EXHIBIT 99.1
===============================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
PACTIV CORPORATION,
MEADOW ACQUISITION CORP.,
PRAIRIE PACKAGING, INC.
===============================================================================
AND
XXXX X. XXXXXXX AND XXXXXXXX X. XXXXXXX
AS REPRESENTATIVES OF THE COMPANY STOCKHOLDERS
APRIL 10, 2007
ARTICLE I DEFINITIONS.................................................................................1
1.1 Definitions.........................................................................................1
1.2 Interpretation.....................................................................................10
ARTICLE II THE MERGER.................................................................................10
2.1 The Merger.........................................................................................10
2.2 Effective Time.....................................................................................10
2.3 Effect of the Merger...............................................................................11
2.4 Certificate of Incorporation; Bylaws...............................................................11
2.5 Directors and Officers.............................................................................11
ARTICLE III MERGER CONSIDERATION; CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES...................11
3.1 Calculation and Payment of the Merger Consideration................................................11
3.2 Effect of Merger on the Capital Stock of the Company...............................................14
3.3 Post-Closing Adjustment............................................................................16
3.4 Lost, Stolen and Destroyed Certificates............................................................17
3.5 Effect of Merger on Capital Stock of Surviving Corporation.........................................17
3.6 Appraisal Rights...................................................................................18
3.7 Withholding Rights.................................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................19
4.1 Organization, Qualification, Power and Authority...................................................19
4.2 Authorization; Enforceability......................................................................19
4.3 Capitalization.....................................................................................19
4.4 Noncontravention...................................................................................20
4.5 Brokers' Fees......................................................................................20
4.6 Financial Statements...............................................................................20
4.7 Internal Controls; Undisclosed Liabilities.........................................................20
4.8 Events Subsequent to Most Recent Financial Statements..............................................21
4.9 Legal Compliance...................................................................................22
4.10 Tax Matters........................................................................................22
4.11 Real Property......................................................................................23
4.12 Personal Property..................................................................................23
4.13 Intellectual Property..............................................................................23
4.14 Contracts..........................................................................................24
4.15 Litigation.........................................................................................25
4.16 Employee Benefits..................................................................................26
4.17 Environmental Matters..............................................................................26
4.18 Indebtedness.......................................................................................27
4.19 Bank Accounts; Directors and Officers..............................................................27
4.20 Licenses and Permits...............................................................................27
4.21 Labor Matters......................................................................................27
4.22 Insurance Policies.................................................................................27
4.23 Customers and Suppliers............................................................................28
4.24 Title and Sufficiency of Assets....................................................................28
i
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB....................................28
5.1 Organization of Parent and Merger Sub..............................................................28
5.2 Ownership of Merger Sub; No Prior Activities.......................................................28
5.3 Authorization; Enforceability......................................................................28
5.4 Noncontravention...................................................................................29
5.5 Brokers' Fees......................................................................................29
5.6 Litigation.........................................................................................29
5.7 Financing..........................................................................................29
5.8 Investment Representation..........................................................................29
ARTICLE VI PRE-CLOSING COVENANTS OF THE COMPANY.......................................................30
6.1 Conduct of Business................................................................................30
6.2 Filings; Consents; Etc.............................................................................31
6.3 Exclusivity........................................................................................32
6.4 Publicity..........................................................................................32
6.5 Access.............................................................................................33
6.6 Financial Statements...............................................................................33
6.7 Environmental Matters..............................................................................33
6.8 Lease Obligations; UCC Filings.....................................................................33
6.9 Deferred Compensation Plan.........................................................................33
ARTICLE VII COVENANTS OF PARENT........................................................................34
7.1 Filings; Consents; Etc.............................................................................34
7.2 Publicity..........................................................................................34
7.3 IRB Letter of Credit...............................................................................35
ARTICLE VIII CONDITIONS PRECEDENT TO THE CLOSING........................................................35
8.1 Conditions Precedent to Each Party's Obligations...................................................35
8.2 Conditions Precedent to Obligations of Parent and Merger Sub.......................................35
8.3 Conditions Precedent to Obligations of the Company.................................................36
ARTICLE IX CLOSING....................................................................................37
9.1 Deliveries by the Company..........................................................................37
9.2 Deliveries by Parent and Merger Sub................................................................38
ARTICLE X POST CLOSING COVENANTS.....................................................................38
10.1 Tax Covenants......................................................................................38
10.2 Section 338(h)(10) Election........................................................................41
10.3 Further Assurances.................................................................................42
10.4 Director and Officer Liability and Indemnification.................................................42
10.5 Employee Matters...................................................................................43
10.6 Litigation Support.................................................................................44
ii
ARTICLE XI INDEMNIFICATION............................................................................44
11.1 Survival of the Company's Representations and Warranties...........................................44
11.2 Survival of Parent's and Merger Subs' Representations and Warranties...............................44
11.3 Indemnification by the Company Stockholders Relating to the Company................................44
11.4 Indemnification by Parent..........................................................................45
11.5 Indemnification Procedure for Third Party Claims...................................................46
11.6 Calculation of Losses..............................................................................47
11.7 Limitation on Indemnities..........................................................................48
11.8 Escrow.............................................................................................49
11.9 Exclusion of Other Remedies........................................................................49
11.10 Environmental Matters..............................................................................49
ARTICLE XII TERMINATION................................................................................50
12.1 Termination of Agreement...........................................................................50
12.2 Effect of Termination..............................................................................51
ARTICLE XIII MISCELLANEOUS..............................................................................51
13.1 Expenses...........................................................................................51
13.2 No Third-Party Beneficiaries.......................................................................51
13.3 Entire Agreement...................................................................................51
13.4 Succession and Assignment..........................................................................52
13.5 Counterparts.......................................................................................52
13.6 Headings...........................................................................................52
13.7 Notices............................................................................................52
13.8 Governing Law......................................................................................53
13.9 Arbitration........................................................................................54
13.10 Amendments and Waivers.............................................................................54
13.11 Severability.......................................................................................54
13.12 Construction.......................................................................................54
13.13 Acknowledgements by Parent and Merger Sub..........................................................54
13.14 Incorporation of Exhibits and Schedules............................................................55
13.15 Specific Performance...............................................................................55
13.16 Company Stockholder Representatives................................................................55
13.17 Representation.....................................................................................55
Exhibit A.........Form of Representative Agreement
Exhibit B.........Form of Escrow Agreement
Exhibit C.........Form of Closing Note
Exhibit D.........Form of Non-Competition Agreement
Exhibit 1.1.......Illustrative Calculation of Closing Working Capital
iii
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made
and entered into as of April 10, 2007 by and among Pactiv Corporation, a
Delaware corporation ("PARENT"), Meadow Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), Prairie
Packaging, Inc., a Delaware corporation (the "COMPANY"), and Xxxx X. Xxxxxxx and
Xxxxxxxx X. Xxxxxxx (each individually, a "REPRESENTATIVE" and collectively, the
"REPRESENTATIVES"), on behalf of the Company Stockholders.
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub
and the Company has approved and declared advisable the merger of Merger Sub
with and into the Company (the "MERGER"), pursuant to which the Company shall
continue as the surviving corporation and as a wholly-owned subsidiary of
Parent, upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL");
WHEREAS, the Board of Directors of each of Parent and the
Company has determined that the Merger is in furtherance of and consistent with
their respective business strategies and is in the best interest of their
respective stockholders, and Parent has approved this Agreement and the Merger
as the sole stockholder of Merger Sub, and the Company has received the
Requisite Stockholder Approval;
WHEREAS, pursuant to the Merger, among other things, all of
the issued and outstanding shares of capital stock of the Company shall be
converted into the right to receive the Merger Consideration (as hereafter
defined) as provided herein;
WHEREAS, as a condition to, and in connection with the
execution of this Agreement, certain of the Company Stockholders have entered
into a Stockholders' Representative Agreement (the "REPRESENTATIVE AGREEMENT"),
with the Representatives in the form attached hereto as EXHIBIT A; and
WHEREAS, the parties to this Agreement desire to make certain
representations, warranties, covenants and other agreements in connection with
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms
shall have the meanings ascribed to them in this SECTION 1.1
"1995 BONDS" means those certain Industrial Development
Revenue Bonds, Series 1995 (Prairie Project) issued by the Illinois Development
Finance Authority on December 14, 1995 in an original aggregate principal amount
equal to $5,000,000.
"1995 BONDS AMOUNT" means the aggregate amount of outstanding
Indebtedness of the Acquired Companies relating to the 1995 Bonds as of the
Closing Date.
"ACCOUNTING ARBITRATOR" has the meaning set forth in SECTION
3.4(B) below.
"ACQUIRED COMPANIES" means, collectively, the Company and each
of the Prairie Subsidiaries.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" has the meaning set forth in the introductory
paragraph above.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 4.6 below.
"BEST EFFORTS" means the good faith efforts that a prudent
business Person desirous of achieving a result would use in similar
circumstances to ensure that such result is achieved as expeditiously as
possible; PROVIDED, HOWEVER, such efforts shall not require or include the
payment of money by such Person to ensure any such result.
"BOLINGBROOK FACILITY" has the meaning set forth in SECTION
6.7 below.
"BUSINESS" means the business of manufacturing, marketing and
selling certain disposable plastic products and packaging materials as conducted
by the Acquired Companies.
"BUSINESS DAY" means any day other than a Saturday or Sunday,
or a day on which banking institutions in New York, New York or Chicago,
Illinois are authorized or obligated by Law to close.
"CAP AMOUNT" has the meaning set forth in SECTION 11.7(C)
below.
"CASH ON HAND" means all cash and cash equivalents of the
Acquired Companies, as of the close of business on the day immediately preceding
the Closing Date, determined in accordance with GAAP. For the avoidance of
doubt, Cash on Hand shall be calculated net of issued but uncleared checks and
drafts and shall include checks, ACH transactions and other wire transfers and
drafts deposited or available for deposit for the account of the Acquired
Companies.
"CERTIFICATE OF MERGER" has the meaning set forth in SECTION
2.2 below.
"CERTIFICATES" has the meaning set forth in SECTION 3.2(D)
below.
"CLAUSE (IV) PAYMENT" has the meaning set forth in SECTION
3.1(A)(IV) below.
"CLOSING" has the meaning set forth in SECTION 2.2 below.
"CLOSING DATE" has the meaning set forth in SECTION 2.2 below.
2
"CLOSING NOTE" has the meaning set forth in SECTION 3.1(C)
below.
"CLOSING STATEMENT" has the meaning set forth in SECTION
3.3(A) below.
"CLOSING WORKING CAPITAL" shall mean as of the close of
business on the Closing Date (but without giving effect to any changes,
including, without limitation, any purchase accounting adjustments, which arise
solely as a result of the Merger), the total current assets of the Acquired
Companies minus the total current liabilities of the Acquired Companies. For the
avoidance of doubt, Closing Working Capital for the purposes of determining
"Estimated Closing Working Capital" and "Closing Working Capital" shall be
calculated (i) in accordance with GAAP, and (ii) in the same manner, using the
same accounting principles, methods, practices and categories as were used by
the Acquired Companies in determining the Acquired Company's total current
assets and total current liabilities in the Audited Financial Statements;
PROVIDED, HOWEVER, cash and cash equivalents included in the definition of Cash
on Hand and any amounts relating to the 1995 Bonds, Senior Bank Debt, Senior
Notes, amounts constituting Company Stockholder Transaction Expenses relating to
payments under the Deferred Compensation Plan and the capital leases and
operating leases identified on SCHEDULE 1.1(B) shall be excluded from any
calculation of Closing Working Capital, any Transfer Taxes, any Taxes resulting
from the Section 338(h)(10) Election and any North Carolina Composite Income Tax
shall be treated as accruing after the Closing Date and shall be excluded from
the computation of the Closing Working Capital. An illustrative calculation of
the Closing Working Capital as of December 31, 2006 and February 28, 2007 is
shown on EXHIBIT 1.1.
"CODE" means the Internal Revenue Code of 1986.
"COMMON PER SHARE MERGER CONSIDERATION" means an amount equal
to the quotient of (x) (i) the Merger Consideration DIVIDED BY (y) the total
number of Common Shares outstanding.
"COMMON SHARE" means each share of Common Stock that is
issued and outstanding immediately prior to the Effective Time.
"COMMON STOCK" means, collectively, the Voting Common Stock
and Non-Voting Common Stock.
"COMPANY" has the meaning set forth in the introductory
paragraph above.
"COMPANY STOCKHOLDER INDEMNIFIED PARTY" has the meaning set
forth in SECTION 11.4 below.
"COMPANY STOCKHOLDER TRANSACTION EXPENSES" means the fees and
expenses payable by the Company Stockholders (and the Acquired Companies)
arising from, incurred in connection with or incident to this Agreement and the
transactions contemplated hereby specified on SCHEDULE 3.1(F) as delivered to
Parent in accordance with the provisions of SECTION 3.1(F) and SECTION 13.1.
3
"COMPANY STOCKHOLDERS" means the holders of all issued and
outstanding Common Shares at or prior to the Effective Time.
"COMPANY'S KNOWLEDGE" means the actual knowledge of the
individuals listed on SCHEDULE 1.1(A).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement dated January 25, 2007 by and between the Company and Parent, as
amended and supplemented after the date thereof.
"CONTRACT" has the meaning set forth in SECTION 4.14 below.
"COVERED EMPLOYEES" has the meaning set forth in SECTION
10.5(A) below.
"CPR" has the meaning set forth in SECTION 13.9 below.
"CUSTOMER CORRESPONDENCE" has the meaning set forth in SECTION
4.23 below.
"DEFENSE NOTICE" has the meaning set forth in SECTION 11.5
below.
"DEFERRED COMPENSATION PLAN" has the meaning set forth in
SECTION 6.9 below.
"DGCL" has the meaning set forth in the Recitals above.
"DISSENTING SHARES" has the meaning set forth in SECTION 3.6
below.
"DISSENTING STOCKHOLDERS" has the meaning set forth in SECTION
3.6 below.
"EFFECTIVE TIME" has the meaning set forth in SECTION 2.2
below.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as
such term is defined in ERISA ss.3(3)) and any other material employee benefit
plan, program or arrangement that provides benefits or compensation to any
employee of any Acquired Company and that is maintained or sponsored by any
Acquired Company.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA ss.3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA ss.3(1).
"ENVIRONMENTAL CLAIMS" has the meaning set forth in SECTION
4.17(B) below.
"ENVIRONMENTAL PERMITS" has the meaning set forth in SECTION
4.17(C) below.
"ENVIRONMENTAL REQUIREMENTS" means all applicable Laws
concerning pollution or protection of human health or the environment, as such
requirements are enacted and in effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974.
4
"ERISA AFFILIATE" means each entity that is treated as a
single employer with the Company for purposes of Code Section 414.
"ESCROW AGENT" has the meaning set forth in SECTION 3.1(C)(I)
below.
"ESCROW AGREEMENT" has the meaning set forth in SECTION
3.1(C)(I) below.
"ESCROW AMOUNT" means an amount equal to the Cap Amount.
"ESCROW FUNDS" has the meaning set forth in SECTION 3.1(C)(I)
below.
"ESTIMATED CLAUSE (IV) PAYMENT" has the meaning set forth in
SECTION 3.1(B) below.
"ESTIMATED CLOSING WORKING CAPITAL" has the meaning set forth
in SECTION 3.1(B) below.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.6 below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any governmental, regulatory or
administrative body, agency or authority, any court or judicial authority, any
arbitrator or any other public authority, whether foreign, federal, state or
local.
"HAZARDOUS MATERIAL" means any substance which is (i) defined
as a hazardous substance, hazardous material, hazardous waste, pollutant or
contaminant under any Environmental Requirement, (ii) a petroleum hydrocarbon,
including crude oil or any fraction thereof, (iii) asbestos or asbestos
containing material, or (iv) regulated pursuant to any Environmental
Requirement.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"HSR REQUEST" has the meaning set forth in SECTION 12.1 below.
"ILLINOIS PERSONAL PROPERTY REPLACEMENT TAXES" means those
Income Taxes imposed under Section 201(c) of the Illinois Income Tax Act.
"IMPLIED PURCHASE PRICE" for an operating lease identified on
SCHEDULE 1.1(B) shall mean an amount equal to (i) the aggregate amount of unpaid
lease payments on such lease until scheduled termination, MINUS (ii) the
aggregate imputed interest charge contained in such lease payments (as derived
from the original purchase price quoted on the leased assets) PLUS (iii)
twenty-two percent (22%) of the original purchase price quoted on the leased
assets.
"INCOME TAXES" means any Taxes imposed on, or measured by, net
income and any Taxes in the form of interest or penalties related thereto.
5
"INDEBTEDNESS" means any liability, whether or not contingent,
(i) in respect of borrowed money or evidenced by bonds, monies, debentures, or
similar instruments, (ii) representing the deferred and unpaid balance of the
purchase price of any property (including pursuant to capital leases listed on
SCHEDULE 1.1(B)) but excluding trade payables, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet prepared
on a consolidated basis in accordance with GAAP, and (iii) guaranties, direct or
indirect, in any manner, of all or any part of any Indebtedness of any Person.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 11.5
below.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 11.5
below.
"INSURANCE POLICIES" has the meaning set forth in SECTION 4.22
below.
"INTELLECTUAL PROPERTY" means, on a worldwide basis, all
patents, trademarks, tradenames and service marks, copyrights, and any
application therefor, along with all confidential business information including
inventions, know how, trade secrets, manufacturing processes, formulae,
technical information, specifications, data, technology, plans and drawings, and
other intellectual property owned, or used by any of the Acquired Companies.
"LAW" means any law, statute, regulation, rule, ordinance or
other binding action or requirement of a Governmental Authority.
"LEASED REAL PROPERTY" means the real property leased or
subleased to the Acquired Companies and used in the Business.
"LEASES" means all leases and subleases, including all
amendments, extensions, renewals and guaranties or side letters with respect
thereto, pursuant to which any of the Acquired Companies holds any Leased Real
Property.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest.
"LOSS" or "LOSSES" has the meaning set forth in SECTION 11.3
below.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means
any effect or change that would be materially adverse to the assets, financial
condition or results of operations of the Acquired Companies taken as a whole;
PROVIDED that none of the following shall be deemed to constitute, and none of
the following shall be taken into account in determining whether there has been,
a Material Adverse Effect or Material Adverse Change: (a) any adverse change,
event, development or effect arising from or relating to (1) general business or
economic conditions, including such conditions related to the Business of the
Acquired Companies (provided such change, event, development or effect does not
disproportionately affect the Acquired Companies vis-a-vis other Persons engaged
in the same industry as the Acquired Companies), (2) national or international
political or social conditions, including the engagement by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions, or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States, (3) financial, banking, or securities markets (including any disruption
thereof and any decline in the price of any security or any market index), (4)
changes in GAAP, (5) changes in Law or other binding directives or orders issued
by any Governmental Authority, or (6) the announcement or performance of this
Agreement or the transactions contemplated by this Agreement, including any
reaction of customers of the Acquired Companies; and (b) any adverse change in
or effect on the Business of the Acquired Companies that is cured to Parent's
reasonable satisfaction before the earlier of (1) the Closing Date and (2) the
date on which this Agreement is terminated pursuant to SECTION 12.1 hereof.
6
"MATERIAL CONTRACT" has the meaning set forth in SECTION 4.14
below.
"MERGER" has the meaning set forth in the Recitals above.
"MERGER CONSIDERATION" has the meaning set forth in SECTION
3.1(A) below.
"MERGER SUB" has the meaning set forth in the introductory
paragraph above.
"MINOR CLAIM" has the meaning set forth in SECTION 11.7(A)
below.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth
in SECTION 4.6 below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA
ss.3(37).
"NON-VOTING COMMON STOCK" means the non-voting common stock,
par value $0.01 per share of the Company.
"NORTH CAROLINA COMPOSITE INCOME TAX" means the Tax payable by
the Company with respect to Income Taxes payable by the Company Stockholders in
the State of North Carolina as a result of owning shares of capital stock of the
Company at any time during the period beginning on January 1, 2007 and ending on
the Closing Date, including North Carolina Income Taxes imposed as a result of
the Section 338(h)(10) Election.
"ORDINARY COURSE OF BUSINESS" means the Ordinary Course of
Business consistent with past custom and practice (including with respect to
quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" means (a) the certificate of
incorporation; (b) articles of incorporation; (c) articles of organization; (d)
any charter or similar document adopted or filed in connection with the
creation, formation or organization of a Person; and (e) any amendment to any of
the foregoing.
"PARENT" has the meaning set forth in the introductory
paragraph above.
"PARENT INDEMNIFIED PARTY" has the meaning set forth in
SECTION 11.3 below.
"PARENT PLAN" has the meaning set forth in SECTION 10.5(B)
below.
7
"PARENT SHARING AMOUNT" has the meaning set forth in SECTION
11.10(B) below.
"PARTY" or "PARTIES" means the Company, the Representatives,
Merger Sub and Parent.
"PAYMENT FUND" has the meaning set forth in SECTION 3.1(C)
below.
"PERMITTED LIENS" means (a) Liens for Taxes not yet delinquent
or that are being contested by appropriate proceedings and for which an
appropriate reserve or accrual is reflected on the Closing Statement, (b)
statutory Liens of landlords for amounts not yet delinquent, (c) Liens of
carriers, warehousemen, mechanics and materialmen incurred in the Ordinary
Course of Business for amounts not yet delinquent, (d) Liens attaching to
inventory held by consignees in the Ordinary Course of Business, (e) zoning,
building codes and other land use Laws that are imposed by any Governmental
Authority having jurisdiction over such Real Property, (f) Liens granted or
created by the Company in favor of lessors in connection with the lease of
personal property or equipment in the Ordinary Course of Business, and (g) Liens
created by any act of Parent or Merger Sub.
"PERSON" means an individual, a sole proprietorship, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, any
other business entity or any Governmental Authority.
"POST CLOSING INCOME TAX REPRESENTATION TERMINATION DATE" has
the meaning set forth in SECTION 11.1 below.
"PRAIRIE SUBSIDIARIES" means, collectively, (i) Prairie UK
Limited, a private limited company organized under the laws of the United
Kingdom and (ii) Prairiebration LLC, a Delaware limited liability company.
"PRIME RATE" has the meaning set forth in SECTION 3.4(C)
below.
"PURCHASE PRICE ALLOCATION SCHEDULE" has the meaning set forth
in SECTION 10.2(C) below. "REPRESENTATIVE" has the meaning set
forth in the introductory paragraph above.
"REPRESENTATIVE AGREEMENT" has the meaning set forth in the
Recitals above.
"REQUISITE STOCKHOLDER APPROVAL" means the affirmative vote or
consent of a majority of the issued and outstanding shares of Voting Common
Stock.
"S CORPORATION RETURNS" has the meaning set forth in SECTION
10.1(A) below.
"SECTION 338(H)(10) ELECTION" has the meaning set forth in
SECTION 10.2(A) below.
"SENIOR BANK DEBT" shall mean all Indebtedness owed by the
Company and pursuant to that certain Fourth Amended and Restated Credit
Agreement, dated as of March 31, 2006, among the Company, LaSalle National Bank
Association and the other financial institutions parties thereto, as amended or
supplemented from time to time.
8
"SENIOR BANK DEBT PAYOFF AMOUNT" means the amount indicated in
the payoff letter delivered pursuant to SECTION 8.2(c), which is equal to the
aggregate principal of, and accrued but unpaid interest on, the Senior Bank Debt
up to and including the Closing Date, and all other costs payable in connection
with the repayment in full of the Senior Bank Debt.
"SENIOR NOTES AGREEMENT" means that certain Note Purchase
Agreement, dated as of September 24, 2004, between the Company and the holders
of Senior Notes parties thereto, as amended or supplemented from time to time.
"SENIOR NOTES" means the Company's 4.87% Series A Senior
Secured Notes due September 24, 2009, 5.35% Series B Senior Secured Notes due
September 24, 2011, 5.62% Series C Senior Secured Notes due September 24, 2012,
5.75% Series D Senior Secured Notes due September 24, 2013 and 5.90% Series E
Senior Secured Notes due September 24, 2014 having a face value of $50,000,000
and issued pursuant to the Note Agreement.
"SENIOR NOTES AMOUNT" means the amount indicated in the
redemption agreement relating to the Senior Notes delivered pursuant to SECTION
8.2(D)(I), which is equal to the aggregate principal of, and accrued but unpaid
interest on, the Senior Notes up to and including the Closing Date PLUS an
amount equal to the applicable "Make-Whole Amount" (as defined under, and
calculated in accordance with the terms of, the Senior Notes Agreement) and all
other costs payable in connection with the repayment in full of the Senior
Notes.
"STANDBY LETTER OF CREDIT has the meaning set forth in SECTION
9.2(F) below.
"STRADDLE PERIOD" means any Tax period that begins before and
ends after the Closing Date.
"SURVIVING CORPORATION" has the meaning set forth in SECTION
2.1 below.
"TARGET CLOSING WORKING CAPITAL" means $57,000,000.
"TAX" or "TAXES" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"TAX CLAIM" has the meaning set forth in SECTION 10.1(D)
below.
"TAX CONTEST" has the meaning set forth in SECTION 10.1(D)
below.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes. including any
schedule or attachment thereto and including any amendment thereof.
"TERMINATION DATE" has the meaning set forth in SECTION
12.1(C) below.
9
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 11.5
below.
"TRANSFER TAXES" has the meaning set forth in SECTION 10.1(G)
below.
"VOTING COMMON STOCK" means the voting common stock, par value
$0.01 per share of the Company.
INTERPRETATION. Unless otherwise expressly provided or unless
the context requires otherwise: (i) all references in this Agreement to
Articles, Sections, Schedules and Exhibits shall mean and refer to Articles,
Sections, Schedules and Exhibits of this Agreement; (ii) all references to
statutes and related regulations shall include all amendments of the same and
any successor or replacement statutes and regulations in each case as so amended
or replaced on or prior to the Closing; (iii) words using the singular or plural
number also shall include the plural and singular number, respectively; (iv)
references to "hereof", "herein", "hereby" and similar terms shall refer to this
entire Agreement (including the Schedules and Exhibits hereto); (v) references
to any Person shall be deemed to mean and include the successors and permitted
assigns of such Person (or, in the case of a Governmental Authority, Persons
succeeding to the relevant functions of such Person); (vi) the term "including"
shall be deemed to mean "including, without limitation"; (vii) words of any
gender include each other gender; and (viii) whenever this Agreement refers to a
number of days, such number shall refer to calendar days, unless such reference
is specifically to "Business Days."
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, at the Effective
Time, Merger Sub shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation and as a wholly-owned
subsidiary of Parent (the "SURVIVING CORPORATION").
2.2 EFFECTIVE TIME. Unless this Agreement is earlier
terminated pursuant to SECTION 12.1, the closing of the Merger (the "CLOSING")
will take place on the later of June 8, 2007 or three (3) Business Days after
the satisfaction or, if permissible, waiver of the conditions set forth in
ARTICLE VIII, at the offices of Winston & Xxxxxx LLP, 00 Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. (Chicago time), provided that such place,
date and time may be changed to another place, date and/or time as agreed to in
writing by Parent and the Company. The date upon which the Closing actually
occurs is herein referred to as the "CLOSING DATE." On the Closing Date, the
Parties shall cause the Merger to be consummated by filing a certificate of
merger (the "CERTIFICATE OF MERGER") with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL (the date and time of acceptance by the
Secretary of State of Delaware of such filing, or, if another date and time is
specified in such filing, such specified date and time, being the "EFFECTIVE
TIME").
10
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, assets,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities, duties and
obligations of the Company and Merger Sub shall become the debts, liabilities,
duties and obligations of the Surviving Corporation.
2.4 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
Time, the Organizational Documents of the Surviving Corporation shall be amended
in their entirety to contain the provisions set forth in the Organizational
Documents of Merger Sub, as in effect immediately prior to the Effective Time.
2.5 DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to serve in accordance with the Organizational
Documents of the Surviving Corporation. The officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office in accordance with the Organizational Documents
of the Surviving Corporation.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
3.1 CALCULATION AND PAYMENT OF THE MERGER CONSIDERATION.
---------------------------------------------------
(a) CALCULATION OF MERGER CONSIDERATION. The
aggregate amount to be paid by Parent with respect to the Common Shares
shall equal the sum of the following:
(i) One Billion Dollars ($1,000,000,000);
(ii) PLUS the total amount of Cash on
Hand;
(iii) (1) PLUS the amount, if any, by
which the Closing Working Capital is
greater than Target Closing Working
Capital, or
(2) MINUS the amount, if any, by
which Target Closing Working Capital
is greater than the Closing Working
Capital,
as determined and adjusted in
accordance with SECTION 3.1(B) and
SECTION 3.3, below;
(iv) PLUS an amount equal to the sum of:
11
(1) the greater of (A) $5,000,000 or
(B) twenty-five (25%) percent of the
amount, if any, by which the
aggregate dollar amount of Net Fixed
Assets of the Company (as such term
is used in the Financial Statements)
as of the beginning of business on
the earlier of the Closing Date or
May 31, 2007, exceeds the aggregate
dollar amount of Net Fixed Assets as
reflected on the Audited Financial
Statements; PROVIDED, HOWEVER, that
additions to Net Fixed Assets as a
result of capital expenditures
identified in subparagraph (2)
below, if any, shall be not be
included in the calculation of Net
Fixed Assets for purposes of this
subparagraph (1)(B); PLUS
(2) one hundred percent (100%) of
the aggregate dollar amount of cash
expenditures for fixed assets made
by the Company prior to the earlier
of the Closing Date or May 31, 2007,
if any, for capital projects not
included in the list of projects
identified on SCHEDULE 6.1(G) to the
extent such expenditures have been
specifically approved in advance by
Parent; PLUS
(3) subject to the provisos at the
end hereof, if the Closing Date is
after May 31, 2007, one hundred
(100%) percent of the aggregate
dollar amount of cash expenditures
for fixed assets by the Company
during the period commencing on the
beginning of business of June 1,
2007 and ending on the end of
business of the Closing Date;
PROVIDED, HOWEVER, if the Closing
Date is after May 31, 2007 solely as
a result of an act (or inaction) by
or on the part of a Company
Stockholder, then the amount in this
subparagraph (3) shall be one
hundred (100%) percent of Net Fixed
Assets increase during the period
referred to above; PROVIDED,
FURTHER, if the Closing Date is
after May 31, 2007 solely as a
result of an HSR Request, then the
amount in this subparagraph (3)
shall be (x) one hundred (100%)
percent of Net Fixed Assets increase
during the period commencing on the
beginning of business of June 1,
2007 and ending on the end of
business of June 30, 2007 PLUS (y)
one hundred (100%) percent of the
aggregate dollar amount of cash
expenditures for fixed assets by the
Company during the period commencing
on the beginning of business of July
1, 2007 and ending on the end of
business of the Closing Date,
(such sum, as determined and
adjusted in accordance with SECTION
3.1(B) and SECTION 3.3 below (the
"CLAUSE (IV) PAYMENT"));
12
(v) MINUS, the Senior Bank Debt Payoff
Amount required to be paid by Parent under SECTION 3.1(D);
(vi) MINUS, the Senior Notes Amount required
to be paid by Parent under SECTION 3.1(E);
(vii) MINUS, the 1995 Bonds Amount;
(viii) MINUS, to the extent such obligations
have not been satisfied as of the Effective Time by the
Company in accordance with its covenant set forth in SECTION
6.8, the deferred and unpaid balance of the purchase price
pursuant to the capital leases listed on SCHEDULE 1.1(B) and
the Implied Purchase Price of the operating leases listed on
SCHEDULE 1.1(B);
(ix) MINUS, the Company Stockholder
Transaction Expenses paid under SECTION 3.1(F).
The aggregate amount of items (i) through (ix) immediately
above is referred to herein as the "MERGER Consideration." After the Effective
Time, the Merger Consideration shall be subject to the adjustments set forth in
SECTION 3.3.
(b) ESTIMATED MERGER CONSIDERATION. Two (2) Business
Days prior to the Closing Date, the Company shall deliver to Parent a
statement of the Closing Working Capital (the "ESTIMATED CLOSING
WORKING CAPITAL") and an estimate of the Clause (iv) Payment (the
"ESTIMATED CLAUSE (IV) PAYMENT"). The Merger Consideration will be
determined for the Closing based on such estimates, subject to later
post-closing adjustment as is contemplated by SECTION 3.3 below. In
connection with the calculation of the Estimated Closing Working
Capital and the Final Working Capital, the Company and Parent shall
follow the procedures set forth in SCHEDULE 3.1(B) for the
determination of the value of the inventory of the Company.
(c) PAYMENT AND ALLOCATION OF MERGER CONSIDERATION.
At and upon the Effective Time, Parent shall remit the Merger
Consideration as follows:
(i) ARTICLE a portion of the Merger
Consideration in the amount of the Escrow Amount shall be
deposited by Parent with the escrow agent (the "ESCROW AGENT")
designated in the escrow agreement (the "ESCROW AGREEMENT"),
substantially in the form of EXHIBIT B hereto, to be entered
into at the Closing by Parent, the Representatives and the
Escrow Agent. Such amounts delivered to the Escrow Agent,
together with any investment proceeds thereon, are referred to
collectively herein as the "ESCROW FUNDS" and will secure the
Company Stockholders' indemnification obligation under ARTICLE
XI; and
(ii) the remaining amount of the Merger
Consideration, after subtraction of the amount paid in
accordance with SECTION 3.1(C)(I) and subtraction of the
portion thereof otherwise allocable in accordance with SECTION
3.6 below to Dissenting Shares, shall be remitted to the
Representatives for the benefit to Company Stockholders in the
form of a promissory note payable to the Representatives in
the form attached as EXHIBIT C hereto (the "CLOSING NOTE").
The Closing Note shall have an aggregate original principal
amount equal to such remaining amount of Merger Consideration
and shall provide for interest at the short-term applicable
Federal rate as defined in Section 1274(d) of the Code for the
month including the Closing Date.
13
The aggregate of the payment set forth in SECTION 3.1(C)(I) above,
together with any subsequent remittances to the Representatives or their
designee pursuant to the Closing Note, the Standby Letter of Credit or as a
consequence of the post-Closing adjustments to the Merger Consideration
described in SECTION 3.3, is referred to herein as the "PAYMENT FUND." Upon and
after the Closing, the Representatives, having been duly empowered to act on
behalf of the Company Stockholders pursuant to the terms of the Representative
Agreement, shall make determinations as to the allocation of the Merger
Consideration among the Common Shares. In furtherance of the foregoing, the
Representatives shall follow the directives and procedures set forth in this
SECTION 3.1(C) and in SECTIONS 3.2 and 3.3 to determine the payments and
deliveries to be made from the Payment Fund with respect to such ownership
interests in the Company. If the Representatives determine that it is necessary
to distribute the Closing Note to the Company Stockholders, Parent shall issue
individual promissory notes to the Company Stockholders to evidence such
division of the Closing Note and shall otherwise cooperate with the
Representatives in good faith to divide the Closing Note and Standby Letter of
Credit in the correct denominations and in the individual names of the Company
Stockholders; PROVIDED, HOWEVER, the Representatives shall reimburse Parent for
any out of pocket expenses incurred by Parent to accomplish such division;
PROVIDED, FURTHER, that in no event shall Parent's aggregate obligations under
the individual promissory notes exceed its obligation under the Closing Note.
(d) PAYMENT OF SENIOR BANK DEBT. At the Effective
Time, Parent shall pay, or cause to be paid, on behalf of the Company,
the Senior Bank Debt Payoff Amount by wire transfer of immediately
available funds to the Persons or bank accounts specified in the payoff
letter for the Senior Bank Debt delivered pursuant to SECTION 8.2(C).
(e) REDEMPTION OF SENIOR NOTES. At the Effective
Time, Parent shall pay, or cause to be paid, on behalf of the Company,
the Senior Notes Amount by wire transfer of immediately available funds
to the Persons or bank accounts specified in the redemption agreement
relating to the Senior Notes delivered pursuant to SECTION 8.2(D).
(f) PAYMENT OF COMPANY STOCKHOLDER TRANSACTION
EXPENSES. At the Effective Time, Parent shall pay, or cause to be paid,
on behalf of the Company and the Company Stockholders, the Company
Stockholder Transaction Expenses by wire transfer of immediately
available funds to the Persons or bank accounts and in the amounts
specified by the Representatives on SCHEDULE 3.1(F) to be provided to
Parent at least one (1) day prior to the Effective Time.
3.2 EFFECT OF MERGER ON THE CAPITAL STOCK OF THE COMPANY.
(a) CONVERSION OF COMMON SHARES. At the Effective
Time, each Common Share shall, by virtue of the Merger and without any
14
action on the part of Parent, Merger Sub, the Company or the Company
Stockholders, be cancelled and extinguished, and each such Common Share
shall be converted into the right to receive the Common Per Share
Merger Consideration (subject to adjustment as provided in SECTIONS 3.3
hereof) payable in accordance with and subject to the conditions
provided in this Agreement, other than with respect to Dissenting
Shares. Notwithstanding any contrary provision set forth in this
Agreement, the Representatives shall not pay to any Company Stockholder
holding Common Shares that portion of the Merger Consideration
represented by such Company Stockholder's pro rata share of the Escrow
Funds until such time as such amount, if any, is distributable pursuant
to the terms and conditions of the Escrow Agreement. The adoption of
this Agreement and the approval of the Merger by the Company
Stockholders shall constitute approval of the Escrow Agreement and of
all of the arrangements relating thereto, including, without
limitation, the placement of the Escrow Funds in escrow.
(b) TREASURY STOCK. Each share of Common Stock held
in the treasury of the Company immediately prior to the Effective Time
shall be cancelled and extinguished without any conversion thereof, and
no payment shall be made with respect thereto.
(c) SURRENDER OF CERTIFICATES. As soon as
practicable, the Representatives or their designee shall mail to each
holder of record of a certificate representing outstanding Common
Shares (the "CERTIFICATES") (1) a letter of transmittal, which shall be
in a customary form reasonably satisfactory to Parent (including an
undertaking to notify Parent of any changes in address of such Company
Stockholder during the forty-eight (48) months following the Closing)
and which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper
delivery by such Company Stockholder of his, her or its Certificates to
the Representatives or their designee, (2) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration contemplated to be paid to the Company Stockholders
pursuant to this SECTION 3.2 and (3) a copy of the Representative
Agreement and a joinder thereto. Upon surrender of a Certificate to the
Representatives or their designee for cancellation, the holder of such
Certificate shall be entitled to receive in exchange therefor the
Merger Consideration (adjusted as contemplated in SECTION 3.3 hereof)
represented by such Certificate as set forth above, which Merger
Consideration shall be payable upon such proper surrender by the
Representatives or their designee by delivery of a certified or bank
cashier's check or by wire transfer, and the Certificate so surrendered
shall forthwith be cancelled upon delivery thereof to the
Representatives or their designee. No interest will be paid or accrued
on any portion of the Merger Consideration payable to holders of
Certificates. In the event of a transfer of ownership of Common Shares
that is not registered in the transfer records of the Company, payment
may be made to a transferee if the Certificate representing such Common
Shares is presented to Parent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable
stock transfer taxes have been paid.
(d) CANCELLATION OF COMMON SHARES. From and after the
Effective Time, all Common Shares shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist,
and each holder of a Certificate representing any such Common Shares
shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration represented by such Certificate
(other than with respect to Dissenting Shares).
15
3.3 POST-CLOSING ADJUSTMENT.
(a) Within sixty (60) days after the Closing Date,
Parent shall prepare and deliver to the Representatives a statement of
the Closing Working Capital and the Clause (iv) Payment (the "CLOSING
STATEMENT"), with all supporting documentation. The Closing Statement
shall be based upon the books and records of the Acquired Companies and
shall be prepared in accordance with GAAP and the definitions of
Closing Working Capital and the Clause (iv) Payment set forth in
ARTICLE I above.
(b) The Closing Statement shall be final and binding
on the Parties unless the Representatives shall, within thirty (30)
days following the delivery of such Closing Statement, deliver to
Parent written notice of disagreement with such Closing Statement,
which notice shall describe the nature of any such disagreement in
reasonable detail, identify the specific items involved and the dollar
amount of such disagreement. If the Representatives shall raise any
objections within the aforesaid thirty (30) day period, then the
disputed matters shall be resolved by the Representatives, on behalf of
the Company Stockholders, and Parent. For the avoidance of doubt,
amounts that are not subject to a written notice of disagreement or
objection shall be remitted to the Representatives or Parent, as the
case may be, in accordance with SECTION 3.3(C). If the Representatives
and Parent are unable to resolve all disagreements within thirty (30)
days of receipt by Parent of a written notice of disagreement, or such
longer period as may be agreed by Parent and the Representatives, then,
within thirty (30) days thereafter, the Representatives and Parent
jointly shall select an arbiter from a nationally recognized
independent public accounting firm that is not the independent auditor
of any of Parent, the Company or the Surviving Corporation; if Parent
and the Representatives are unable to select an arbiter within such
time period, the American Arbitration Association shall make such
selection (the Person so selected shall be referred to herein as the
"ACCOUNTING ARBITRATOR"). The Accounting Arbitrator so selected will
consider only those items and amounts set forth in the Closing
Statement as to which Parent and the Representatives have disagreed
within the time periods and on the terms specified above and must
resolve the matter in accordance with the terms and provisions of this
Agreement. Each Party may furnish to the Accounting Arbitrator such
information and documents as it deems relevant, with copies of such
submission and all such documents and information being concurrently
given to the other Party. Neither Party shall have or conduct any
communication, either written or oral, with the Accounting Arbitrator
without the other Party either being present or receiving a concurrent
copy of any written communication. The Accounting Arbitrator may
conduct a conference concerning the objections and disagreements
between the Representatives and Parent, at which conference each Party
shall have the right to (i) present its documents, materials and other
evidence (previously provided to the Accounting Arbitrator and the
other Party) and (ii) have present its or their advisors, accountants,
counsel and other representatives. The Accounting Arbitrator shall
resolve each item of disagreement based solely on the presentations and
16
supporting material provided by the Parties and not pursuant to any
independent review and may not assign a value to any particular item
greater than the greatest value for such item claimed by either Party
or less than the lowest value for such item claimed by either Party, in
each case as presented to the Accounting Arbitrator. The Accounting
Arbitrator shall issue a detailed written report that sets forth the
resolution of all items in dispute and that contains a final Closing
Statement. Such report shall be final and binding upon Parent and the
Representatives. The fees and expenses of the Accounting Arbitrator
shall be borne on a proportionate basis by the Representatives, on
behalf of the Company Stockholders, on the one hand, and Parent, on the
other hand, based on the inverse proportion of the respective
percentages of the dollar value of disputed issues determined in favor
of the Representatives and Parent. Parent and the Representatives
shall, and Parent shall cause the Surviving Corporation to, cooperate
fully with the Accounting Arbitrator and respond on a timely basis to
all requests for information or access to documents or personnel made
by the Accounting Arbitrator or by other Parties hereto, all with the
intent to fairly and in good faith resolve all disputes relating to
such Closing Statement as promptly as reasonably practicable.
(c) If the amounts representing the Closing Working
Capital and Clause (iv) Payment as reflected in the Closing Statement
as finally determined in accordance with this SECTION 3.3 differs from
the Estimated Closing Working Capital and Estimated Clause (iv)
Payment, the Merger Consideration shall be adjusted on a
dollar-for-dollar basis by the amount of such difference.
The Representatives shall hold at least Five Million Dollars
($5,000,000) of the Merger Consideration (in the form of a portion of the
Closing Note or in cash if the Closing Note has been paid) in the Payment Fund
until the Closing Statement is finally determined. If the adjustments, if any,
under this SECTION 3.3 result in an aggregate reduction in the Merger
Consideration, the Representatives shall pay to Parent (by wire transfer to an
account designated in writing by Parent) the amount of such reduction plus
interest from and after the Closing Date to and through the date of payment at
the prime rate charged on the Closing Date by LaSalle Bank National Association
(the "PRIME RATE") within five (5) Business Days after the final determination
of the adjustments. Conversely, if such adjustments result in an aggregate
increase in the Merger Consideration, Parent shall remit the amount of such
increase plus interest from and after the Closing Date to and through the date
of payment at the Prime Rate within five (5) Business Days after the final
determination of the adjustments to the Representatives.
3.4 LOST, STOLEN AND DESTROYED CERTIFICATES. If any
Certificate shall have been lost, stolen or destroyed, the Representatives will
deliver the Merger Consideration to such Company Stockholder only upon receipt
by the Representatives of an affidavit (in a form reasonably satisfactory to
Parent) by the Person claiming such Certificate to be lost, stolen or destroyed.
No bond shall be required to be posted by any Company Stockholder in connection
with such affidavit.
3.5 EFFECT OF MERGER ON CAPITAL STOCK OF SURVIVING
CORPORATION. At the Effective Time, each share of Merger Sub's common stock, par
value $0.01 per share, that is issued and outstanding immediately prior to the
Effective Time, shall, by virtue of the Merger and without any action on the
part of Parent, Merger Sub, the Company or the Company Stockholders, be
converted automatically into and exchanged for one share of common stock of the
Surviving Corporation.
17
3.6 APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, Common Shares (the "DISSENTING SHARES") that are
issued and outstanding immediately prior to the Effective Time and are held by
Company Stockholders who have not voted in favor of the Merger, consented
thereto in writing or otherwise contractually waived their rights to appraisal
and who have complied with all of the relevant provisions of the DGCL (the
"DISSENTING STOCKHOLDERS") shall not be converted into or be exchangeable for
the right to receive the Merger Consideration, unless and until such
stockholders shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the DGCL. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of any Common Shares,
attempted withdrawals of such demands and any other instruments served pursuant
to the DGCL and received by the Company relating to stockholders' rights of
appraisal, and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. At Closing, an amount
equal to 150% of the Common Per Share Merger Consideration otherwise payable to
the Dissenting Stockholders will be deposited with the Escrow Agent; such funds
shall be used to make any required payments to Dissenting Stockholders and any
costs of Parent or the Acquired Companies associated with such appraisal
process, with the balance distributed to the Payment Fund, to be disbursed by
the Representatives to the Company Stockholders. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, then (i) as of
the occurrence of such event, such holder's Dissenting Shares shall cease to be
Dissenting Shares and shall be converted into and represent the right to receive
the Merger Consideration (adjusted as contemplated by SECTION 3.3 hereof) in
accordance with SECTIONS 3.1 and 3.2, and (ii) promptly following the occurrence
of such event, Parent shall remit to the Representatives the portion of the
Merger Consideration (adjusted as contemplated by SECTION 3.3 hereof) to which
such holder is entitled.
3.7 WITHHOLDING RIGHTS. Parent and the Representatives shall
be entitled to deduct and withhold (without duplication) from any and all
payments made under this Agreement such amounts as may be required to be
deducted and withheld under applicable laws. To the extent such amounts are
withheld and paid to the appropriate Governmental Authority in accordance with
applicable laws, such withheld amount shall be treated for all purposes of this
Agreement as having been paid to the Person to whom such amounts would have
otherwise been paid. To the extent that Parent determines it needs to withhold
on the payment of the Merger Consideration payable at Closing, the amount of the
Closing Note shall be reduced by such withholding and the Representatives shall
make appropriate allocations under SECTION 3.1(C) to reflect such withholding.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub
with respect to the matters specified in this ARTICLE IV as follows:
4.1 ORGANIZATION, QUALIFICATION, POWER AND AUTHORITY. Each of
the Acquired Companies is an entity, duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or
formation. Each of the Acquired Companies is in good standing under the Laws of
each jurisdiction where such qualification is required except where the lack of
such qualification would not have a Material Adverse Effect. Each of the
Acquired Companies has the requisite power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.
4.2 AUTHORIZATION; ENFORCEABILITY. The Company has requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
and no stockholder votes are necessary to authorize this Agreement or to
consummate the Merger and the other transactions contemplated hereby, other than
the filing and recordation of the Certificate of Merger. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other Parties hereto, constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms and conditions, subject to Laws of general application relating to public
policy, bankruptcy, insolvency and the relief of debtors and rules of Law
governing specific performance, injunctive relief and other equitable remedies.
The Representatives have received executed counterpart signature pages to the
Representative Agreement from Company Stockholders holding shares of Voting
Common Stock in excess of that required for Requisite Stockholder Approval and
such Representative Agreement authorize the Representatives to take all of the
actions contemplated of the Representatives on behalf of the Company
Stockholders by this Agreement.
4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company
consists of 3,500,000 shares of Voting Common Stock, of which there are
2,891,136 shares of Voting Common Stock issued and outstanding as of
the date hereof and 3,500,000 shares of Non-Voting Common Stock, of
which there are 2,891,136 shares of Non-Voting Common Stock issued and
outstanding as of the date hereof, all as set forth on SCHEDULE 4.3(A).
All of the issued and outstanding Common Shares have been duly
authorized and are validly issued, fully paid and non-assessable. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Company to issue, sell
or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights with respect to the
Company.
19
(b) The Company does not have any subsidiaries, other
than the Prairie Subsidiaries. Except as set forth in SCHEDULE 4.3(B),
all of the outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Prairie
Subsidiaries are owned of record and beneficially, directly or
indirectly, by the Company. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could
require any Prairie Subsidiary to issue, sell or otherwise cause to
become outstanding any of its capital stock (or equivalent equity
interests of entities other than corporations). There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to any Prairie Subsidiary.
4.4 NONCONTRAVENTION. Assuming that all consents, approvals,
authorizations and permits described in SCHEDULE 4.4 have been obtained and all
filings and notifications described in this SECTION 4.4 have been made, neither
the execution and delivery of this Agreement, nor the consummation of the Merger
or the other transactions contemplated hereby, will (i) violate any Laws to
which any of the Acquired Companies is subject, or any provision of the
Organizational Documents of any of the Acquired Companies, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel or require any notice under any material agreement, contract, lease,
license, instrument or other arrangement to which any of the Acquired Companies
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Lien upon any of its assets), and except for the
filing of the Certificate of Merger under the DGCL, the pre-merger notification
requirements of the HSR Act, none of the Acquired Companies needs to give any
notice to, make any filing with or obtain any authorization, consent or approval
of any Governmental Authority in order for the Company to consummate the
transactions contemplated by this Agreement.
4.5 BROKERS' FEES. Other than to Xxxxxxx, Xxxxx & Co.,
none of the Acquired Companies has any liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
4.6 FINANCIAL STATEMENTS. The Company has made available to
Parent the following financial statements (collectively, the "FINANCIAL
STATEMENTS"): (i) audited consolidated balance sheets and statements of income,
stockholders' equity and cash flows as of and for the fiscal years ended
December 31, 2006 and December 31, 2005 for the Company (the "AUDITED FINANCIAL
STATEMENTS"); and (ii) unaudited consolidated balance sheets and statements of
income and cash flows (the "MOST RECENT FINANCIAL STATEMENTS") as of and for the
two months ended February 28, 2007 for the Company. The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and present fairly
in all material respects the financial condition of the Company as of such dates
and the results of operations of the Company for such periods; PROVIDED,
HOWEVER, that the Most Recent Financial Statements are subject to the year-end
adjustments described in SCHEDULE 4.6 and lack footnotes and other presentation
items.
20
4.7 INTERNAL CONTROLS; UNDISCLOSED LIABILITIES.
(a) To the Company's Knowledge, the Acquired
Companies maintain a system of internal controls that (i) provide
reasonable assurance that commitments are made or transactions are
executed only in accordance with management's general or specific
authorizations, (ii) provide reasonable assurance that access to assets
is permitted only in accordance with management's general or specific
authorizations, and (iii) include timely and sufficient account
reconciliations as well as physical inventories or an adequate
cycle-count programs of inventories, with the recording of any
differences appropriately to the general ledger. Parent acknowledges
and agrees that none of the Acquired Companies is currently, or has at
any time in the past, been subject to the internal controls reporting
procedures set forth in The Xxxxxxxx-Xxxxx Act of 2002 and that the
representations contained in this SECTION 4.7(A) shall not be deemed
breached, nor shall the Company Stockholders be subject to any claim
for indemnification for any costs incurred by the Parent or the
Acquired Companies following the Closing in connection with obligations
with respect to reporting internal controls procedures under applicable
provisions of The Xxxxxxxx-Xxxxx Act of 2002.
(b) Other than as set forth on the face of the
balance sheet included in the Most Recent Financial Statements, the
Acquired Companies do not have any liabilities required under GAAP to
be set forth on the face of the balance sheet included in the Most
Recent Financial Statements, or to the Company's Knowledge any other
liabilities, except for (i) liabilities which have arisen after the
date of the Most Recent Financial Statements in the Ordinary Course of
Business, (ii) liabilities that will be fully reflected or reserved for
in the calculation of Closing Working Capital, or (iii) liabilities
otherwise specifically disclosed in this Agreement, including the
Schedules hereto.
4.8 EVENTS SUBSEQUENT TO MOST RECENT FINANCIAL STATEMENTS.
Since the date of the Most Recent Financial Statements except as set forth on
SCHEDULE 4.8 and except as required by this Agreement, there has not been any:
(a) incident of damage, destruction or loss of any
property owned by the Acquired Companies or used in the operation of
the Business, whether or not covered by insurance, having a replacement
cost or fair market value in excess of $100,000;
(b) voluntary or involuntary sale, transfer,
surrender, abandonment, waiver, release or other disposition of any
kind by any of the Acquired Companies of any right, power, claim, debt,
asset or property (having a replacement cost or fair market value in
excess of $100,000 in the aggregate), except the sale of inventory and
collection of accounts in the Ordinary Course of Business;
(c) loan or advance by any of the Acquired Companies
to any Person, other than advances to employees for business expenses
to be incurred in the Ordinary Course of Business or sales to customers
on credit in the Ordinary Course of Business;
(d) declaration, setting aside, or payment of any
dividend or other distribution in respect of any of the Acquired
Companies' equity interests or any direct or indirect redemption,
purchase, or other acquisition of such stock, or the payment of
principal or interest on any note, bond, debt instrument or debt to any
Affiliate of the Acquired Companies;
21
(e) issuance by the Acquired Companies of any notes,
bonds, or other debt securities or any equity securities or securities
convertible into or exchangeable for any equity securities;
(f) cancellation, waiver or release by the Acquired
Companies of any debts, rights or claims, except in the Ordinary Course
of Business;
(g) change in accounting or tax principles, methods
or practices (including, without limitation, any change in depreciation
or amortization policies or rates) utilized by the Acquired Companies;
(h) capital expenditures or commitments therefor by
the Acquired Companies in excess of $100,000;
(i) adoption, amendment or termination of any
Employee Benefit Plan or increase in the benefits provided under any
Employee Benefit Plan, or payment of any bonus or profit sharing
payments in each case except in the Ordinary Course of Business or as
required to comply with applicable Law; or
(j) except for salary increases in the Ordinary
Course of Business and for the hiring of employees in the Ordinary
Course of Business, (i) increase in any manner the base compensation
of, or enter into any new bonus or incentive agreement or arrangement
with, any of its employees, or (ii) new employment, severance,
consulting, or other compensation agreement with any of its employees
or any other Person.
4.9 LEGAL COMPLIANCE. Each of the Acquired Companies is in
compliance with all applicable Laws and, to the Company's Knowledge, each of the
Acquired Companies has been in compliance with all applicable Laws in all
material respects at all times since January 1, 2004.
4.10 TAX MATTERS. Except as set forth on SCHEDULE 4.10:
(a) Each Acquired Company has timely filed all Tax
Returns for all years and periods and for all jurisdictions (whether
federal, state, local or foreign) in which any such Tax Returns were
due and all such Tax Returns were complete and correct in all material
respects.
(b) All Taxes shown on such Tax Returns as due and
payable by any Acquired Company have been paid.
(c) No Acquired Company has executed or filed with
any Governmental Authority (whether federal, state, local or foreign)
any agreement or other document extending or having the effect of
extending the period for assessment, reassessment or collection of any
Taxes, and no power of attorney granted by any Acquired Company with
respect to any Taxes is currently in force.
22
(d) No federal, state, local or foreign Tax audits or
other administrative proceeding, discussions or court proceedings are
presently pending or, to Company's Knowledge, threatened with regard to
any material Tax Return of any Acquired Company.
(e) The Company is not (and has never been) a "United
States real property holding corporation" within the meaning of Code
Section 897(c).
(f) The Company has duly elected to be treated as an
S Corporation pursuant to Code Section 1362(a) and the laws of each
state in which it does business that allows for S Corporation
treatment. This election is currently effective, and no event has
occurred that would terminate the Company's S Corporation status (other
than the transactions contemplated by this Agreement). No Governmental
Authority has challenged the effectiveness of this election. The
Company has no potential liability for Taxes under Code Section 1374
(or any similar provision of foreign, state, or local law).
(g) This SECTION 4.10 contains the sole and exclusive
representations and warranties with respect to any Tax matters relating
to the Acquired Companies, including any arising under the Code.
4.11 REAL PROPERTY.
(a) The Company does not own any real property.
(b) SCHEDULE 4.11(B) sets forth the addresses of all
Leased Real Property and a list of all Leases. The Company has made
available to Parent a copy of each such Lease. Except as set forth in
SCHEDULE 4.11(B), with respect to each Lease:
(i) such Lease is the valid and binding
obligation of the Company, enforceable in accordance with its
terms subject to bankruptcy, reorganization, receivership and
other Laws affecting creditors' rights generally; and
(ii) neither the Company party thereto nor,
to the Company's Knowledge, any other party to such Lease is
in default under such Lease.
4.12 PERSONAL PROPERTY. Except as set forth on SCHEDULE 4.12
or disposed of since the date of the Most Recent Balance Sheet in the Ordinary
Course of Business, the Acquired Companies have good and marketable title to, or
a valid leasehold interest in, all material items of tangible personal property
reflected on the Most Recent Balance Sheet as owned or leased by such Acquired
Company, free and clear of any Liens other than Permitted Liens.
4.13 INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.13 sets forth a list of all trademark
registrations, trademark applications, issued patents and patent
applications owned by the any Acquired Company that is material to the
operation of the Business. SCHEDULE 4.13 additionally sets forth a list
of all license agreements (other than any implied licenses) to which
any of the Acquired Companies is a party that are material to the
operation of the Business (other than "off the shelf" licenses pursuant
to which such Intellectual Property is made available through regular
commercial distribution channels on standard terms and conditions). As
of the Closing Date, the Acquired Companies own, or validly license or
otherwise possess valid rights to use, each item of Intellectual
Property that is material to the operation of the Business as conducted
on the date hereof, including each item of Intellectual Property that
is listed in SCHEDULE 4.13.
23
(b) None of the Acquired Companies has infringed or
misappropriated, or is now infringing or misappropriating, the
intellectual property rights of any third party; (ii) there is no claim
pending or, to the Company's Knowledge, threatened, against any of the
Acquired Companies with respect to the alleged infringement or
misappropriation by any of the Acquired Companies of any intellectual
property rights of any third party; and (iii) to the Company's
Knowledge, no third party is infringing or misappropriating the
Intellectual Property and no claim against a third party with respect
to the alleged infringement or misappropriation of the Intellectual
Property is currently pending or threatened. To the Company's
Knowledge, the Acquired Companies have taken commercially reasonable
steps to protect each item of Intellectual Property that is material to
the operation of the Business from infringement or misappropriation.
4.14 CONTRACTS. Except as listed or described on SCHEDULE
4.14, as of the date hereof, none of the Acquired Companies is a party to or
bound by any written or oral leases, agreements or other contracts ("CONTRACTS")
that are of a type described below (such Contracts that are required to be
listed on SCHEDULE 4.14 are referred herein to as the "MATERIAL CONTRACTS"):
(a) any written or material consulting agreement or
employment agreement, and any collective bargaining arrangement with
any labor union and any such agreements currently in negotiation or
proposed;
(b) any Contract for capital expenditures or the
acquisition or construction of fixed assets in excess of $100,000;
(c) any Contract for the purchase, maintenance or
acquisition, or the sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or other property or services
requiring remaining aggregate future payments in excess of $100,000,
other than for the purchase or sale of inventory in the Ordinary Course
of Business;
(d) any Contract relating to the borrowing of money,
or the guaranty of another Person's borrowing of money or other
obligation, including, without limitation, all notes, mortgages,
indentures and other obligations, guarantees of performance, agreements
and instruments for or relating to any lending or borrowing;
24
(e) any Contract granting any Person a Lien on all or
any part of the material assets of any of the Acquired Companies, other
than Permitted Liens or Liens which will be released at the Closing;
(f) any Contract under which any of the Acquired
Companies is (i) a lessee or sublessee of any machinery, equipment,
vehicle or other tangible personal property, or (ii) a lessor of any
tangible personal property owned by any of the Acquired Companies, in
any single lease under (i) or (ii) having an original value in excess
of $100,000;
(g) any Contract under which any of the Acquired
Companies has granted or received a license or sublicense or under
which it is obligated to pay or has the right to receive a royalty,
license fee or similar payment in an amount in excess of $100,000;
(h) any Contract which include a non-competition
provision, a non-hire or non-solicitation provision, or any other
provision that restricts in any material manner the Acquired Companies'
conduct of business, other than confidentiality agreements entered into
in the Ordinary Course of Business;
(i) any Contract with any stockholder of the Company
or Affiliate of the Acquired Companies; or
(j) any joint venture or partnership Contract.
The Company has provided Parent a true and complete copy of
each written Material Contract. Except as set forth on SCHEDULE 4.14, each
Material Contract is a valid and binding obligation of the applicable Acquired
Company party thereto, enforceable in accordance with its terms, subject to
bankruptcy, reorganization, receivership and other Laws affecting creditors'
rights generally. Except as set forth on SCHEDULE 4.14, neither the applicable
Acquired Company party to such Material Contract nor, to the Company's
Knowledge, any other party to such Material Contract is in material breach or
default under such Material Contract.
On or prior to the Closing, the agreements identified on
SCHEDULE 4.14(I) as terminable at Closing shall be terminated as between the
Acquired Companies and the Affiliates party thereto.
4.15 LITIGATION. Except as set forth on SCHEDULE 4.15, there
are no suits, actions or proceedings pending or, to the Company's Knowledge,
threatened, against any of the Acquired Companies, including any such suits,
actions or proceedings that would adversely affect the Company's performance
under this Agreement or the consummation of the transactions contemplated by
this Agreement, nor are any of the Acquired Companies subject to any judgment,
order or decree of any Governmental Authority.
25
4.16 EMPLOYEE BENEFITS.
(a) SCHEDULE 4.16(A) lists each Employee Benefit Plan
that any of the Acquired Companies maintain or to which any of the
Acquired Companies contribute on behalf of any employee or former
employee of any of the Acquired Companies.
(i) Each Employee Benefit Plan (and each
related trust, insurance contract or fund) has been
maintained, funded and administered in accordance with the
terms of such Employee Benefit Plan and complies in form and
in operation in all material respects with the applicable
requirements of ERISA and the Code.
(ii) All contributions (including all
employer contributions and employee salary reduction
contributions) that are due have been made to each Employee
Benefit Plan that is an Employee Pension Benefit Plan. All
premiums or other payments that are due have been paid with
respect to each Employee Benefit Plan that is an Employee
Welfare Benefit Plan.
(iii) Each Employee Benefit Plan that is
intended to meet the requirements of Code Section 401(a) has
received a favorable determination letter from the Internal
Revenue Service to the effect that such Employee Benefit Plan
meets the requirements of Code Section 401(a).
(b) None of the Acquired Companies maintains,
sponsors or contributes to any Employee Pension Benefit Plan that is
subject to Title IV of ERISA or Code Section 412.
(c) No Employee Benefit Plan is a Multiemployer Plan.
None of the Acquired Companies nor any of their respective ERISA
Affiliates has (i) at any time during the last three (3) years,
contributed to or been obligated to contribute to any Multiemployer
Plan or (ii) incurred any withdrawal liability to a Multiemployer Plan
that has not been satisfied in full.
4.17 ENVIRONMENTAL MATTERS.
Except as set forth in SCHEDULE 4.17,
(a) Each of the Acquired Companies and the Acquired
Companies' operation of the Business, including the use, treatment or
storage of Hazardous Material by the Acquired Companies, are in
compliance with Environmental Requirements and Environmental Permits.
(b) Since January 1, 2004, none of the Acquired
Companies has received any written notice regarding any actual or
alleged violation of Environmental Requirements or any liabilities or
potential liabilities relating to any of the Acquired Companies arising
under Environmental Requirements or related to Hazardous Materials. The
Acquired Companies are not subject to any pending complaints, suits,
administrative proceedings, judgments, orders or decrees arising under
Environmental Requirements or related to Hazardous Materials
(collectively, the "ENVIRONMENTAL CLAIMS"), nor to the Company's
Knowledge, is an Environmental Claim threatened.
26
(c) SCHEDULE 4.17(C) sets forth a list of all
material Licenses held by the Acquired Companies as required under
Environmental Requirements to operate the Business during the 12 month
period immediately prior to the date hereof (collectively, the
"ENVIRONMENTAL PERMITS") and all such Environmental Permits are valid
and in good standing.
(d) The Company has delivered to Parent and Merger
Sub copies of environmental reports and documents related to
Environmental Claims in the Company's possession or control.
(e) SECTION 4.17 contains the sole and exclusive
representations and warranties of the Company with respect to any
environmental matters, including, without limitation, any arising under
any Environmental Requirements.
4.18 INDEBTEDNESS. As of the Closing Date, the Acquired
Companies will not have any Indebtedness, other than the 1995 Bonds Amount, the
Senior Bank Debt, the Senior Notes and the capital lease obligations of the
Acquired Companies.
4.19 BANK ACCOUNTS; DIRECTORS AND OFFICERS. SCHEDULE 4.19
includes a list of each bank in which any of the Acquired Companies has an
account or safe deposit box and the number of each such account or box. SCHEDULE
4.19 also sets forth a list of the officers and directors of each Acquired
Company. No Acquired Company has granted a power of attorney to any Person that
is currently in effect.
4.20 LICENSES AND PERMITS. SCHEDULE 4.20 sets forth a list of
all material notifications, licenses, permits, franchises, certificates,
approvals, exemptions, classifications, registrations and other similar
documents and authorizations (collectively, the "LICENSES") held by the Acquired
Companies and issued by, or submitted by any of the Acquired Companies to, any
Governmental Authority or other Person, which constitute all material Licenses
used by the Acquired Companies in the conduct of the Business during the 12
month period immediately prior to the date hereof. Each Acquired Company holds
the material Licenses which are required for such Acquired Company to operate
the Business as presently conducted by it.
4.21 LABOR MATTERS. Except as set forth on SCHEDULE 4.21,
there is no, and within the last three (3) years, none of the Acquired Companies
has experienced any, material strike, picketing, boycott, work stoppage or
slowdown or other labor dispute, allegation, charge or complaint of unfair labor
practice, employment discrimination or, to the Company's Knowledge, union
organizational activity; nor, to the Company's Knowledge, is any such action
threatened against any of the Acquired Companies.
4.22 INSURANCE POLICIES. The Company has made available to
Parent correct and complete copies of all insurance policies, including without
limitation, general liability policies, product liability, comprehensive general
liability and umbrella insurance policies, property and casualty insurance
policies, and directors' and officers' insurance policies, maintained as of the
date hereof by the Acquired Companies (the "INSURANCE POLICIES"), together with
descriptions of "self-insurance" programs, as set forth on SCHEDULE 4.22. All
premiums due with respect to such policies have been paid, and such policies are
in full force an effect.
27
4.23 CUSTOMERS AND SUPPLIERS. SCHEDULE 4.23 sets forth a list
of the Acquired Companies' top ten (10) customers and suppliers as of December
31, 2006 (determined by the amount of total sales or purchases, as applicable).
Except as set forth on SCHEDULE 4.23, to the Company's Knowledge, there are no
material unresolved disputes with any such customer or supplier, and to the
Company's Knowledge, no such customer or supplier has indicated in writing to
the Company that it intends to materially reduce the level of its purchases from
or sales to the Acquired Companies, or materially change in a way adverse to the
Acquired Companies the terms of business it conducts with the Acquired
Companies, other than pricing changes in accordance with contractual terms or in
the Ordinary Course of Business. The e-mails and other correspondence listed on
SCHEDULE 4.23 ("CUSTOMER CORRESPONDENCE") have been supplied by the Company to
the Parent and constitute true and complete copies of such Customer
Correspondence. To the Knowledge of the Company, the Company has no information
as of the Effective Time to indicate that statements made in the Customer
Correspondence were not or are no longer correct or were or are misleading in
light of later correspondence. Nothing in the representations made in this
SECTION 4.23 shall be deemed to be a representation or guaranty of future sales
to any customer.
4.24 TITLE AND SUFFICIENCY OF ASSETS. Other than assets
disposed of since the date of the Most Recent Balance Sheet, the Acquired
Companies have good and marketable title to all assets reflected on the Most
Recent Balance Sheet, subject to no Liens other than Permitted Liens, and other
than assets used pursuant to valid Leases or licenses of Intellectual Property,
such assets constitute all of the assets used in Business. The tangible assets
of the Acquired Companies are in a condition to allow in all material respects
the continued conduct of the Business after Closing as is currently conducted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
5.1 ORGANIZATION OF PARENT AND MERGER SUB. Each of Parent and
Merger Sub is a corporation, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation.
5.2 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. Merger Sub
is a direct, wholly-owned subsidiary of Parent, was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement and has
engaged in no business activity other than as contemplated by this Agreement.
Except for obligations or liabilities incurred in connection with the
transactions contemplated by this Agreement, Merger Sub has not and will not
have incurred, directly or indirectly, through any subsidiary or Affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
5.3 AUTHORIZATION; ENFORCEABILITY. Each of Parent and Merger
Sub has requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent and Merger Sub and no stockholder votes are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated hereby, other than the filing and recordation of the
Certificate of Merger. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by the
other Parties hereto, constitutes the valid and legally binding obligation of
Parent and Merger Sub, enforceable in accordance with its terms and conditions,
subject to Laws of general application relating to public policy, bankruptcy,
insolvency and the relief of debtors and rules of Law governing specific
performance, injunctive relief and other equitable remedies.
28
5.4 NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any Laws to which Parent or Merger Sub is subject or any
provision of its Organizational Documents, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel or require any
notice under any agreement, contract, lease, license, instrument or other
arrangement to which Parent or Merger Sub is a party or by which it is bound or
to which any of its assets is subject. Except for the filing of the Certificate
of Merger under the DGCL, the pre-merger notification requirements of the HSR
Act and foreign antitrust and competition law filings listed on SCHEDULE 4.4,
neither Parent nor Merger Sub needs to give any notice to, make any filing with
or obtain any authorization, consent or approval of any Governmental Authority
in order for the parties to consummate the transactions contemplated by this
Agreement.
5.5 BROKERS' FEES. Other than as will be paid by Parent,
neither Parent nor Merger Sub has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
5.6 LITIGATION. There are no actions, suits, claims or legal,
administrative or arbitratorial proceedings pending against, or threatened
against, Parent or Merger Sub that would adversely affect Parent's or Merger
Sub's performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
5.7 FINANCING. Parent will have, on the Closing Date,
sufficient immediately available funds, in cash, to fund the Merger
Consideration, the Senior Bank Debt Payoff Amount, the Senior Notes Amount and
the Company Stockholder Transaction Expenses to be paid at the Closing without
any third party consent or approval.
5.8 INVESTMENT REPRESENTATION. Parent is acquiring the Common
Shares for its own account with the present intention of holding such securities
for investment purposes and not with a view to or for sale in connection with
any public distribution of such securities in violation of any federal or state
securities Laws. Parent is an "accredited investor" as defined in Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act.
Parent acknowledges that it is informed as to the risks of the transactions
contemplated hereby and of ownership of the Common Shares. Parent acknowledges
that the Common Shares have not been registered under the Securities Act or the
Exchange Act or any state or foreign securities Laws and that the Common Shares
may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of unless such sale, transfer, offer, pledge, hypothecation
or other disposition is pursuant to the terms of an effective registration
statement under the Securities Act and are registered under any applicable state
or foreign securities Laws or pursuant to an exemption from registration under
the Securities Act or the Exchange Act and any applicable state or foreign
securities Laws.
29
5.9 NO KNOWLEDGE OF BREACHES. Parent represent and warrants
that Parent does not have any Knowledge that any of the representations or
warranties in this Agreement are not, as of the date hereof, true in all
material respects. This representation shall not be deemed remade as of the
Closing pursuant to SECTION 8.3(A), so that the certification made by Parent and
Merger Sub pursuant to such section shall be a recertification only that this
representation was true as of the date hereof. For purposes of this SECTION 5.9,
Knowledge of the Parent shall be deemed to be Knowledge of Xxxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxx Xxxxxxxxx and Xxxxx Xxxxx.
ARTICLE VI
PRE-CLOSING COVENANTS OF THE COMPANY
6.1 CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, set forth on SCHEDULE 6.1 or as otherwise consented to in writing by
Parent (which such consent may not be unreasonably withheld, conditioned or
delayed), from the date hereof through the Closing, the Company, covenants and
agrees that:
(a) Except for recruitment of new employees, salary
increases or the introduction of new or modifications to employee
benefit arrangements consistent with the Ordinary Course of Business,
the Company shall not permit any Acquired Company to (i) increase in
any manner the base compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of its employees, (ii)
enter into any new employment, severance, consulting, or other
compensation agreement with any of its existing employees or any other
Person, (iii) amend or enter into a new Employee Benefit Plan (except
as required by Law), or (iv) make or agree to make any bonus or profit
sharing payments to any employee or any other Person.
(b) Subject to the terms and conditions of this
Agreement, the Company shall cause each of the Acquired Companies to
use Best Efforts to keep available the services of its present
employees and preserve the goodwill, reputation and present
relationships of the Business with suppliers, customers, licensors and
others having business relations with any of the Acquired Companies,
and will not enter any Contracts that would be a Material Contract
other than in the Ordinary Course of Business.
(c) The Company shall cause each of the Acquired
Companies to use Best Efforts to conduct the Business in all material
respects according to its Ordinary Course of Business in substantially
the same manner as heretofore conducted.
30
(d) The Company shall not, and shall not permit any
Acquired Company to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of capital stock of any
class or other equity interests of, or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire,
any such shares, equity interests, or convertible securities.
(e) The Company shall not, and shall not permit any
Acquired Company to, amend its Organizational Documents.
(f) The Company shall not, and shall not permit any
Acquired Company to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise
dispose of, any of its assets other than in the Ordinary Course of
Business.
(g) The Company will use reasonable efforts to
continue the capital expenditure projects identified on SCHEDULE 6.1(G)
in the Ordinary Course of Business and with respect to which the
Company currently anticipates spending approximately $5,000,000 in each
of April, 2007 and May 2007.
Notwithstanding the foregoing, the Company's
covenants and agreements set forth in paragraphs (b) and (c) of this
SECTION 6.1 shall not be breached or deemed violated in the event that
any supplier, customer, licensor and other Person having a business
relationship with any of the Acquired Companies terminates or
discontinues its business relationship with an Acquired Company (or
otherwise conditions the continuation of its business relationship with
an Acquired Company, including receipt of any payment or pricing or
other contractual concessions) as a result of the announcement or
performance of this Agreement or the transactions contemplated by this
Agreement.
6.2 FILINGS; CONSENTS; ETC. The Company shall use Best Efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable in compliance with applicable Laws to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the Company shall give all notices, make all required filings with or
applications to Governmental Authorities, and use Best Efforts to obtain all
Consents of all third parties, including Governmental Authorities and all
Consents listed on SCHEDULE 4.4, necessary for the parties to consummate the
transactions contemplated hereby. The Company shall reasonably cooperate with
Parent in connection with any financing sought by Parent related to the Merger,
including providing reasonable access to the books and records, officers,
agents, and other representatives of the Company, providing customary
certifications to placement agents or auditors, and authorizing and requesting
the Company's accountants to provide any customary "comfort" letters or to
otherwise cooperate in connection with such financing. In addition, the Company
agrees to use Best Efforts to (a) oppose, lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby, and (b) cause the conditions
set forth in SECTION 8.1 and SECTION 8.2 to be satisfied and to consummate the
transactions contemplated hereby. In addition to and without limitation of the
31
foregoing, the Company undertakes and agrees to file as soon as practicable, and
in any event not later than the tenth Business Day after the date hereof, a
Notification and Report Form under the HSR Act with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice, and shall pay 50% of the filing fee in connection therewith.
Furthermore, notwithstanding any provisions of this Agreement to the contrary,
the Company shall cooperate with Parent in connection with any actions by Parent
to avoid or eliminate any impediment under any antitrust, competition, or trade
regulation law that may be asserted by any Governmental Authority with respect
to the Agreement so as to make effective as promptly as practicable the
transactions and to avoid any suit or proceeding that would otherwise have the
effect of preventing or delaying the Closing beyond the Termination Date. The
Company shall (i) promptly notify Parent of any written communication to the
Company or its Affiliates from any Governmental Authority and, subject to
applicable Law, permit Parent to review in advance any proposed written
communication to any of the foregoing (and consider in good faith the views of
the other party in connection therewith); (ii) not agree to participate, or to
permit its Affiliates to participate, in any substantive meeting or discussion
with any Governmental Authority in respect of any filings, investigation or
inquiry concerning this Agreement unless it consults with Parent in advance and,
to the extent permitted by such Governmental Authority, gives Parent the
opportunity to attend and participate thereat; and (iii) furnish Parent with
copies of all correspondence, filings, and communications (and memoranda setting
forth the substance thereof) between it and its Affiliates and its respective
representatives on the one hand, and any Governmental Authority or members of
their respective staffs on the other hand, with respect to this Agreement.
6.3 EXCLUSIVITY. During the period from the date of this
Agreement through the Closing or the earlier termination of this Agreement
pursuant to ARTICLE XII hereof, the Company shall not take, and shall cause the
Prairie Subsidiaries not to take, or permit any other Person on its behalf to
take any action to encourage, initiate or engage in discussions or negotiations
with, or provide any information to, any Person (other than Parent and Parent's
representatives) concerning any merger or recapitalization involving the
Acquired Companies, sale of Common Shares or other securities of the Acquired
Companies, , any sale of all or substantially all of the assets of the Acquired
Companies or similar transaction involving the Acquired Companies (other than
assets sold in the Ordinary Course of Business). The Company shall, and shall
cause the Acquired Companies and their officers, directors, agents and
representatives to, terminate any and all negotiations or discussions with any
third party regarding any proposal concerning any merger or recapitalization
involving the Acquired Companies, sale of Common Shares, any sale of all or
substantially all the assets of the Acquired Companies or other similar
transaction, and will promptly notify Parent (including the name of the party
making the inquiry and the general terms of such inquiry) of any inquiry or
contact made by any third person with respect to any such transaction.
6.4 PUBLICITY. The Company shall not, and shall not permit any
of its representatives to, issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written consent of Parent (which consent shall not be unreasonably withheld);
PROVIDED, HOWEVER, that the foregoing shall not restrict or prohibit the Company
from making any announcement to its employees, customers and suppliers to the
extent the Company reasonably determines in good faith that such announcement is
necessary or advisable.
32
6.5 ACCESS. The Company will permit Parent and its
representatives (including legal counsel and accountants) to have, upon prior
notice, reasonable access during normal business hours and under reasonable
circumstances, and in a manner so as not to interfere with the normal business
operations of the Acquired Companies, to the premises, management, books,
records (including tax records), contracts and documents of or pertaining to the
Acquired Companies. Neither Parent nor any of its representatives shall contact
any employee, customer, supplier or landlord of any of the Acquired Companies
without the prior consent of a Representative, not to be unreasonably withheld,
conditioned or delayed. Parent shall comply with, and shall cause its
representatives to comply with, all of their obligations under the
Confidentiality Agreement with respect to the information disclosed pursuant to
this SECTION 6.6, which agreement will remain in full force and effect.
6.6 FINANCIAL STATEMENTS. Within 25 days after the end of each
month, the Company shall provide to Parent copies of financial statements for
the Acquired Companies as of the previous month-end, consisting of an income
statement, balance sheet and cash flow statement and the monthly management
package, in the form prepared by the Company in the Ordinary Course of Business.
6.7 ENVIRONMENTAL MATTERS. The Company shall (i) prior to
Closing, complete installation of the emissions capture and control equipment at
the Company's facility located at its 000 Xxxxxxxxx Xxxxx in Bolingbrook,
Illinois (the "BOLINGBROOK FACILITY") required to meet the capture and control
requirements of the Environmental Permits for the Bolingbrook Facility, and
complete its engineering evaluation of such equipment such that it believes that
the equipment is sufficient to meet the capture and control requirements of the
Environmental Permits for the Bolingbrook Facility, and (ii) after such
equipment is installed and such evaluation is complete, complete all required
compliance testing for the Bolingbrook Facility with the Illinois Environmental
Protection Agency and take any necessary corrective measures to comply with all
Environmental Requirements related to such capture and control requirements. All
evaluation and test results shall be provided to Parent. In addition, prior to
the Closing, the Company shall timely file the 2006 Emission Report for the
Bolingbrook Facility with the Illinois Environmental Protection Agency.
6.8 LEASE OBLIGATIONS; UCC FILINGS. Prior to the Closing, the
Company shall use its Best Efforts to (i) pay the deferred and unpaid balance of
the purchase price obligations arising under those certain capital leases listed
on SCHEDULE 1.1(b) and the Implied Purchase Price of the operating leases listed
on SCHEDULE 1.1(B) and (ii) otherwise obtain title to the property and equipment
subject to such leases in the Company's name. The Company shall use its Best
Efforts to have all Uniform Commercial Code filings naming any Acquired Company
as debtor released prior to the Closing, other than those filings related to or
evidencing Permitted Liens.
6.9 DEFERRED COMPENSATION PLAN. Prior to the Closing, the
Company and the Board of Directors of the Company shall take such action as is
necessary to amend the Prairie Packaging, Inc. Deferred Compensation Plan
effective December 1, 1998 (as amended or revised, the "DEFERRED COMPENSATION
PLAN"), such that immediately prior to the Effective Time all participants in
the Deferred Compensation Plan shall become fully vested in their respective
accounts. Further, the Company and the Board of Directors of the Company shall
take such action as is necessary to terminate the Deferred Compensation Plan,
effective immediately prior to the Effective Time, and in connection with such
termination provide that the account balances shall be paid in full to the
individual participants. Any amounts paid to participants in the Deferred
Compensation Plan shall be considered Company Stockholder Expenses hereunder.
33
ARTICLE VII
COVENANTS OF PARENT
7.1 FILINGS; CONSENTS; ETC. Parent shall use Best Efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable in compliance with applicable Laws to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby. Without limiting the generality of the
foregoing, Parent shall give all notices, make all required filings with or
applications to governmental bodies and other regulatory authorities, and use
Best Efforts to obtain all Consents of all third parties, including Governmental
Authorities, necessary for the parties to consummate the transactions
contemplated herein. In addition, Parent agrees to use Best Efforts to cooperate
with the Company in connection with the foregoing, including using Best Efforts
to (a) oppose, lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and (b) to cause the conditions set forth in
SECTION 8.1 and SECTION 8.3 to be satisfied and to consummate the transactions
contemplated herein. In addition to and without limitation of the foregoing,
Parent undertakes and agrees to file as soon as practicable, and in any event
not later than the tenth Business Day after the date hereof, a Notification and
Report Form under the HSR Act with the United States Federal Trade Commission
and the Antitrust Division of the United States Department of Justice, and shall
pay 50% of the filing fee in connection therewith. Parent shall (i) respond as
promptly as practicable to any inquiries or requests received from any
Governmental Authority for additional information or documentation, and (ii) not
extend any waiting period under the HSR Act or enter into any agreement with any
Governmental Authority not to consummate the Merger, except with the prior
consent of the Representatives hereto (which shall not be unreasonably withheld
or delayed). Parent shall (i) promptly notify the Representatives of any written
communication to Parent or its Affiliates from any Governmental Authority and,
subject to applicable Law, permit the Representatives to review in advance any
proposed written communication to any of the foregoing (and consider in good
faith the views of the other party in connection therewith); (ii) not agree to
participate, or to permit its Affiliates to participate, in any substantive
meeting or discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement unless it consults with the
Representatives in advance and, to the extent permitted by such Governmental
Authority, gives the Representatives the opportunity to attend and participate
thereat; and (iii) furnish the Representatives with copies of all
correspondence, filings, and communications (and memoranda setting forth the
substance thereof) between it and its Affiliates and its respective
representatives on the one hand, and any Governmental Authority or members of
their respective staffs on the other hand, with respect to this Agreement.
7.2 PUBLICITY. Parent shall not, and shall not permit any of
its representatives to, issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
consent of the Company; PROVIDED, HOWEVER, that the foregoing shall not restrict
or prohibit Parent from issuing any press release or making any pubic
announcement that it reasonably determines it is required to issue or make in
order to comply with any applicable Law, including applicable securities Laws;
PROVIDED that Parent shall provide the Company with an opportunity to review and
comment upon, and shall consider in good faith the Company's comments with
respect to, any such press releases prior to their issuance or release; and
PROVIDED, FURTHER, that Parent shall not, without the consent of the
Representatives disclose the identity of the Company Stockholders in connection
with any such press release or public announcement.
34
7.3 IRB LETTER OF CREDIT. Parent shall take such actions as is
necessary to cause the LaSalle Bank National Association, as the issuing bank of
the IRB Letter of Credit, to permit such IRB Letter of Credit to remain issued
and outstanding in support of the 1995 Bonds notwithstanding the Company's
payment of the Senior Bank Debt Amount and termination of the facilities and
agreements relating to the Senior Bank Debt.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE CLOSING
8.1 CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS. The
respective obligations of each Party to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
of the following conditions, any one or more of which may be waived in writing
at the option of the affected Party:
(a) NO LEGAL PROHIBITION. No statute, rule,
regulation, ruling, consent, decree, judgment, injunction or order
shall be enacted, promulgated, entered or enforced by any court or
Governmental Authority which would prohibit the consummation by such
Party of the transactions contemplated hereby.
(b) NO INJUNCTION. Such Party shall not be prohibited
by any order, ruling, consent, decree, judgment or injunction of a
court or regulatory agency of competent jurisdiction from consummating
the transactions contemplated hereby.
(c) HSR ACT. The applicable waiting period, together
with any extensions thereof, under the HSR Act shall have expired or
been terminated.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub under this Agreement to consummate
the transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all of the following conditions, any one or more of
which may be waived in writing at the option of Parent:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF COVENANTS. Except as expressly contemplated by this
Agreement, the representations and warranties of the Company contained
in this Agreement (without giving effect to any "materiality" or
Material Adverse Effect qualification or exception contained therein)
shall be true and correct as of the Closing with the same force and
effect as though made on and as of the Closing (other than those
representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time,
which need only be accurate as of such date or with respect to such
period), except where the failure of such representations and
warranties to be so true and correct does not have, and is not likely
to have, individually or in the aggregate, a Material Adverse Effect on
the Acquired Companies. The Company shall have performed and complied
with, in all material respects, all covenants and agreements required
by this Agreement to be performed or complied with by it on or prior to
the Closing. Parent shall receive at the Closing a certificate from the
Company, dated as of the Closing Date and executed by the Company,
certifying its fulfillment of the conditions set forth in this SECTION
8.2(A).
35
(b) NO MATERIAL ADVERSE CHANGE. No event or events
shall have occurred since the date of this Agreement which individually
or in the aggregate constitutes a Material Adverse Change.
(c) PAYOFF LETTER. The Company shall have received a
payoff letter reasonably satisfactory to Parent duly executed by the
agent under the Senior Bank Debt indicating that upon payment of the
Senior Bank Debt Payoff Amount specified in such payoff letter, all
outstanding obligations of the Acquired Companies arising under or
related to the Senior Bank Debt shall be repaid and extinguished in
full and that upon receipt of such amount such Person shall release its
Liens and other security interests in, and agree to deliver Uniform
Commercial Code Termination Statements and such other documents or
endorsements necessary to release of record its Liens and other
security interest in, the assets and properties of the Acquired
Companies.
(d) REDEMPTION AGREEMENTS. The Company shall have
received a redemption agreement reasonably satisfactory to Parent duly
executed by each holder of Senior Notes indicating that upon payment of
the Senior Notes Amount specified in such redemption agreement, all
outstanding obligations of the Acquired Companies to such holder
arising under or related to the Senior Notes shall be repaid and
extinguished in full and that upon receipt of such amount such Senior
Notes shall be redeemed in full.
(e) CONSENTS. The Company shall have received
evidence that all third party consents or approvals identified on
SCHEDULE 8.2(E) have been obtained by the Company.
(f) ESCROW AGREEMENT. The Escrow Agent and the
Representatives shall have executed and delivered the Escrow Agreement.
8.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all the following conditions, any one or more of which may be waived
in writing at the option of the Representatives:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF COVENANTS. Except as expressly contemplated by this
Agreement, the representations and warranties of Parent and Merger Sub
contained in this Agreement shall be true and correct in all material
respects as of the Closing with the same force and effect as though
made on and as of the Closing. Parent and Merger Sub shall have
performed and complied with, in all material respects, all covenants
and agreements required by this Agreement to be performed or complied
with by Parent and Merger Sub on or prior to the Closing. The
Representatives shall receive at the Closing a certificate dated as of
the Closing Date and validly executed on behalf of Parent and Merger
Sub by an executive officer of Parent and Merger Sub, certifying the
fulfillment of the conditions set forth in this SECTION 8.3(A).
36
(b) ESCROW AGREEMENT. The Escrow Agent and Parent
shall have executed and delivered the Escrow Agreement.
ARTICLE IX
CLOSING
9.1 DELIVERIES BY THE COMPANY. At the Closing, the Company
shall deliver or cause to be delivered to Parent:
(a) MINUTE BOOKS. All of the minute books, stock
ledgers and similar corporate records, and corporate seals of each of
the Acquired Companies;
(b) RESOLUTIONS. A copy of the resolutions of the
Board of Directors of the Company certified by its Secretary as having
been duly and validly adopted and as being in full force and effect,
authorizing execution and delivery of this Agreement and performance by
the Company of the transactions contemplated hereby, and a copy of the
minutes, consent, or other proceedings evidencing the Requisite
Stockholder Approval, certified by its Secretary as having been duly
and validly adopted and as being in full force and effect;
(c) CERTIFICATE. The certificate required by SECTION
8.2(A);
(d) RESIGNATIONS. Resignations effective as of the
Closing Date of those directors and officers of the Acquired Companies
as Parent may request to resign;
(e) GOOD STANDING CERTIFICATES. Certificates of good
standing (or foreign law equivalent), dated not more than ten (10) days
prior to the Closing Date, with respect to each of the Acquired
Companies issued by the Secretary of State (or foreign law equivalent),
of the respective jurisdiction of incorporation or formation and, in
the case of the Company, Illinois and North Carolina;
(f) CORPORATE DOCUMENTS. Copies of the Organizational
Documents of each of the Acquired Companies certified by the Secretary
of State (or foreign law equivalent), of the respective jurisdiction of
incorporation or formation;
(g) ESCROW AGREEMENT. The Escrow Agreement executed
by the Representatives;
(h) FIRPTA CERTIFICATE. A certificate duly completed
and executed pursuant to Sections 1.897-2(h) and 1.1445-2(c) of the
Treasury Regulation, certifying that the shares of the Company are not
United States real property interests within the meaning of Section
897(c) of the Code;
37
(i) Non-competition agreements from such
individuals and in such form attached hereto as EXHIBIT D; and
(j) OPINION. The opinion of Winston & Xxxxxx LLP,
counsel to the Acquired Companies, addressing the matters set forth on
SCHEDULE 9.1(I).
9.2 DELIVERIES BY PARENT AND MERGER SUB. Parent will deliver
or cause to be delivered to the Representatives:
(a) MERGER CONSIDERATION. Payment of the Merger
Consideration as provided in SECTION 3.1(C);
(b) CERTIFICATE. The certificate required by SECTION
8.3(A);
(c) BOARD RESOLUTIONS. A copy of the resolutions of
the Board of Directors of Parent and Merger Sub, certified by its
Secretary as having been duly and validly adopted and as being in full
force and effect, authorizing execution and delivery of this Agreement
and performance by Parent and Merger Sub of the transactions
contemplated hereby;
(d) GOOD STANDING CERTIFICATE. Certificate of good
standing, dated not more than ten days prior to the Closing Date, with
respect to Parent and Merger Sub, issued by the Secretary of State of
the State Delaware;
(e) ESCROW AGREEMENT. The Escrow Agreement executed
by Parent; and
(f) STANDBY LETTER OF CREDIT. An unconditional,
standby letter of credit securing the payment when due of any unpaid
principal and interest of the Closing Note from a U.S. financial
institution acceptable to the Representatives and in a form reasonably
acceptable to the Representatives (the "STANDBY LETTER OF CREDIT"), the
cost of which will be borne by the Parent.
ARTICLE X
POST CLOSING COVENANTS
10.1 TAX COVENANTS.
(a) The Representatives shall prepare the IRS Form
1120S (and any comparable form for state and local Tax purposes and any
related information returns) of the Company for any year ending on or
before the Closing Date (collectively, the "S CORPORATION RETURNS"). At
least thirty (30) days prior to the due date of an S Corporation Return
(after applicable extensions), the Representatives shall deliver to
Parent a copy of such S Corporation Return and Parent shall cause the
Company to timely file such S Corporation Return in accordance with
applicable procedures.
38
(b) Parent shall cause the Acquired Companies to
prepare and timely file all Tax Returns of any Acquired Company due on
or after the Closing Date that relate to periods ending on or before
the Closing Date or any Straddle Period (other than S Corporation
Returns) and such Tax Returns shall be prepared in a manner that is
strictly consistent with practices, procedures, and accounting methods
of the Acquired Company in existence prior to the Closing Date. Parent
shall not, and shall not allow any Acquired Company, to amend, modify,
or otherwise change any Tax Return (or file a claim for refund for
Taxes) that relates to any period ending on or before the Closing Date
or take any action to extend or toll the applicable statute of
limitations with respect to any Tax Return for a period ending on or
before the Closing Date, in each case, without the prior written
permission of the Representatives (which consent shall not be
unreasonably withheld or delayed).
(c) For purposes of determining the accrual for Taxes
for purposes of computing the Closing Working Capital, Taxes (other
than Transfer Taxes and Taxes resulting from the Section 338(h)(10)
Election), which, in each case, shall be treated as occurring in a
period beginning after the Closing Date) with respect to any Straddle
Period shall be allocated to the portion of such period ending on the
Closing Date using the following conventions: (A) in the case of Income
Taxes or other Taxes resulting from, or imposed on, sales, receipts,
uses, transfers or assignments of property or other assets, or payments
to other persons (including, without limitation, wages), the amount
allocated to the portion of the Straddle Period ending on the Closing
Date shall be the amount of Taxes payable for such portion of the
period determined assuming the Acquired Company filed a separate Tax
Return solely for the portion of the Straddle Period ending on the
Closing Date; and (B) in the case of all other Taxes, the amount
allocated to the portion of the Straddle Period ending on the Closing
Date shall equal to the amount of Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of
calendar days in the portion of the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar
days in the entire Straddle Period.
(d) If any Governmental Authority issues to Parent or
any Acquired Company (i) a written notice of its intent to audit,
examine or conduct another proceeding with respect to Taxes or Tax
Returns of such Acquired Company for periods beginning on or prior to
the Closing Date; (ii) a written notice of deficiency, a written notice
of reassessment, a written proposed adjustment, a written assertion of
claim or written demand concerning Taxes or Tax Returns of a Acquired
Company for periods beginning on or prior to the Closing Date; or (iii)
a written notice of deficiency, a written notice of reassessment, a
written proposed adjustment, a written assertion of claim, a written
demand, or a request for information during the course of any audit or
other proceeding that challenges or relates to the status of the
Company as an S corporation pursuant to Section 1362 of the Code or
laws of any state or the adverse determination of the issue being
raised could otherwise result in any Acquired Company incurring any
Taxes for which the Company Stockholders are liable under this
Agreement (collectively, a "TAX CLAIM"), Parent or the Company shall
39
notify the Representatives of its receipt of such communication from
the Governmental Authority within ten (10) Business Days after
receiving such notice. Parent shall not, and shall not allow any
Acquired Company to, settle or otherwise resolve any Tax Claim that
would result in the Company Stockholders indemnifying a Parent
Indemnified Party for any resulting Taxes without the prior written
approval of the Representatives (which shall not be unreasonably
withheld or delayed). The applicable Acquired Company shall, at its own
expense and in good faith, control the contest of any Tax Claim (a "TAX
CONTEST"); PROVIDED, HOWEVER, the Representatives, at Company
Stockholders' sole cost and expense, shall in good faith control the
Tax Contest relating to an S Corporation Return, the status of the
Company as an S corporation or the imposition of the Illinois Personal
Property Replacement Tax or the New Jersey Income Taxes on any Acquired
Company and shall have the right to participate, at the Company
Stockholders' sole cost and expense, in any other Tax Contest. Parent
shall cause the applicable Acquired Company to execute any power of
attorney or other document that the Representatives reasonably believe
is necessary to permit the Representatives to control or participate in
a Tax Contest. If during the course of any Tax Contest, the
Representatives wish to settle or otherwise resolve such Tax Contest
(or any issue relating thereto) on terms acceptable to the Governmental
Authority, Parent shall cause the applicable Acquired Company to settle
such Tax Contest (or issue) on such terms provided that such settlement
does not result in a Parent Indemnified Party incurring any material
Taxes that the Company Stockholders are not required to fully indemnify
such Parent Indemnified Party for under this Agreement.
(e) All refunds (whether in the form of a direct
payment or as an offset to Taxes payable) for Taxes for periods (or
portions thereof) ending on or before the Closing Date (to the extent
not included in the final determination of the Closing Working Capital)
shall be property of the Company Stockholders. To the extent that any
Acquired Company (or any Affiliate) receives a refund that is property
of the Company Stockholders (whether as a direct payment or an offset
to Taxes payable), Parent or the applicable Acquired Company shall
promptly pay (and, in no event, less than ten (10) days after receipt
of such refund or filing of the Tax Return which reduces the amount of
Taxes payable), the amount of such refund (plus related interest) to
the Representatives for disbursement to the Company Stockholders.
Parent shall, and shall cause each Acquired Company to cooperate with
the Representatives (including filing amended Tax Returns or claims for
refunds) to obtain any refunds or any Tax benefits that would give rise
to payments to the Company Stockholders under this SECTION 10.1(E).
(f) Parent and the Representatives shall provide, and
Parent shall cause the Acquired Companies to provide, each other with
such assistance as may reasonably be requested by the other in
connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, or any judicial or
administrative proceedings relating to Taxes or Tax Returns of any
Acquired Company. Such assistance shall include making employees
available on a mutually convenient basis to provide additional
information or explanation of material provided hereunder and shall
include providing copies of relevant Tax Returns and supporting
material. Parent shall cause the Acquired Companies to retain for the
full period of any statute of limitations and provide the
Representatives with any records or information which may be relevant
to any Tax Returns or Taxes for any period (or portion of any Straddle
Period) ending on or prior to the Closing Date.
40
(g) All federal, state, local, foreign transfer,
documentary stamp, registration, sales, use or similar Taxes, fees, or
expenses applicable to, imposed upon or arising out of the Merger or
any other transaction contemplated by this Agreement ("TRANSFER TAXES")
shall be paid by Parent. For the avoidance of doubt, Transfer Taxes
shall not include any Illinois Personal Property Replacement Taxes. To
the extent that any Company Stockholders incurs any Transfer Tax as a
result of the transactions contemplated by this Agreement, Parent shall
indemnify and hold the Company Stockholders harmless from such Transfer
Taxes.
(h) For all relevant Tax purposes, all
indemnification payments under this Agreement shall be treated as
adjustments to the Merger Consideration. For all relevant Tax purposes,
the Escrow Amount shall be treated as assets of Parent and Parent shall
pay all Taxes on any interest or other income earned with respect to
the Escrow Amount until such funds are distributed in accordance with
the Escrow Agreement.
10.2 SECTION 338(H)(10) ELECTION.
(a) Parent and the Representatives, on behalf of the
Company Stockholders, agree to join, in an appropriate and timely
manner, to make election under Section 338(h)(10) of the Code and any
corresponding election permitted under any local, state or foreign
jurisdiction (collectively, the "SECTION 338(H)(10) ELECTION") with
respect to Parent's acquisition of the Company. The Representatives
agree to cooperate with Parent to take all actions necessary or
appropriate to effect and preserve the Section 338(h)(10) Election.
(b) At the Closing, the Representatives shall deliver
to Parent an IRS Form 8023 (in a form that is initially prepared by
Parent and reasonably acceptable to the Representatives) executed by
each relevant Company Stockholder with respect to Parent's acquisition
of the Company. Parent shall execute such IRS Form 8023 and cause such
form to be timely filed with the Internal Revenue Service and Parent
shall deliver to the Representatives a copy of the fully executed IRS
Form 8023 as filed with the Internal Revenue Service accompanied by a
certification that such form has been timely filed.
(c) Within thirty (30) days of the final
determination of the Closing Statement, Parent shall provide to the
Representatives a schedule allocating the Merger Consideration (and
relevant liabilities of the Acquired Companies) among the assets of the
Acquired Companies (the "PURCHASE PRICE ALLOCATION SCHEDULE"). The
Purchase Price Allocation Schedule will be prepared in accordance with
the applicable provisions of the Code and consistent with the
methodologies set forth on SCHEDULE 10.2(C). The Representatives shall
have forty-five (45) days to review and approve the Purchase Price
Allocation Schedule (which approval shall not be unreasonably
withheld). If the Representatives dispute any portion of the Purchase
Price Allocation Schedule, the parties shall resolve such dispute
(including the sharing of costs) in the same manner in which a dispute
regarding the Closing Statement is resolved in accordance with the
provisions of SECTION 3.3(B). Parent and the Representatives agree to
report, and cause the Company and each other Acquired Company to
report, the transactions resulting from the Section 338(h)(10) Election
consistently with the Purchase Price Allocation Schedule as finally
determined under this SECTION 10.2(C) (including for purposes of
preparing and filing the IRS Form 8883). The parties hereto shall make
appropriate adjustments to the allocations on the Purchase Price
Allocation Schedule to reflect any adjustments to the Merger
Consideration.
41
(d) Notwithstanding any other provision of this
Agreement, no Company Stockholder shall be responsible for any Taxes of
any Acquired Company that results from the Section 338(h)(10) Election
(other than Taxes resulting from a breach of a representation and
warranty included in SECTION 4.10(F) and Illinois Personal Property
Replacement Taxes and North Carolina Composite Income Taxes and New
Jersey Income Taxes in accordance with ARTICLE XI). For the avoidance
of doubt, this SECTION 10.2(D) shall not affect or reduce the ability
of the Representatives or Parent to withhold appropriate Taxes from the
Merger Consideration under SECTION 3.7.
10.3 FURTHER ASSURANCES. At any time or from time to time up
to one (1) year after the Closing, each of the Parties hereto shall, at the
request of the other Party hereto and at such requesting Party's expense,
execute and deliver any further instruments or documents and take all such
further actions as are reasonably requested of it in order to consummate and
make effective the transactions contemplated by this Agreement.
10.4 DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION.
(a) For a period of six (6) years after the Closing,
Parent shall not, and shall not permit any of the Acquired Companies
to, amend, alter, repeal or modify any provision in any of the Acquired
Companies' Organizational Documents relating to the exculpation or
indemnification of any officers and directors in any way that
diminishes or adversely affects the indemnification or exculpations
provided therein (unless required by Law), it being the intent of the
Parties that the officers and directors of any of the Acquired
Companies who were officers and directors prior to the Closing shall
continue to be entitled to such exculpation and indemnification to the
full extent provided for under applicable Law.
(b) For a period of six (6) years after the Closing,
Parent shall, or shall cause each of the Acquired Companies to,
maintain director and officer and employment practices liability
insurance which insurance shall provide coverage for the individuals
who were officers and directors of the Acquired Companies prior to the
Closing comparable to the policy or policies maintained by the Acquired
Companies immediately prior to the Closing as set forth on SCHEDULE
4.22, and with comparable insurance companies, for the benefit of such
individuals.
(c) In the event Parent, the Company or any of their
respective successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger, or (ii)
transfers all or substantially all of its properties and assets to any
Person, then and in either such case, proper provision shall be made so
that the successors and assigns of Parent or the Company, as the case
may be, shall assume the obligations set forth in this SECTION 10.4.
The provisions of this SECTION 10.4 shall survive the consummation of
the Merger and expressly are intended to benefit each of the
Indemnified Persons.
42
(d) Nothing contained in this SECTION 10.4 shall
preclude the right of any Parent Indemnified Party to bring an
indemnity claim under ARTICLE XI for a matter which is subject to the
indemnification contained in this SECTION 10.4.
10.5 EMPLOYEE MATTERS.
(a) Parent shall cause the Surviving Corporation, for
the period commencing at the Effective Time and ending on December 31,
2007, to maintain (i) overall compensation levels (including salary,
wages, bonus opportunities, commissions and severance) that in the
aggregate are no less favorable than, and (ii) benefits (and the costs
thereof) provided under Employee Benefit Plans that in the aggregate
are no less favorable than, the overall compensation levels and
benefits (and the costs thereof) maintained for and provided to the
current and former employees of the Acquired Companies (the "COVERED
EMPLOYEES") immediately prior to the Effective Time, in each case as
reasonably determined by Parent; provided, HOWEVER, subject to the
foregoing, that nothing herein shall prevent the amendment or
termination of any Employee Benefit Plan, or interfere with the
Surviving Corporation's right or obligation to take any actions as are
necessary to conform with applicable Law.
(b) Parent shall recognize each Covered Employee's
service with an Acquired Company as service with the Parent for
purposes of eligibility and vesting under each of Parent's employee
compensation, incentive and benefit plans, programs, policies and
arrangements Parent maintains for the benefit of the Covered Employees
(each, a "PARENT Plan"); PROVIDED, that (1) if the Covered Employees
are transferred to Parent's 401(k) plans, the Covered Employees will be
covered by Parent's plans in effect for employees hired after January
1, 2003 (or such other plan as may be in effect for newly hired
employees at the time of such transfer) and (2) if the Covered
Employees are covered by Parent's pension plans, the Covered Employees
will not receive prior service credit for purposes of benefit accrual
under such plans. With respect to each Parent Plan that is an Employee
Welfare Benefit Plan, Parent shall (i) waive each pre-existing
condition limitation that may apply to a Covered Employee, and (ii)
recognize all amounts with which an Acquired Company credited a Covered
Employee in the plan year which includes the Closing Date for purposes
of co-payment, deductible, out-of-pocket maximum, or other cost-sharing
mechanisms and purposes.
(c) Without limiting the generality of the foregoing,
after the Closing Date, Parent shall, or shall cause the Surviving
Corporation, as applicable, to, honor those employment, change in
control, termination, retention and severance agreements, and all
similar agreements, in each case, to which the Acquired Companies is a
party, all of which are set forth on SCHEDULE 10.5(C).
43
10.6 LITIGATION SUPPORT. So long as any party hereto is
actively contesting or defending against any action brought by a third party or
a Governmental Authority in connection with the transactions contemplated hereby
or any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or transaction
attributable prior to the Closing Date involving the Acquired Companies, each
other party hereto will reasonably cooperate with such party and such party's
counsel in the contest or defense, make reasonably available their personnel,
and provide such testimony and reasonable access to their books and records as
shall be necessary in connection with the contest or defense, at the sole cost
and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification under ARTICLE XI).
ARTICLE XI
INDEMNIFICATION
11.1 SURVIVAL OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
All representations and warranties of the Company, other than the
representations and warranties in SECTION 4.10(F), contained in this Agreement
shall survive the Closing hereunder for a period of eighteen (18) months after
the Closing Date. The representations and warranties contained in SECTION
4.10(F) to the extent they relate to Income Taxes for periods beginning on or
after the Closing Date shall survive for a period of forty-eight (48) months
after the Closing Date (the date on which the survivability period for the
representations and warranties in SECTION 4.10(F) that relate to Income Taxes
for periods beginning on or after the Closing Date terminates shall be referred
to as the "POST CLOSING INCOME TAX REPRESENTATION TERMINATION DATE"). To the
extent that the Representatives cause the Company to extend the statute of
limitations for assessment of any Income Taxes with respect to its S Corporation
Return for the year ended on the Closing Date (or Company agrees to such an
extension for the Company's S Corporation Return for the year ended on the
Closing Date and the Representatives consents to such extension in writing), the
Post Closing Income Tax Representation Termination Date shall not occur earlier
than the date that is thirty (30) days after the date on which the extended
statute of limitation expires. The representations and warranties contained in
SECTION 4.10(F) to the extent they relate to Income Taxes for periods ending on
or prior to the Closing Date and the covenant set forth in SECTION 11.3(C) shall
survive for the applicable statute of limitations of the Tax at issue plus
thirty (30) days, PROVIDED, that, in the event that the Representatives shall
agree to a tolling of an applicable statute of limitations, such period shall be
extended for a period equal to such period of tolling.
11.2 SURVIVAL OF PARENT'S AND MERGER SUBS' REPRESENTATIONS AND
WARRANTIES. All of the representations and warranties of Parent and Merger Sub
shall survive the Closing hereunder for a period of eighteen (18) months after
the Closing Date.
11.3 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS RELATING TO
THE COMPANY. From and after the Closing, the Company Stockholders shall, in
accordance with and subject to this ARTICLE XI, indemnify, defend and save
Parent, Merger Sub and, from and after the Closing Date, the Company, and their
respective officers, directors, employees, agents, representatives, successors
and permitted assigns (each, a "PARENT INDEMNIFIED PARTY"), harmless from and
against, and shall pay to a Parent Indemnified Party or reimburse a Parent
Indemnified Party for, any and all liabilities, obligations, damages, Taxes,
deficiencies, demands, claims, suits, actions, or causes of action, assessments,
losses, costs, expenses, interest, fines, penalties, or costs or expenses of any
and all investigations, proceedings, judgments, orders and settlements
(including reasonable fees and expenses of attorneys, accountants and other
experts) (hereinafter, a "LOSS" or the "LOSSES") sustained or incurred by any
Parent Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of:
44
(a) any breach of a representation or warranty made
by the Company in ARTICLE IV of this Agreement or in any certificate
delivered by the Company pursuant to SECTION 8.2(A); PROVIDED, HOWEVER,
that the Parent Indemnified Party shall have asserted its claim for
indemnification in writing with reasonable supporting details promptly
upon discovering any such breach and in any event before the expiration
of any applicable survival period specified in SECTION 11.1;
(b) any breach of a covenant made by the Company in
this Agreement;
(c) any Illinois Personal Property Replacement Taxes
imposed on the Company solely as a result of the Section 338(h)(10)
Election and any North Carolina Composite Income Taxes and any New
Jersey Income Taxes imposed on the Company solely as a result of the
Section 338(h)(10) Election;
(d) any claim or assertion for broker's or seller's
fees or expenses arising out of the transactions contemplated by this
Agreement by a person claiming to have been engaged by the Company, or
any other Company Stockholder Transaction Expenses not listed on
SCHEDULE 3.1(F); or
(e) any claim by any Company Stockholder alleging
improper allocation of or payments from the Payment Fund by the
Representatives.
11.4 NDEMNIFICATION BY PARENT. From and after the Closing,
Parent shall indemnify, defend and save the Company Stockholders, and their
respective agents, representatives, successors and permitted assigns (each, a
"COMPANY STOCKHOLDER INDEMNIFIED PARTY") harmless from and against, and shall
promptly pay to a Company Stockholder Indemnified Party or reimburse a Company
Stockholder Indemnified Party for, any and all Losses sustained or incurred by
any Company Stockholder Indemnified Party relating to, resulting from, arising
out of or otherwise by virtue of:
45
(a) any breach of a representation or warranty made
by Parent or Merger Sub in this Agreement or in any certificate
delivered by Parent or Merger Sub pursuant to SECTION 8.3(A); PROVIDED,
HOWEVER, that the Company Stockholder Indemnified Party shall have
asserted its claim for indemnification in writing with reasonable
supporting details promptly upon discovering any such breach and in any
event before the expiration of any applicable survival period specified
in SECTION 11.2;
(b) any breach of a covenant made by Parent or Merger
Sub in this Agreement; or
(c) any claim or assertion for broker's or finder's
fees or expenses arising out of the transactions contemplated by this
Agreement by any Person claiming to have been engaged by Parent or
Merger Sub.
11.5 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. Other
than a Tax Claim or a Tax Contest, which procedure is set forth and which shall
be governed exclusively by SECTION 10.1(D), in the event that subsequent to the
Closing, any Person that is or may be entitled to indemnification under this
Agreement (an "INDEMNIFIED PARTY") receives notice of the assertion of any
claim, issuance of any order or the commencement of any action or proceeding by
any Person who is not a party to this Agreement or an Affiliate of a party,
including, without limitation, any Governmental Authority (a "THIRD PARTY
CLAIM"), against such Indemnified Party, against which a party to this Agreement
is or may be required to provide indemnification under this Agreement (an
"INDEMNIFYING PARTY"), the Indemnified Party shall give written notice thereof
together with a statement of any available information regarding such claim to
the Indemnifying Party within thirty (30) days after learning of such claim (or
within such shorter time as may be necessary to give the Indemnifying Party a
reasonable opportunity to respond to and defend such claim), provided that
failure to give notice within such period shall not affect the Indemnified
Parties' rights, or the Indemnifying Parties' obligations hereunder, expect to
the extent the Indemnifying Parties are actually prejudiced by such delay. For
purposes of this ARTICLE XI, notice to the Representatives shall be deemed
notice to all of the Company Stockholders. The Indemnifying Party shall have the
right upon written notice to the Indemnified Party (the "DEFENSE NOTICE") within
thirty (30) days after receipt from the Indemnified Party of notice of such
claim, to conduct at its expense the defense against such claim in its own name,
or if necessary in the name of the Indemnified Party; PROVIDED, HOWEVER, that
the Indemnified Party shall have the right to approve the defense counsel
selected by the Indemnifying Party, which approval shall not be unreasonably
withheld, conditioned or delayed, and in the event the Indemnifying Party and
the Indemnified Party cannot agree upon such counsel within ten days after the
Defense Notice is provided, then the Indemnifying Party shall propose an
alternate defense counsel, who shall be subject again to the Indemnified Party's
approval, which such approval shall not be unreasonably withheld, conditioned or
delayed. In the event that the Indemnifying Party does elect to conduct the
defense of the subject claim, the Indemnified Party will cooperate with and make
available to the Indemnifying Party such assistance and materials as may be
reasonably requested by it, and the Indemnified Party shall have the right at
its expense to participate in the defense assisted by counsel of its own
choosing, provided that the Indemnified Party shall have the right to compromise
and settle the claim only with the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, conditioned or delayed.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement of any Third Party Claim or cease to
defend against such claim, if pursuant to or as a result of such settlement or
cessation, (i) injunctive or other equitable relief would be imposed against the
Indemnified Party, or (ii) such settlement or cessation would lead to liability
or create any financial or other obligation on the part of the Indemnified Party
for which the Indemnified Party is not indemnified hereunder. The Indemnifying
Party shall not be entitled to control, and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement of any claim to
the extent that claim seeks an order, injunction or other equitable relief
against the Indemnified Party which, if successful, could materially interfere
with the business, operations, assets, condition (financial or otherwise) or
prospects of the Indemnified Party, or in a proceeding to which the Indemnifying
Party is also a party and the Indemnified Party determines in good faith that
joint representation would be inappropriate (and in each case the cost of such
defense shall constitute an amount for which the Indemnified Party is entitled
to indemnification hereunder). If an offer is made to settle a Third Party
Claim, which offer the Indemnifying Party is permitted to settle under this
SECTION 11.5 only upon the prior written consent of the Indemnified Party, and
the Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give prompt written notice to the Indemnified Party to
that effect. If the Indemnified Party fails to consent to such firm offer within
twenty (20) calendar days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to such Third Party
Claim will not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnified Party through the end of such
twenty (20) day period. Other than as specifically provided in this SECTION
11.5, any final, non-appealable or non-appealed judgment entered, order issued
or settlement agreed upon in the manner provided in this SECTION 11.5 shall be
binding upon the Indemnifying Party, and shall conclusively be deemed to be an
obligation with respect to which the Indemnified Party is entitled to prompt
indemnification hereunder.
46
11.6 CALCULATION OF LOSSES.
(a) The amount of any Losses payable under this
ARTICLE XI by the Indemnifying Party shall be net of any (i) amounts
actually recovered by the Indemnified Party under applicable insurance
policies or from any other Person alleged to be responsible therefor
and (ii) the net reduction in Taxes actually realized by the
Indemnified Party arising from the incurrence or payment of any such
Losses. If the Indemnified Party receives any amounts under applicable
insurance policies, or from any other Person alleged to be responsible
for any Losses or a Tax benefit subsequent to an indemnification
payment by the Indemnifying Party, then such Indemnified Party shall
promptly reimburse the Indemnifying Party for any payment made or
expense incurred by such Indemnifying Party in connection with
providing such indemnification payment up to the amount received by the
Indemnified Party, net of any expenses incurred by such Indemnified
Party in collecting such amount. The Indemnified Party shall use Best
Efforts to collect any amounts available under such insurance coverage
or from such other party alleged to have responsibility therefor prior
to making any claim for indemnification under this ARTICLE XI.
(b) The Indemnifying Party shall not be liable under
this ARTICLE XI for any (i) Losses relating to any matter to the extent
that there is included in the Closing Statement a specific liability or
reserve relating to such matter, (ii) Losses the Indemnified Party had
otherwise been compensated for pursuant to the adjustments to the
Merger Consideration pursuant to SECTION 3.3, or (iii) punitive damages
(other than such amounts paid to third parties).
(c) The Indemnified Parties shall take, and shall
cause their respective Affiliates to take, all reasonable steps to
mitigate and otherwise minimize their Losses to the maximum extent
reasonably possible upon and after becoming aware of any event which
would reasonably be expected to give rise to any Losses.
47
(d) If the Indemnified Party receives any payment
from an Indemnifying Party in respect of any Losses and the Indemnified
Party could have recovered all or a part of such Losses from a third
party based on the underlying claim asserted against the Indemnifying
Party, the Indemnified Party shall assign such of its rights to proceed
against such third party as are necessary to permit the Indemnifying
Party to recover from such third party the amount of such
indemnification payment.
11.7 LIMITATION ON INDEMNITIES.
(a) Notwithstanding anything to the contrary set
forth in this Agreement, the Company Stockholders shall not be liable
hereunder to the Parent Indemnified Parties pursuant to SECTIONS
11.3(A) OR (B) as a result of any breach of any of the representations
or warranties of the Company as set forth in ARTICLE IV or any
covenants of the Company as set forth in this Agreement or in any
certificate delivered by the Company pursuant to SECTION 8.2(A), if,
with respect to any individual item of Loss, such item is less than
Twenty-five Thousand Dollars ($25,000) (a "MINOR CLAIM").
(b) Notwithstanding anything to the contrary set
forth in this Agreement except as provided for in SECTION 11.7(C), the
Company Stockholders shall not be liable hereunder to the Parent
Indemnified Parties pursuant to SECTIONS 11.3(A) OR (B) as a result of
any breach of any of the representations or warranties of the Company
as set forth in ARTICLE IV or any covenants of the Company as set forth
in this Agreement or in any certificate delivered by the Company
pursuant to SECTION 8.2(A), except to the extent that the Losses
incurred by the Parent Indemnified Parties as a result of such breaches
shall exceed in the aggregate One Million, Two Hundred and Fifty
Thousand Dollars ($1,250,000), and then only to the extent of such
excess; PROVIDED, HOWEVER, in no case will such Losses include any
Minor Claim.
(c) The aggregate amount required to be paid by the
Company Stockholders pursuant to SECTION 11.3 as a result of any breach
of any of the representations and warranties of the Company as set
forth in ARTICLE IV, other than the representations and warranties in
SECTION 4.10(F), or any of the covenants of the Company as set forth in
this Agreement, or in any certificate delivered by the Company pursuant
to SECTION 8.2(A) or pursuant to SECTION 11.10, shall not exceed in the
aggregate Fifty Million Dollars ($50,000,000) until the first
anniversary of the Closing and thereafter Twenty-Five Million Dollars
($25,000,000) (the "CAP AMOUNT"). The aggregate amount required to be
paid by the Company Stockholders pursuant to SECTION 11.3 as a result
of any breach of any of the representations and warranties in SECTION
4.10(F) or under SECTION 11.3(C) that result in Income Taxes for
periods beginning on or after the Closing Date, shall not exceed in the
aggregate One Hundred Million Dollars ($100,000,000) MINUS any amounts
paid or payable pursuant to the first sentence of this SECTION 11.7(C).
Notwithstanding the foregoing or anything to the contrary herein, in no
event shall the combined aggregate amount paid or payable by the
Company Stockholders pursuant to the first and second sentences of this
SECTION 11.7(C) exceed One Hundred Million Dollars ($100,000,000). The
aggregate amount required to be paid by the Company Stockholders
pursuant to SECTION 11.3 as a result of any breach of representations
and warranties in SECTION 4.10(F) that result in Income Taxes payable
for periods ending on or prior the Closing Date shall not exceed in the
aggregate the Merger Consideration and shall not be subject to any of
the other limitations set forth in this SECTION 11.7(C).
48
11.8 ESCROW. Notwithstanding anything to the contrary in this
Agreement, following the Closing, except for (i) any claims or causes of action
for actual fraud or intentional misrepresentation, and (ii) claims that survive
beyond the distribution of the escrow, the sole and exclusive recourse of any
Parent Indemnified Parties with respect to any and all claims relating to the
subject matter of this Agreement and the transactions contemplated hereby shall
be to make a claim against the Escrow Amount for the amount of such claim in
accordance with the terms of the Escrow Agreement; PROVIDED, HOWEVER, that
nothing herein shall be construed to limit the right of a party to seek specific
performance or other injunctive relief for any such breach. Payments out of the
escrow shall be allocated among the Company Stockholders as determined by the
Representatives. Claims made outside of the escrow in accordance with the terms
hereof shall be the several liability of each individual Company Stockholder
meaning his, her or its proportionate share of the Common Shares, and the Parent
Indemnified Parties shall not be entitled to claim against any particular
Company Stockholder an amount which is greater than such Company Stockholder's
proportionate share.
11.9 EXCLUSION OF OTHER REMEDIES. Following the Closing,
subject to subject to SECTION 11.8 hereof the indemnification provisions in this
ARTICLE XI shall provide the sole and exclusive remedy of the parties hereto,
their affiliates, and any of their officers, directors, employees, stockholders,
agents and representatives with respect to any and all Losses of any kind or
nature whatever incurred because of or resulting from or arising out of this
Agreement, the transaction contemplated hereby, the Business, and any of its
assets and liabilities, provided, that nothing in this SECTION 11.9 shall
preclude a Party from bringing an appropriate action for specific performance or
other equitable remedy or an action for fraud.
11.10 ENVIRONMENTAL MATTERS.
(a) Subject to the provisions of SECTION 11.10(B),
from and after the Closing, the Company Stockholders shall indemnify,
defend and save harmless each Parent Indemnified Party from and
against, and shall pay to a Parent Indemnified Party or reimburse a
Parent Indemnified Party for, any and all Losses sustained or incurred
by any Parent Indemnified Party relating to, resulting from, arising
out of or otherwise by virtue of:
(i) any claim that the Company was in
violation of applicable Law or did not have all necessary
Environmental Permits under Environmental Requirements in
effect as of the Effective Time that is brought by the United
States Environmental Protection Agency based upon, related to
or arising from the April 7, 2005, Section 114(a) Request for
Information under the Clean Air Act served upon the Company by
the United States Environmental Protection Agency or the
Company's May 23, 2005, response to that request;
(ii) any claim that the emissions or the
reporting of emissions from the Bolingbrook Facility prior to
the Closing was in violation of applicable Law under
Environmental Requirements in effect as of the Effective Time;
and
49
(iii) any costs or expenses incurred by the
Company after the Effective Time in connection with the
complete installation of the emissions capture and control
equipment at the Bolingbrook Facility as required in
accordance with SECTION 6.7.
(b) Notwithstanding anything to the contrary, the
Company Stockholders' obligations arising under this SECTION 11.10
shall not be subject to the limitations set forth in SECTIONS 11.7(A)
OR (B). With respect to indemnifiable Losses arising under SECTIONS
11.10(A)(I) AND (II), the Company Stockholders and Parent shall share
equally on a dollar-for-dollar basis the first One Million Two Hundred
and Fifty Thousand Dollars ($1,250,000) of such Losses (the "PARENT
SHARING AMOUNT"). The Company Stockholders shall be obligated to
indemnify Parent Indemnified Parties for all indemnifiable Losses
arising under SECTIONS 11.10(A)(I) AND (II) in excess of such Parent
Sharing Amount up to the Cap Amount. For the avoidance of doubt,
indemnifiable Losses arising under SECTION 11.10(A)(III), shall not be
subject to the Parent Sharing Amount. Furthermore, Losses sustained or
incurred by the Parent Indemnified Parties under this SECTION 11.10
shall not count against the One Million, Two Hundred and Fifty Thousand
Dollars ($1,250,000) deductible set forth in SECTION 11.7(B). Except as
otherwise provided in this SECTION 11.10(B), the Company Stockholders'
obligations arising under this SECTION 11.10 shall be subject to the
same limitations and procedures set forth in this ARTICLE XI.
ARTICLE XII
TERMINATION
12.1 TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(a) Parent and the Company may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) Parent may terminate this Agreement by giving
written notice to the Company at any time prior to the Closing in the
event of a Material Adverse Effect;
(c) Parent may terminate this Agreement by giving
written notice to the Company at any time prior to the Closing (A) in
the event the Company has breached any representation warranty or
covenant contained in this Agreement in any material respect, Parent
has notified the Company of the breach and the breach has continued
without cure for a period of thirty (30) days after the notice of such
breach and results in a Material Adverse Effect, or (B) if the Closing
shall not have occurred on or before June 30, 2007 (the "TERMINATION
DATE"), by reason of the failure of any condition precedent under
SECTION 8.2 hereof (unless the failure results primarily from Parent
breaching any representation, warranty, or covenant contained in this
Agreement); and
50
(d) The Company may terminate this Agreement by
giving written notice to Parent at any time prior to the Closing (A) in
the event Parent or Merger Sub has breached any representation warranty
or covenant contained in this Agreement in any material respect, the
Company has notified Parent of the breach and the breach has continued
without cure for a period of thirty (30) days after the notice of
breach, or (B) if the Closing shall not have occurred on or before the
Termination Date, by reason of the failure of any condition precedent
under SECTION 8.3 hereof (unless the failure results primarily from the
Company breaching any representation and warranty or covenant contained
in this Agreement).
Notwithstanding the foregoing, if the Closing shall not have occurred
on or before the Termination Date solely by reason of a second request or other
regulatory investigation or inquiry arising from or in connection with the
filing of the Notification and Report Form under the HSR Act with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice (an "HSR REQUEST"), the parties shall agree to extend the
Termination Date to a mutually agreed upon later date to accommodate the
completion of such request, investigation or inquiry.
12.2 EFFECT OF TERMINATION. If any party terminates this
Agreement pursuant to SECTION 12.1 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in willful breach);
PROVIDED, HOWEVER, that the confidentiality provisions contained in SECTION 6.6
above shall survive termination.
ARTICLE XIII
MISCELLANEOUS
13.1 EXPENSES. Each of Parent, Merger Sub, the Company and the
Representatives will bear his, her or its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby PROVIDED, HOWEVER, in the event the Merger is
consummated, the Company Stockholders will bear the costs and expenses
(including legal fees and expenses) of the Acquired Companies incurred in
connection with this Agreement and the transactions contemplated hereby, which
amounts will constitute part of the Company Stockholder Transaction Expenses
13.2 NO THIRD-PARTY BENEFICIARIES. Except as set forth in
SECTION 10.4 and ARTICLE XI, this Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
13.3 ENTIRE AGREEMENT. This Agreement, including the schedules
and exhibits attached hereto, the Schedules and the Representative Agreement and
the other documents referred to herein, constitutes the entire agreement among
the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
51
13.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of Parent and the Company.
13.5 COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by means of facsimile), each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
13.6 HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.7 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) when delivered
personally to the recipient, (ii) one Business Day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) one
Business Day after being sent to the recipient by facsimile transmission or
electronic mail or (iv) four Business Days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:
(a) IF TO PARENT OR MERGER SUB, ADDRESSED TO IT AT:
Pactiv Corporation
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX, 00000
Telephone: 847/000-0000
Fax: 847/000-0000
Attention: Xxxxxxx X. Xxxxxx
Vice President & Treasurer
WITH A COPY TO:
--------------
Pactiv Corporation
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX, 00000
Telephone: 847/000-0000
Fax: 847/000-0000
Attention: Xxxxxx X. Xxxxx
Vice President,
General Counsel & Secretary
52
(b) IF TO THE COMPANY, ADDRESSED TO IT AT:
Prairie Packaging, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Telephone: 708/000-0000
Fax:
Attention: Xxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
WITH A COPY TO:
--------------
Winston & Xxxxxx LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: 312/000-0000
Fax: 312/000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
(c) IF TO THE REPRESENTATIVES, ADDRESSED TO IT AT:
Xxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxx
c/o Winston & Xxxxxx LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: 312/000-0000
Fax: 312/000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
WITH A COPY TO:
--------------
Winston & Xxxxxx LLP
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
parties notice in the manner herein set forth.
53
13.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic Laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the Laws of any jurisdiction other than the State of Delaware.
13.9 ARBITRATION. Except for actions by any Party seeking
specific performance or injunctive relief, in the event that Parent, the Company
and the Representatives on behalf of the Company Stockholders fail to agree on
any dispute arising out of or related to this Agreement or any other agreement
or instrument delivered in connection with the transactions contemplated hereby,
such dispute shall be resolved by binding arbitration in Chicago, Illinois. Any
Party electing to commence arbitration shall give written notice to the other
Parties of such election. The claim shall be settled by the International
Institute for Conflict Prevention and Resolution (the "CPR"), Rules for
Non-Administered Arbitration then currently in effect, by three independent and
impartial arbitrators none of whom shall be appointed by either party, but who
shall instead be appointed in accordance with CPR Rule ss.5.3 as in effect on
the date of this Agreement. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. ss.ss.1-16. The determination of the arbitrators in
all matters referred to such arbitrators hereunder shall be final and binding on
the Parties hereto. The award of such arbitrators may be confirmed or enforced
in any court of competent jurisdiction. The costs and expenses of the
arbitrators, and the reasonable attorneys' fees and costs of the prevailing
party (as determined by the arbitrators) incurred in such arbitration (and in
related matters), shall be included in the arbitration award in favor of such
prevailing party; PROVIDED, HOWEVER, that in the event the arbitrators do not
declare a prevailing party in such arbitration, then such costs and expenses
shall be apportioned among the parties by such arbitrators in accordance with
the arbitrators' determination of the merits of their respective positions.
13.10 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
all of the Parties hereto. No waiver by any Party of any provision of this
Agreement or any default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be valid unless the same shall be
in writing and signed by the party making such waiver, nor shall such waiver be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
13.11 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
13.12 CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any Law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
13.13 ACKNOWLEDGEMENTS BY PARENT AND MERGER SUB. Parent and
Merger Sub acknowledge that they have conducted to their satisfaction an
independent investigation and verification of the financial condition, results
of operations, assets, liabilities, properties and projected operations of the
Acquired Companies, and, in making their determination to proceed with the
transactions contemplated by this Agreement, Parent and Merger Sub have relied
on the results of their own independent investigation and verification and the
representations and warranties of the Company expressly and specifically set
forth in ARTICLE IV of this Agreement, including the Schedules (and any updates
thereto). SUCH REPRESENTATIONS AND WARRANTIES BY THE COMPANY CONSTITUTE THE SOLE
AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO PARENT AND MERGER
SUB IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND PARENT AND
MERGER SUB UNDERSTAND, ACKNOWLEDGE AND AGREE THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED (INCLUDING, BUT NOT
LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION,
RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF THE ACQUIRED COMPANIES AND ANY
SET FORTH IN THE CONFIDENTIAL INFORMATION MEMORANDUM PREVIOUSLY DELIVERED TO
PARENT) ARE SPECIFICALLY DISCLAIMED BY THE COMPANY AND THE COMPANY STOCKHOLDERS.
54
13.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The exhibits
and schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
13.15 SPECIFIC PERFORMANCE. The Parties hereto agree that, if
any of the provisions of this Agreement or any other document contemplated by
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, therefore, the
Parties shall be entitled to specific performance of the terms hereof and
thereof, in addition to any other remedy at Law or in equity.
13.16 COMPANY STOCKHOLDER REPRESENTATIVES. A decision, act,
consent or instruction of the Representatives shall constitute a decision, act,
consent or instruction from all of the Company Stockholders and shall be final,
binding and conclusive upon each of the Company Stockholders. Parent may rely
upon any such decision, act, consent or instruction of the Representatives as
being the decision, act, consent or instruction of every such Company
Stockholder. Parent is hereby relieved from any liability to any Persons for any
acts done by them in accordance with such decision, act, consent or instruction
of the Representatives. In furtherance of the foregoing, any reference to a
power of the Company Stockholders under this Agreement, to be exercised or
otherwise taken, shall be a power vested in the Representatives.
13.17 REPRESENTATION. Winston & Xxxxxx LLP has represented the
Company and its Subsidiaries, the Company Stockholders and the Representatives.
All of the parties recognize the commonality of interest that exists and will
continue to exist until Closing, and the parties agree that such commonality of
interest should continue to be recognized after the Closing. Specifically, the
parties agree Parent shall not, and shall not cause the Company or any of its
Subsidiaries to, seek to have Winston & Xxxxxx LLP disqualified from
representing any Company Stockholder or the Representatives in connection with
any dispute that may arise between any Company Stockholder or the
Representatives and Parent or the Company or any Subsidiary of the Company in
connection with this Agreement or the transactions contemplated hereby.
* * * * *
55
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and Plan of Merger as of the date first above written.
PARENT:
-------
PACTIV CORPORATION, a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman and CEO
MERGER SUB:
-----------
MEADOW ACQUISITION CORP. a Delaware
corporation and a wholly-owned
subsidiary of Parent
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman and CEO
COMPANY:
--------
PRAIRIE PACKAGING, INC., a Delaware
corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Chairman
REPRESENTATIVE:
---------------
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
