STOCK PURCHASE AGREEMENT
By and Between
AURORA FOODS INC.
and
X.X. CHILDS EQUITY PARTNERS III, L.P.
Dated as of July 11, 2003
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES......................................2
SECTION 1.1 ISSUANCE AND SALE.....................................2
SECTION 1.2 THE PURCHASE PRICE....................................2
ARTICLE II THE CLOSING.....................................................2
SECTION 2.1 THE CLOSING...........................................2
SECTION 2.2 DELIVERIES............................................2
SECTION 2.3 INITIAL CALCULATION...................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................5
SECTION 3.1 ORGANIZATION; SUBSIDIARIES............................6
SECTION 3.2 DUE AUTHORIZATION.....................................6
SECTION 3.3 CAPITALIZATION........................................7
SECTION 3.4 SEC REPORTS...........................................8
SECTION 3.5 FINANCIAL STATEMENTS..................................8
SECTION 3.6 ABSENCE OF CERTAIN CHANGES............................8
SECTION 3.7 LITIGATION............................................9
SECTION 3.8 CONSENTS AND APPROVALS................................9
SECTION 3.9 NONCONTRAVENTION.....................................10
SECTION 3.10 COMPLIANCE WITH LAWS................................10
SECTION 3.11 COMPANY MATERIAL CONTRACTS..........................11
SECTION 3.12 FINANCIAL ADVISORY, LEGAL AND OTHER FEES............12
SECTION 3.13 ERISA COMPLIANCE....................................13
SECTION 3.14 INTELLECTUAL PROPERTY...............................14
SECTION 3.15 TAXES...............................................15
SECTION 3.16 PROPERTIES..........................................17
SECTION 3.17 ENVIRONMENTAL MATTERS...............................18
SECTION 3.18 AFFILIATE TRANSACTIONS..............................19
SECTION 3.19 LABOR RELATIONS.....................................19
SECTION 3.20 CERTAIN BUSINESS PRACTICES..........................20
SECTION 3.21 INSURANCE...........................................20
SECTION 3.22 STATE TAKEOVER STATUTES.............................20
SECTION 3.23 PRODUCT RECALLS.....................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................20
SECTION 4.1 INVESTMENT...........................................21
SECTION 4.2 ORGANIZATION.........................................21
SECTION 4.3 DUE AUTHORIZATION....................................22
SECTION 4.4 NON-CONTRAVENTION....................................22
SECTION 4.5 LITIGATION...........................................23
SECTION 4.6 CONSENTS AND APPROVALS...............................23
SECTION 4.7 SUFFICIENT AVAILABLE FUNDS...........................23
SECTION 4.8 BENEFICIAL OWNERSHIP.................................23
ARTICLE V COVENANTS OF THE COMPANY........................................24
SECTION 5.1 CONDUCT OF BUSINESS PENDING CLOSING..................24
SECTION 5.2 DIRECTORS' AND OFFICERS' INDEMNIFICATION
AND INSURANCE........................................26
SECTION 5.3 NO SOLICITATION OF ALTERNATIVE PROPOSALS.............28
SECTION 5.4 ACCESS TO INFORMATION................................29
SECTION 5.5 CONSENTS.............................................30
SECTION 5.6 RESTRUCTURING........................................30
SECTION 5.7 INVESTOR AGREEMENT...................................33
SECTION 5.8 AGREEMENTS WITH FIVE PERCENT HOLDERS.................33
SECTION 5.9 CORPORATE GOVERNANCE.................................33
SECTION 5.10 RELEASES............................................33
SECTION 5.11 NOTIFICATION OF CERTAIN MATTERS.....................33
SECTION 5.12 REFINANCING TRANSACTIONS............................33
SECTION 5.13 CLOSING FEE.........................................34
SECTION 5.14 INVOICES FOR PROFESSIONAL SERVICES..................34
ARTICLE VI COVENANTS OF THE INVESTOR......................................34
SECTION 6.1 CONSENTS.............................................34
SECTION 6.2 COMMITMENT LETTER....................................34
SECTION 6.3 FINANCING............................................35
SECTION 6.4 APPROVAL OF BANKRUPTCY PLAN..........................35
SECTION 6.5 SUFFICIENT AVAILABLE FUNDS...........................35
SECTION 6.6 NOTIFICATION OF CERTAIN MATTERS......................36
ARTICLE VII CONDITIONS....................................................36
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS...............36
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR........37
SECTION 7.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.........38
ARTICLE VIII TERMINATION..................................................39
SECTION 8.1 TERMINATION..........................................39
SECTION 8.2 FEES AND EXPENSES....................................40
ARTICLE IX NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN
COVENANTS; NATURE OF REMEDIES..................................42
ARTICLE X CERTAIN DEFINITIONS.............................................42
SECTION 10.1 CERTAIN DEFINITIONS.................................42
SECTION 10.2 REFERENCES TO OTHER DEFINITIONS.....................52
ARTICLE XI MISCELLANEOUS..................................................55
SECTION 11.1 GOVERNING LAW.......................................55
SECTION 11.2 JURISDICTION; FORUM; SERVICE OF PROCESS;
WAIVER OF JURY......................................55
SECTION 11.3 SUCCESSORS AND ASSIGNS..............................56
SECTION 11.4 ENTIRE AGREEMENT; AMENDMENT.........................56
SECTION 11.5 NOTICES.............................................56
SECTION 11.6 DELAYS OR OMISSIONS.................................57
SECTION 11.7 COUNTERPARTS........................................58
SECTION 11.8 SEVERABILITY........................................58
SECTION 11.9 TITLES AND SUBTITLES................................58
SECTION 11.10 ACKNOWLEDGMENT......................................58
SECTION 11.11 NO PUBLIC ANNOUNCEMENT..............................58
SECTION 11.12 FURTHER ACTIONS; REASONABLE BEST EFFORTS............58
SECTION 11.13 INTERPRETATION......................................59
EXHIBIT INDEX
Exhibit A -- Investor Agreement Term Sheet
Exhibit B -- Break-Up Payment Claim Order
Exhibit C -- Break-Up Payment Order
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
July 11, 2003, is made by and between Aurora Foods Inc., a Delaware
corporation (the "Company"), and X.X. Childs Equity Partners III, L.P., a
Delaware limited partnership (the "Investor"). Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them in Article X
hereof.
WHEREAS, each of the Company and the Investor wishes to
effect a series of transactions that shall together constitute a capital
restructuring of the Company, all on the terms and subject to the conditions
set forth herein;
WHEREAS, in connection with such capital restructuring, the
Investor desires to make a significant investment in the Company;
WHEREAS, the parties desire to effectuate such capital
restructuring and investment in conjunction with the filing with the
Bankruptcy Court of a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code and the Bankruptcy Plan and the Disclosure Statement relating
thereto;
WHEREAS, on July 1, 2003, the Company and the Investor
entered into an Agreement in Principle (the "Agreement in Principle") with
regard to such capital restructuring and investment pursuant to which the
parties agreed to negotiate in good faith and use reasonable best efforts to
enter into this Agreement;
WHEREAS, as contemplated by the Agreement in Principle, the
Investor desires to purchase from the Company, and the Company desires to
issue and sell to the Investor, upon the terms and subject to the conditions
set forth herein, shares of newly-issued common stock, par value $.01 per
share (the "New Common Stock"), of the Reorganized Company; and
WHEREAS, in connection with such sale and purchase of shares
of New Common Stock, the Company and the Investor shall, upon consummation of
the transactions contemplated hereby, enter into an Investor Agreement
substantially on the terms contained in the term sheet attached as Exhibit A
(the "Investor Agreement") setting forth certain registration rights and other
rights and agreements pertaining to the Investor's ownership of New Common
Stock.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Issuance and Sale. Upon the terms and subject to the
conditions set forth herein, at the Closing, the Reorganized Company shall
issue and sell to the Investor and the Investor shall purchase from the
Reorganized Company the number of shares of New Common Stock that represents
65.6% of the outstanding shares of New Common Stock on a fully diluted basis
as of the Closing Date (subject to adjustment as set forth in Section 5.6(d)
hereof, the "Investor Shares").
Section 1.2 The Purchase Price. The Investor shall pay to the
Company, in accordance with the Bankruptcy Plan, by wire transfer of
immediately available funds, an aggregate purchase price of $200 million (the
"Purchase Price") in consideration for the purchase by the Investor of the
Investor Shares upon the Closing (the "Investment").
ARTICLE II
THE CLOSING
Section 2.1 The Closing. The closing of the purchase and sale of
the Investor Shares hereunder and the other transactions contemplated hereby
(the "Closing") shall take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m.,
local time, after the later of (i) five (5) Business Days after the date upon
which all conditions set forth in Article VII hereof have been satisfied or
waived (other than those conditions which by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions)
and (ii) in the event of timely objections to the Initial Calculation, two (2)
Business Days after the date upon which the Initial Calculation is finalized
pursuant to Sections 2.3(b) and (c) hereof, unless another date or place is
agreed in writing by each of the parties hereto. The date on which the Closing
occurs is referred to in this Agreement as the "Closing Date."
Section 2.2 Deliveries.
(a) At the Closing, the Company shall deliver to the
Investor:
(i) one or more certificates representing the Investor
Shares registered in the name of the Investor (or its nominee or
designee) in such amounts as the Investor shall specify to the Company
at least three (3) Business Days prior to the Closing Date;
(ii) the Investor Agreement executed by the Company;
(iii) the officer's certificate contemplated in Section
7.2(h) hereof;
(iv) the Governmental Requirements;
(v) the Third Party Consents;
(vi) a certified copy of the Confirmation Order;
(vii) the resignations of certain directors of the
Company as specified by the Investor pursuant to Section 5.9 hereof;
(viii) the resignation of Xxxx X. Xxxxxxxx as Interim
Chief Executive Officer of the Company;
(ix) the opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, contemplated in Section 7.2(l) hereof; and
(x) such other instruments as are necessary to effectuate
the transactions contemplated hereby.
(b) At the Closing, the Investor shall deliver to the Company:
(i) the Purchase Price, which shall be paid by wire
transfer of immediately available funds to an account designated by the
Company at least three (3) Business Days prior to the Closing Date;
(ii) the Investor Agreement executed by the Investor;
(iii) the officer's certificate contemplated in Section
7.3(c) hereof; and
(iv) such other instruments as are necessary to
effectuate the transactions contemplated hereby.
Section 2.3 Initial Calculation.
(a) No later than two (2) Business Days after the Condition
Satisfaction Date, the Company shall prepare and deliver to the Investor a
schedule setting forth in reasonable detail the calculation of (i) EBITDA and
Adjusted EBITDA for the EBITDA Period and (ii) Working Capital as of the
Working Capital Date (collectively, the "Initial Calculation").
(b) If the Investor has any objections to the Initial
Calculation (or any component thereof), it shall deliver a written statement
describing its objections in reasonable detail to the Company not later than
two (2) Business Days after its receipt of the Initial Calculation. The
Company and the Investor shall use reasonable best efforts to resolve any such
objections themselves. If a final resolution of such objections is not made
within five (5) Business Days after receipt by the Company of the Investor's
written objections, the Investor and the Company shall submit the issue to an
auditor (the "Auditor") for resolution. The Auditor shall be the New York
office of Deloitte & Touche; provided, that if, for any reason, at the time of
such submission, Deloitte & Touche is unavailable to serve as the Auditor or
if Deloitte & Touche is not in a neutral and impartial position in relation to
the parties as determined by Deloitte & Touche, the parties shall have ten
(10) Business Days from the time of such submission to agree on a substitute
Auditor. Failing timely agreement, on the request of either party, the
American Arbitration Association shall designate a national accounting firm to
serve as the Auditor. If issues in dispute are submitted to the Auditor for
resolution, each party shall furnish to the Auditor such work papers and other
documents and information relating to the disputed issues as the Auditor may
request, and shall be afforded the opportunity to present to the Auditor any
material relating to the resolution of the disputed items and to discuss the
resolution of the disputed items with the Auditor. The Auditor shall be
instructed in performing the review that the Investor and the Company shall
each be provided with copies of any and all correspondence and drafts
exchanged between any party and the Auditor. The Investor and the Company
shall be granted reasonable access to information contained in the documents
made available to the Auditor by the other party, provided that any
information contained in the documents shall be subject to the terms of the
Confidentiality Agreement.
(c) The Auditor shall determine (and written notice thereof
shall be given to the Company and the Investor) as promptly as practicable,
but in any event within ten (10) Business Days of the date on which such
dispute is referred to the Auditor, based solely on presentations of the
Investor and the Company and not by independent review, (i) whether the
Initial Calculation (or any component thereof) was prepared in accordance with
the terms of this Agreement and (ii) (only with respect to the disputed items
submitted to the Auditor) whether and to what extent (if any) the Initial
Calculation (or any component thereof) requires adjustment. The parties shall
share equally the fees and expenses of the Auditor. The determination of the
Auditor shall be final, conclusive and binding on the parties, and the
Auditor's determination of the amount of the Initial Calculation (or any
component thereof) shall then be deemed to be the Initial Calculation (or the
applicable component thereof) for purposes of this Section 2.3.
(d) The Company shall make the work papers and back-up
materials used in preparing the Initial Calculation, and the relevant books,
records, and the financial staff of the Company available to the Investor and
its Advisors during normal business hours and upon reasonable notice during
(i) the review by the Investor of the Initial Calculation and (ii) the
resolution by the parties of any objections thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by
the Company (the "Company Disclosure Schedule") to the Investor simultaneously
with the execution and delivery hereof or in the SEC Reports, the Company
represents and warrants to the Investor as set forth below. Disclosure of an
item in response to one Section of this Agreement shall constitute disclosure
in response to such other Sections of this Agreement as is reasonably apparent
on the face of the disclosure notwithstanding the fact that no express
cross-reference is made. Disclosure of any items not otherwise required to be
disclosed shall not create any inference of materiality. In the event of any
inconsistency between statements in the body of this Agreement and statements
in the Company Disclosure Schedule (excluding exceptions expressly set forth
in the Company Disclosure Schedule with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement
shall control.
EXCEPT FOR THE LIMITED REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS ARTICLE III AND THE INVESTOR'S RELIANCE THEREON:
(A) THE INVESTOR IS ACQUIRING THE INVESTOR SHARES, AND THE SALE HEREUNDER IS
MADE "AS IS" AND "WHERE IS", WITHOUT REPRESENTATION OR WARRANTY; (B) THE
COMPANY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, ORAL OR
WRITTEN, INCLUDING, BUT NOT LIMITED TO THOSE CONCERNING (I) THE NATURE AND
CONDITION OF ANY ASSETS AND THE SUITABILITY OF ANY ASSETS FOR ANY AND ALL
ACTIVITIES AND USES, (II) THE MANNER, CONSTRUCTION, CONDITION AND STATE OF
REPAIR OR LACK OF REPAIR OF ANY IMPROVEMENTS LOCATED ON ANY ASSETS, AND (III)
THE COMPLIANCE OF ANY ASSET OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES,
OR REGULATIONS OF ANY GOVERNMENT OR OTHER BODY; (C) THE COMPANY MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF
LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY,
CONDITION, HABITABILITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE COMPANY OR ANY OF ITS ASSETS; (D) THE INVESTOR IS
PURCHASING THE INVESTOR SHARES BASED SOLELY ON THE INVESTOR'S OWN INDEPENDENT
INVESTIGATIONS AND FINDINGS AND NOT IN RELIANCE UPON ANY INFORMATION PROVIDED
BY THE COMPANY OR THE COMPANY'S REPRESENTATIVES; AND (E) THE COMPANY MAKES NO
REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR RELIABILITY OF ANY FORECASTS
OR PROJECTIONS OF REVENUES, SALES, EXPENSES OR PROFITS. IN NO EVENT SHALL THE
COMPANY BE LIABLE FOR DAMAGES ARISING FROM A BREACH OF A REPRESENTATION OR
WARRANTY FOLLOWING THE CLOSING.
Section 3.1 Organization; Subsidiaries.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and corporate authority to carry on its business
as it is now being conducted. Except as set forth in Section 3.1 of the
Company Disclosure Schedule, the Company is, and as of the Closing Date will
be, duly qualified to do business as a foreign corporation and in good
standing in each jurisdiction where the character of its assets owned or held
under lease or the nature of its business makes such qualification necessary,
except in those jurisdictions where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Sea Coast Foods, Inc. (the "Subsidiary") is a
Washington corporation and a direct wholly-owned subsidiary of the Company.
The Company owns all of the capital stock of the Subsidiary free and clear of
all Liens, other than Permitted Liens, and there are no outstanding
subscription rights, options, warrants, convertible or exchangeable securities
or other rights of any character whatsoever relating to issued or unissued
capital stock of the Subsidiary, or any Contracts to which the Company is a
party relating to issued or unissued capital stock of the Subsidiary or
pursuant to which the Subsidiary is or may become bound to issue or grant
additional shares of its capital stock or other equity interests or related
subscription rights, options, warrants, convertible or exchangeable securities
or other rights, or to grant preemptive rights. The Company does not own any
direct or indirect equity interest in any entity other than the Subsidiary.
(c) The Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington and
has the requisite corporate power and corporate authority to carry on its
business as it is now being conducted. Except as set forth in Section 3.1 of
the Company Disclosure Schedule, the Subsidiary is, and, as of the Closing
Date will be, duly qualified to do business as a foreign corporation and in
good standing in each jurisdiction where the character of its assets owned or
held under lease or the nature of its business makes such qualification
necessary, except in those jurisdictions where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 3.2 Due Authorization. The Company has all necessary
corporate power and authority to enter into this Agreement and each of the
other Transaction Documents to which it is a party, subject to approval of the
Bankruptcy Court, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Company of this Agreement and each
of the other Transaction Documents to which it is a party is, and the
issuance, sale and delivery of the Investor Shares by the Company and the
compliance by the Company with this Agreement and each of the other
Transaction Documents to which it is a party upon the approval of the
Bankruptcy Court, will have been duly authorized by all requisite corporate
action of the Company. This Agreement has been, and each of the other
Transaction Documents to which the Company is a party when executed and
delivered by the Company will be, duly and validly executed and delivered by
the Company, and (assuming due authorization, execution and delivery by the
other parties hereto or thereto) this Agreement constitutes, and each of such
other Transaction Documents when executed and delivered by the Company will
constitute, a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforcement is
limited by bankruptcy, reorganization, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and limitations
imposed by general principles of equity.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
250,000,000 shares of common stock, par value $0.01 per share ("Common
Stock"), and 25,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock"). As of June 30, 2003, there were (i) 77,155,022 shares of
Common Stock issued and outstanding, (ii) no shares of Common Stock held in
the Company's treasury, (iii) 9,639,031 shares of Common Stock reserved for
issuance upon the exercise of outstanding options to purchase shares of Common
Stock ("Options"), (iv) 2,400,000 shares of Common Stock reserved for issuance
upon the exercise of outstanding warrants to purchase shares of Common Stock
("Warrants"), (v) 5,758,176 shares of Common Stock were issuable upon
conversion of Preferred Stock, and (vi) 3,750,000 shares of Series A
Cumulative Convertible Preferred Stock, par value $0.01 per share, of the
Company ("Series A Preferred") issued and outstanding. All issued and
outstanding shares of Common Stock and Series A Preferred are, and all shares
of Common Stock issuable upon exercise of options or conversion of the Series
A Preferred, in accordance with the terms of the instruments governing such
exercise or conversion, shall be, when issued in accordance with the
respective terms thereof, duly authorized and validly issued, fully paid and
nonassessable, and free of preemptive rights.
(b) Subject to the Exceptions, except as disclosed in
Section 3.3(a) and except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, there are no outstanding subscription rights, options,
warrants, convertible or exchangeable securities or other rights of any
character whatsoever to which the Company is a party relating to issued or
unissued capital stock of the Company, or any Contracts of any character
whatsoever relating to issued or unissued capital stock of the Company or
pursuant to which the Company or the Subsidiary is or may become bound to
issue or grant additional shares of their capital stock or related
subscription rights, options, warrants, convertible or exchangeable securities
or other rights, or to grant preemptive rights.
(c) Subject to the Exceptions, and except as set forth in
Section 3.3(c) of the Company Disclosure Schedule, (i) neither the Company nor
the Subsidiary has agreed to register any securities under the Securities Act
or under any state securities law or granted registration rights to any Person
and (ii) there are no voting trusts, stockholder agreements, proxies or other
Contracts or understandings in effect to which the Company or the Subsidiary
is a party with respect to the voting or transfer of any of the outstanding
shares of their capital stock. The Company has no "poison pill" rights plan
pertaining to its capital stock.
(d) All outstanding shares of the Company's and the
Subsidiary's capital stock, and all outstanding options, warrants and other
securities of the Company and the Subsidiary, have been issued and granted in
compliance in all material respects with all applicable federal securities
laws.
Section 3.4 SEC Reports. Unless not required during the pendency
of the Bankruptcy Case, and except as set forth in Section 3.4 of the Company
Disclosure Schedule, since December 31, 2001, the Company has timely filed
with the SEC all registration statements, proxy statements, reports, forms,
certifications, schedules and other documents required to be filed by it under
applicable federal securities laws. Except as set forth in Section 3.4 of the
Company Disclosure Schedule, each SEC Report, on the date of its filing or as
subsequently amended, complied as to form in all material respects with the
applicable requirements of such laws and did not, on the date of filing or as
subsequently amended, contain any untrue statement of material facts or omit
to state material facts required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Section 3.5 Financial Statements. The consolidated financial
statements of the Company (including notes thereto) included in the SEC
Reports, as subsequently amended, comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, and have been prepared in
accordance with United States generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved (except as may
be indicated in the notes thereto) and fairly present in all material respects
in accordance with GAAP the consolidated financial condition, results of
operations, cash flows and changes in stockholders' equity of the Company and
the Subsidiary as of the respective dates thereof and for the respective
periods then ended (subject to normal year-end adjustments and the absence of
notes in the case of any unaudited interim financial statements).
Section 3.6 Absence of Certain Changes. Subject to the Exceptions,
and except as set forth in Section 3.6 of the Company Disclosure Schedule,
since December 31, 2002:
(a) the Company and the Subsidiary have in all material
respects conducted their respective business in the Ordinary Course of
Business;
(b) neither the Company nor the Subsidiary has taken any
actions, and no events have occurred that, individually or in the aggregate,
has had or would have a Material Adverse Effect; and
(c) neither the Company nor the Subsidiary has taken any
action that, if taken after the date of this Agreement without the Investor's
consent, would constitute a breach of any of the covenants set forth in
Section 5.1 hereof.
Section 3.7 Litigation.
(a) Subject to the Exceptions, and except as set forth in
Section 3.7(a) of the Company Disclosure Schedule, there is no claim, action,
suit, investigation or proceeding ("Litigation") pending or, to the Knowledge
of the Company, threatened in writing against the Company or the Subsidiary or
involving any of their respective properties or assets by or before any court,
arbitrator or other Governmental Entity which (i) is reasonably likely to
prevent or materially delay consummation of the transactions contemplated by
this Agreement or any of the other Transaction Documents or (ii) if resolved
adversely to the Company or the Subsidiary would have a Material Adverse
Effect.
(b) Subject to the Exceptions, and except as set forth in
Section 3.7(b) of the Company Disclosure Schedule, neither the Company nor the
Subsidiary is (i) in default under or in breach of any order, judgment or
decree of any court, arbitrator or other Governmental Entity, or (ii) a party
or subject to any order, judgment or decree of any court, arbitrator or other
Governmental Entity, except, in each case, where such default or breach, or
such order, judgment or decree, would not have a Material Adverse Effect.
Section 3.8 Consents and Approvals. Except for (a) any required
filings under (i) the HSR Act, (ii) the Exchange Act, (iii) any applicable
state securities and blue sky laws and (iv) the DGCL in respect of the Charter
Amendment, (b) the Regulatory Approvals set forth in Section 3.8 of the
Company Disclosure Schedule, (c) the Confirmation Order and the Disclosure
Statement Order, (d) the Break-Up Payment Order or Allowed Break-Up Payment
Claim, as the case may be, (e) the Creditor Consents set forth in Section 3.8
of the Company Disclosure Schedule, (f) the Contract Consents set forth in
Section 3.8 of the Company Disclosure Schedule, and (g) the License Consents,
no consent, approval, authorization of, declaration, filing, or registration
with, any Governmental Entity or any third party is required to be made or
obtained by the Company or the Subsidiary in connection with the execution,
delivery, and performance by the Company of this Agreement or any of the other
Transaction Documents to which the Company is a party, except for such
consents, approvals, authorizations, declarations, filings, or registrations
(x) which purport to be required to be made or obtained upon the occurrence of
the Bankruptcy Case (other than in respect of Material Licenses) or (y) the
failure of which to so file or obtain would not (A) materially impair the
Company's ability to conduct its business after the Closing substantially as
it was conducted immediately prior to the Closing or (B) materially adversely
affect the ability of the Company to perform its obligations under this
Agreement or any of the Transaction Documents to which it is a party. The
items referred to in clauses (a) through (d) of this Section 3.8 are referred
to as the "Governmental Requirements" and the items referred to in clauses (e)
through (f) are referred to as "Third Party Consents."
Section 3.9 Noncontravention. Assuming that the Governmental
Requirements, the Third Party Consents and the License Consents will be
satisfied, made or obtained and will remain in full force and effect and the
conditions set forth in Article VII hereof will be satisfied, neither the
execution, delivery or performance by the Company of this Agreement or any of
the other Transaction Documents to which the Company is a party nor the
consummation of the Transactions contemplated hereby or thereby will: (a)
conflict with or result in any breach of the certificate of incorporation of
the Company or the Amended and Restated By-Laws of the Company or the
certificate of incorporation or by-laws of the Subsidiary, (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination,
cancellation, suspension, modification or acceleration of any obligation
under, or result in the creation of a Lien (other than Permitted Liens) under,
or otherwise require the consent or waiver of, or notice to, any other party
under, any Company Material Contract, or (c) violate any Law applicable to the
Company, the Subsidiary or any of their respective properties or assets,
except in the case of clause (b) or (c), for violations, breaches, defaults,
rights or Liens (other than Permitted Liens) which (i) purport to become
effective upon the occurrence of the Bankruptcy Case, or (ii) individually or
in the aggregate, would not (x) materially adversely affect the ability of the
Company to perform its obligations under this Agreement or any of the
Transaction Documents to which it is a party or (y) materially impair the
Company's ability to conduct its business after the Closing substantially as
it was conducted immediately prior to the Closing.
Section 3.10 Compliance with Laws. Subject to the Exceptions, and
except as set forth in Section 3.10 of the Company Disclosure Schedule, the
Company and the Subsidiary are in compliance in all material respects with all
Laws applicable to their business, and neither the Company nor the Subsidiary
has received any written notice of any alleged material violation of Law,
except where such non-compliance or violation (i) purports to become effective
upon the occurrence of the Bankruptcy Case, or (ii) individually or in the
aggregate, would not (x) materially adversely affect the ability of the
Company to perform its obligations under this Agreement or any of the
Transaction Documents to which it is a party or (y) have a Material Adverse
Effect. The Company holds all licenses, permits, consents, registrations,
certificates, authorizations or approvals ("Permits"), required for the
ownership of the assets and operation of the businesses of the Company and the
Subsidiary and, all such Permits are in full force and effect, except where
the failure to hold or be in full force and effect (i) purports to become
effective upon the occurrence of the Bankruptcy Case, or (ii) individually or
in the aggregate, would not (x) materially adversely affect the ability of the
Company to perform its obligations under this Agreement or any of the
Transaction Documents to which it is a party or (y) have a Material Adverse
Effect.
Section 3.11 Company Material Contracts.
(a) Except for contracts filed as exhibits to the Company's
Annual Report on Form 10-K for the year ended December 31, 2002 (the "Current
10-K"), Section 3.11(a) of the Company Disclosure Schedule lists as of the
date hereof each Contract of the following types to which the Company or the
Subsidiary is a party or by or to which the Company or the Subsidiary or any
of their properties may be bound or subject:
(i) Contracts containing covenants purporting to limit
the freedom of the Company or the Subsidiary to compete in any line of
business in any geographic area or to hire any individual or group of
individuals;
(ii) other than purchase orders entered into in the
Ordinary Course of Business, Contracts and agreements which require
payments to or by the Company or the Subsidiary of at least $2.5 million
annually and which, in either case, cannot be canceled by the Company
without penalty on notice of ninety (90) days or less;
(iii) Contracts constituting indentures, mortgages,
promissory notes, loan agreements, bonds, guarantees, letters of credit
or other financing agreements or instruments of the Company or the
Subsidiary evidencing indebtedness in amounts in excess of $2.5 million;
(iv) Contracts providing for the acquisition or
disposition of any business or the capital stock of any Person in each
case having a purchase price in excess of $2.5 million that has not been
consummated;
(v) Contracts in respect of any joint venture,
partnership or other similar arrangement, in each case involving a
contribution of future capital (whether such future capital is
contributed in cash, goods or services) in excess of $2.5 million on the
part of the Company;
(vi) Contracts constituting manufacturer's
representative, sales agency, supply, co-packaging, distribution or
marketing Contracts (A) having a remaining term of one-year or more
(from the date hereof) and which are not terminable by the Company or
the Subsidiary without penalty on notice of ninety (90) days or less and
(B) which are material to the business, results of operations, condition
(financial or otherwise) of the Company and the Subsidiary, taken as a
whole;
(vii) other than capital expenditures reflected in the
Company Plan, Contracts under which the Company or the Subsidiary is
committed for aggregate capital expenditures in excess of $2.5 million;
(viii) Contracts (other than Contracts which are Plans)
providing for future payments in excess of $1 million individually that
are conditioned, in whole or in part, on a change in control of the
Company; and
(ix) each amendment, supplement, and modification in
respect of any of the foregoing.
(b) "Company Material Contract" means (i) the Contracts
filed as exhibits to the Current 10-K, (ii) the Contracts disclosed in Section
3.11(a) of the Company Disclosure Schedule, (iii) the Company Leases, and (iv)
the Plans which are Contracts. Subject to the Exceptions, and except as set
forth in Section 3.11(b) of the Company Disclosure Schedule, (x) each Company
Material Contract is a valid and binding obligation of the Company, and is in
full force and effect, (y) neither the Company nor the Subsidiary, nor, to the
Knowledge of the Company, any other Person, is in breach of or default under
any Company Material Contract and (z) neither the Company nor the Subsidiary
has received any written notice of a breach or default (which has not been
cured) under any Company Material Contract, except where the failure to be so
valid and binding and in full force and effect or such breach or default,
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 3.12 Financial Advisory, Legal and Other Fees. No agent,
broker, accounting firm, investment bank, other financial advisor, commercial
bank, other financial institution, law firm, public relations firm or any
other Person is or will be entitled to any fee, commission, expense or other
amount from the Company or the Subsidiary in connection with any of the
transactions contemplated by this Agreement or the other Transaction Documents
except for (a) the advisors identified in Section 3.12 of the Company
Disclosure Schedule, (b) other Persons whose fees, commissions, expenses and
other amounts accrued through the date hereof and paid or payable do not in
the aggregate total more than $1 million (taking into account any amount saved
if any of the aforementioned advisors are replaced) and (c) other Persons
hired by the Company after the date of this Agreement in connection with the
Bankruptcy Case or required to be paid by the Company by the Bankruptcy Code
or rules relating thereto or by an order of the Bankruptcy Court.
Section 3.13 ERISA Compliance.
(a) Section 3.13(a) of the Company Disclosure Schedule
contains a complete and correct list of each Plan. With respect to each Plan,
the Company has heretofore delivered or made available to the Investor true
and correct copies of the Plan and any amendments thereto (or if the Plan is
not a written Plan, a description thereof) and the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401 of the Code. There has been no amendment
to, written interpretation of or announcement (whether or not written) by the
Company or the Subsidiary relating to, or change in employee participation or
coverage under, any Plan that would increase materially the expense of
maintaining such Plan above the level or expense incurred in respect thereof
for the most recent fiscal year ended prior to the date hereof.
(b) Each Plan has been administered in all material
respects in accordance with its terms, and each of the Plans (and any related
trust) has been operated and is in material compliance with the applicable
provisions of ERISA, the Code and all other applicable laws. Each Plan which
is intended to be qualified under Section 401(a) of the Code is so qualified
and has been determined by the IRS to be so qualified or an application for
such qualification has been submitted to the IRS, and, to the Knowledge of the
Company, nothing has occurred since the date of such determination that could
reasonably be expected to adversely affect such qualified status. Each Plan
which is primarily subject to the laws of a jurisdiction outside of the United
States (each, a "Non-U.S. Plan") is in good standing with applicable
regulatory authorities.
(c) None of the Company, the Subsidiary nor any ERISA
Affiliate has incurred any unsatisfied liability under Title IV of ERISA or
Section 302 of ERISA in connection with any Plan and no condition exists that
presents a material risk to the Company, the Subsidiary or any ERISA Affiliate
of incurring any such liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation (which premiums have been paid when due).
(d) No Plan (i) is subject to Title IV of ERISA; (ii) is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA; (iii) is a
"multiple employer plan" within the meaning of Section 413(c) of the Code; or
(iv) is or at any time was funded through a "welfare benefit fund" within the
meaning of Section 419(e) of the Code and no benefits under a Plan are or at
any time have been provided through a voluntary employees' beneficiary
association within the meaning of Section 501(c)(9) of the Code.
(e) No Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) with respect to current or
former employees for periods extending after retirement or other termination
of service (other than (i) coverage mandated by statute or (ii) benefits the
full cost of which is borne by the current or former employee (or his or her
beneficiary)).
(f) Except as set forth on Schedule 3.13(f) of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents shall not, either alone or in
combination with another event, (i) entitle any current or former employee,
agent, independent contractor or officer of the Company or the Subsidiary to
severance pay, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee, agent, independent contractor or
officer, (iii) constitute a "change in control" causing an increase or
acceleration of benefits under any Plan, or (iv) result in any payment or
benefit that will be characterized as an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(g) To the Knowledge of the Company, there is no pending,
threatened or anticipated assessment, complaint, proceeding, or investigation
of any kind in any court or government agency with respect to any Plan or
Non-U.S. Plan (other than routine claims for benefits).
(h) There are no unpaid contributions due prior to the date
hereof to any Plan (including each Non-U.S. Plan) that are required to have
been made under the terms of the Plan or any applicable Laws.
(i) Neither the Company nor any other "disqualified person"
or "party in interest" as defined in Section 4975 of the Code and Section
3(14) of ERISA, respectively, has engaged in a non-exempt "prohibited
transaction" as defined in Section 4975 of the Code or Section 406 of ERISA
with respect to any Plan.
Section 3.14 Intellectual Property.
(a) Set forth on Section 3.14(a) of the Company Disclosure
Schedule is a complete list of the material trademarks owned or used by the
Company or the Subsidiary in connection with the Company's branded consumer
products, in each case identifying which are owned and which are licensed.
Subject to the Exceptions, and except as set forth in Section 3.14(a) of the
Company Disclosure Schedule, with respect to each item of material
Intellectual Property owned by the Company or the Subsidiary: (i) the Company
or the Subsidiary is the sole owner and possesses all right, title, and
interest in and to the item, free and clear of all Liens other than Permitted
Liens; (ii) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge of any Governmental Entity; and (iii) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of the Company, is threatened that
challenges the legality, validity, enforceability, registrations, use, or
ownership of the item, which, in the case of subsection (iii) above, if
resolved adversely to the Company or the Subsidiary would have a Material
Adverse Effect.
(b) Subject to the Exceptions, and except as set forth in
Section 3.14(b) of the Company Disclosure Schedule, with respect to each item
of material Intellectual Property which is used but not owned by the Company
or the Subsidiary: (i) the Company or the Subsidiary has a valid right to use
such items of Intellectual Property; and (ii) except as would not have a
Material Adverse Effect, neither the Company nor the Subsidiary is in material
breach of any license or sublicense with respect to such Intellectual Property
(including the Material Licenses), and no event has occurred that with notice
or lapse of time would constitute a material breach by the Company or the
Subsidiary thereunder.
(c) The Company and the Subsidiary own or have the right to
use, without payments to any other Person except pursuant to a license,
settlement or similar agreement, all material Intellectual Property either (i)
necessary for, or (ii) actually used in, the operation of the business
(including, without limitation, in connection with the manufacture, marketing,
sale or distribution of any of the Company's products) of the Company and the
Subsidiary as and where their business is currently conducted.
(d) Subject to the Exceptions, and except as would not have
a Material Adverse Effect and except as set forth in Section 3.14(d) of the
Company Disclosure Schedule: (i) neither the Company nor the Subsidiary has
interfered with, infringed upon, misappropriated, or otherwise violated any
intellectual property rights of third parties; (ii) neither the Company nor
the Subsidiary has received any charge, complaint, claim, demand, or notice
during the past two (2) years, (or earlier, if not resolved) alleging any such
interference, infringement, misappropriation, or violation (including any
claim that the Company or the Subsidiary must license or refrain from using
any intellectual property rights of any third party); and (iii) to the
Knowledge of the Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise violated any material Intellectual Property
rights of the Company or the Subsidiary during the past two (2) years (or
earlier if not resolved).
(e) Except as would not have a Material Adverse Effect, the
Intellectual Property owned by the Company and/or the Subsidiary and for which
confidentiality is required has been maintained in confidence in accordance
with protection procedures believed by the Company and the Subsidiary to be
adequate for protection, and in accordance with procedures customarily used in
the industry to protect rights of like importance.
Section 3.15 Taxes. Subject to the Exceptions, and except as set
forth in Section 3.15 of the Company Disclosure Schedule:
(a) The Company and the Subsidiary have timely filed all
Tax Returns required to be filed by them under applicable law, and all such
Tax Returns were and are true, complete and correct in all material respects.
Except to the extent adequately reserved for and reflected on the most recent
balance sheets of the Company contained in the SEC Reports, all Taxes due and
payable by the Company for all periods or portions thereof ending on or before
the Closing Date have been timely paid or provided for.
(b) The Company and the Subsidiary have complied with the
provisions of the Code relating to the withholding of Taxes, as well as
similar provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld, collected and paid over to the proper
governmental authorities all amounts required.
(c) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns of
the Company or the Subsidiary, except for any audits or other proceedings (i)
that will not result in additional material Taxes, or (ii) with respect to
which the Company has established adequate reserves for any resultant Taxes,
which reserves are reflected on the most recent balance sheets of the Company
contained in the SEC Reports.
(d) Neither the Company nor the Subsidiary has requested
any extension of time within which to file any Tax Return, which Tax Return
has not prior to the expiration of the extension period been filed.
(e) Neither the Company nor the Subsidiary has agreed to,
nor is it required to make, any adjustment pursuant to Section 481(a) of the
Code (or any predecessor provision) by reason of any change in any accounting
method of the Company or the Subsidiary that could affect any period or
portion thereof beginning on or after the Closing Date, and there is no
application pending with any taxing authority requesting permission for any
changes in any accounting method of the Company or the Subsidiary.
(f) The Company does not have any material liability for
Taxes of any Person other than the Subsidiary (i) under Treasury Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) by
contract, or (iii) otherwise.
(g) No material deficiencies for any Taxes have been
proposed, asserted or assessed in writing against the Company which have not
been paid, except for any deficiencies with respect to which the Company has
established adequate reserves, which reserves are reflected on the most recent
balance sheets of the Company contained in the SEC Reports, and there is no
outstanding waiver of the statute of limitations with respect to any Taxes or
Tax Returns of the Company or the Subsidiary.
(h) The Subsidiary does not have any liability for Taxes of
any Person other than the Company (i) under Treasury Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign law) (ii) by contract, or
(iii) otherwise.
(i) Section 3.15 of the Company Disclosure Schedule
describes all material adjustments to Tax Returns filed by, or on behalf of,
the Company or the Subsidiary, or any affiliated group of corporations of
which the Company or the Subsidiary is or was a member, for all taxable years
since 1998, that have been proposed in writing by any representative of any
Governmental Entity, and the resulting Taxes, if any, proposed to be assessed.
(j) There are no material liens with respect to Taxes upon
any of the properties or assets, real or personal, tangible or intangible, of
the Company or the Subsidiary (except for Taxes not yet due).
(k) No property owned by the Company or the Subsidiary is
property that the Investor, the Company or the Subsidiary is or will be
required to treat as being owned by another person pursuant to the provisions
of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately before the enactment of the Tax Reform Act of 1986, or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(l) Neither the Company nor the Subsidiary, owns an
interest in any (i) domestic international sales corporation, (ii) foreign
sales corporation, (iii) controlled foreign corporation, or (iv) passive
foreign investment company.
(m) The Company is not a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(n) To the Knowledge of the Company, neither the Company
nor the Subsidiary is a party (other than as an investor) to any industrial
development bond.
(o) To the Knowledge of the Company, neither the Company
nor the Subsidiary was a party to any deferred intercompany transaction that
will be restored (pursuant to the Section 1502 regulations) and will result in
income or loss to the Company or the Subsidiary due to the contemplated
transaction.
(p) To the Knowledge of the Company, during the previous
two years neither the Company nor the Subsidiary has engaged in any exchange
under which the gain realized on such exchange was not recognized due to
Section 1031 of the Code.
(q) To the Knowledge of the Company, none of the property
owned or used by the Company or the Subsidiary is subject to a lease other
than a "true" lease for federal income tax purposes.
Section 3.16 Properties.
(a) Section 3.16(a) of the Company Disclosure Schedule sets
forth a complete list of (i) all real property owned in fee by the Company or
the Subsidiary (the "Company Owned Real Property") and (ii) all material real
property leases and subleases (including the corresponding overleases) to
which the Company or the Subsidiary is a party (the "Company Leases").
(b) Subject to the Exceptions, and except as disclosed in
Section 3.16(b) of the Company Disclosure Schedule:
(i) the Company and the Subsidiary have good, marketable
title to the Company Real Property free of all Liens including good,
valid and enforceable leasehold interests in and to the Company Leased
Real Property pursuant to the Company Leases, in each case subject to
the Permitted Liens;
(ii) there are no outstanding consents which have not
yet been obtained by the Company or the Subsidiary, as applicable, in
connection with the leasing of any of the Company Leased Real Property,
except for consents the failure to obtain would not result in a Material
Adverse Effect;
(iii) except for outstanding Third Party Consents, (x)
the use and operation of the Company Real Property in the conduct of the
business of the Company and the Subsidiary does not violate any
instrument of record or agreement affecting the Company Real Property
and (y) there are no outstanding notices of default under any of the
Company Leases which individually, or in the aggregate, would materially
adversely affect the Company's use of the Company Leased Real Property;
(iv) valid policies or commitments of title insurance
have been issued insuring the Company's or, if applicable, the
Subsidiary's fee simple title to the Company Owned Real Property,
subject only to the matters set forth in such policies or commitments;
and
(v) (x) each material certificate, permit or license
from any Governmental Entity having jurisdiction over any of the Company
Owned Real Property or any agreement, easement or other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Company Owned Real Property or which is
necessary to permit the lawful use and operation of all driveways, roads
and other means of egress and ingress to and from any of the Company
Owned Real Property has been obtained and is in full force and effect,
and (y) no written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement having a
material adverse effect on the use thereof or the business or operations
of the Company or the Subsidiary has been issued by any Governmental
Entity.
Section 3.17 Environmental Matters. Subject to the Exceptions, and
except as set forth in Section 3.17 of the Company Disclosure Schedule:
(a) the Company Real Property (the "Company Facilities") is
in compliance with all applicable Environmental Laws including, but not
limited to, the possession of all permits and other governmental
authorizations required under applicable Environmental Laws, where the failure
to comply with such Environmental Laws would result in a Material Adverse
Effect;
(b) there is no pending or threatened claim, lawsuit or
administrative proceeding against the Company or the Subsidiary under any
Environmental Law, which would have a Material Adverse Effect. The Company has
not received written notice from any person, including a Governmental Entity,
alleging that the Company or the Subsidiary is in violation of any applicable
Environmental Law or otherwise may be liable under any applicable
Environmental Law, which violation or liability is unresolved and would result
in a Material Adverse Effect; and
(c) there have been no Releases, spills or discharges of
Hazardous Materials on or underneath any of the Company Real Property, that
would result in a Material Adverse Effect.
Section 3.18 Affiliate Transactions. Subject to the Exceptions,
and except as set forth in Section 3.18 of the Company Disclosure Schedule,
none of the executive officers or directors (or immediate family members
thereof) of the Company or the Subsidiary nor any Five Percent Holder is party
to any Contract with the Company or has any material interest in any property,
real, personal or mixed, tangible or intangible, owned by or used in the
business of the Company or the Subsidiary.
Section 3.19 Labor Relations. Subject to the Exceptions, and
except as set forth in Section 3.19 of the Company Disclosure Schedule:
(a) the Company and the Subsidiary are in compliance in all
material respects with all applicable Laws respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to employees, except where such non-compliance would not
have a Material Adverse Effect;
(b) neither the Company nor the Subsidiary has received
written notice of any charge or complaint against either the Company or the
Subsidiary pending before the Equal Employment Opportunity Commission, the
National Labor Relations Board, or any other Governmental Entity regarding any
alleged unlawful employment practice which, if resolved adversely to the
Company or the Subsidiary, would have a Material Adverse Effect;
(c) neither the Company nor the Subsidiary is a party to
any collective bargaining agreement and there is no work stoppage or labor
strike pending or threatened against the Company or the Subsidiary; and
(d) neither the Company nor the Subsidiary has received
written notice that any representation petition respecting the employees of
the Company or the Subsidiary has been filed with the National Labor Relations
Board.
Section 3.20 Certain Business Practices. Since January 1, 2002,
neither the Company nor the Subsidiary nor, to the Knowledge of the Company,
any directors, officers, agents or employees of the Company and/or the
Subsidiary acting on behalf of the Company or the Subsidiary have (a) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to political activity, or (b) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended.
Section 3.21 Insurance. The Company and the Subsidiary maintain
policies of insurance in amounts that the Company believes to be reasonably
sufficient to insure against risks usually insured against by Persons
operating similar businesses or properties of similar size in the localities
where such businesses or properties are located and have been issued by
insurers of recognized responsibility. The Company has received no written
notice of default under any such policies and no written notice of
cancellation of any such coverage.
Section 3.22 State Takeover Statutes. The Company has opted out of
Section 203 of the DGCL and, as a result, Section 203 of the DGCL is
inoperable as to the Investment. To the Knowledge of the Company, no other
state takeover statute applies to this Agreement or any of the transactions
contemplated hereby.
Section 3.23 Product Recalls. Except as set forth in Section 3.23
of the Company Disclosure Schedule, since January 1, 2002, the Company has not
instituted any material recalls or withdrawals of products produced or sold by
the Company or the Subsidiary, and there has not been any similar action of
any Governmental Entity with respect to such products.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Except as set forth in the disclosure schedule delivered by the
Investor (the "Investor Disclosure Schedule") to the Company simultaneously
with the execution and delivery hereof, the Investor hereby represents and
warrants to the Company as set forth below. Disclosure of an item in response
to one Section of this Agreement shall constitute disclosure in response to
such other Sections of this Agreement as is reasonably apparent on the face of
the disclosure notwithstanding the fact that no express cross-reference is
made. Disclosure of any items not otherwise required to be disclosed shall not
create any inference of materiality. In the event of any inconsistency between
statements in the body of this Agreement and statements in the Investor
Disclosure Schedule (excluding exceptions expressly set forth in the Investor
Disclosure Schedule with respect to a specifically identified representation
or warranty), the statements in the body of this Agreement shall control.
Section 4.1 Investment.
(a) The Investor is acquiring the Investor Shares for
investment for its own account, and not with a view to any resale or
distribution thereof in violation of the Securities Act. The Investor
understands that the Investor Shares have not and subject to the terms of the
Investor Agreement will not be registered under the Securities Act or any
state securities laws by reason of specific exemptions therefrom which depend
upon, among other things, the bona fide nature of the investment intent and
the accuracy of the Investor's representations as expressed herein.
(b) The Investor acknowledges that the Investor Shares to
be purchased by the Investor must be held indefinitely unless subsequently
registered under the Securities Act and any applicable state securities laws
or unless exemptions from such registrations are available. The Investor's
financial condition and investments are such that it is in a position to hold
the Investor Shares for an indefinite period, bear the economic risks of the
investment and withstand the complete loss of the investment. The Investor has
extensive knowledge and experience in financial and business matters and has
the capability to evaluate the merits and risks of the Investor Shares. The
Investor qualifies as (i) an "accredited investor" as such term is defined in
Section 2(15) of the Securities Act and Regulation D promulgated thereunder or
(ii) a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act.
(c) The Investor (i) has had an opportunity to conduct a
due diligence investigation concerning the Company's business operations,
financial affairs and prospects; (ii) has received all the information it
considers necessary for deciding whether to enter into the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party; (iii) has examined and reviewed the SEC Reports; and (iv) has, in
conjunction with its legal counsel and other advisors, evaluated the risk
factors inherent in an investment in the Investor Shares.
Section 4.2 Organization. The Investor is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Investor's general partner is X.X. Childs Advisors III,
L.P., a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware, whose general partner is
X.X. Childs Associates, L.P., a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, whose
general partner is X.X. Childs Associates, Inc., a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
(the Investor and the foregoing entities being referred to herein collectively
as the "Investor Entities" and individually as an "Investor Entity").
Section 4.3 Due Authorization. The Investor has all necessary
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party, subject to approval of the
Bankruptcy Court, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by the Investor of this Agreement and each
of the other Transaction Documents to which it is a party is, and the
acceptance of the Investor Shares by the Investor and the compliance by the
Investor with this Agreement and each of the other Transaction Documents to
which it is a party, upon the approval of the Bankruptcy Court, will have been
duly authorized by all requisite action of each of the Investor Entities. This
Agreement has been, and each of the other Transaction Documents to which the
Investor is a party when executed and delivered by the Investor will be, duly
and validly executed and delivered by the Investor, and (assuming due
authorization, execution and delivery by the other parties hereto or thereto)
this Agreement constitutes, and each of such other Transaction Documents when
executed and delivered by the Investor will constitute, a valid and binding
obligation of the Investor, enforceable against the Investor in accordance
with its terms, except as such enforcement is limited by bankruptcy,
reorganization, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and limitations imposed by general principles of
equity.
Section 4.4 Non-Contravention. Assuming that the Governmental
Requirements and the Third Party Consents will be satisfied, made or obtained
and will remain in full force and effect and the conditions set forth in
Article VII hereof will be satisfied, neither the execution, delivery or
performance by the Investor of this Agreement or any of the other Transaction
Documents to which the Investor is a party nor the consummation of the
Transactions contemplated hereby or thereby will: (a) conflict with or result
in any breach of the organizational documents of any Investor Entity, (b)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default under, or give rise to any right of
termination, cancellation, suspension, modification or acceleration of any
obligation under, or result in the creation of a Lien under, any of the terms,
conditions or provisions of, or otherwise require the consent or waiver of, or
notice to, any other party under, any bond, note, mortgage, indenture, other
evidence of indebtedness, guarantee, license, agreement or other contract or
instrument to which any Investor Entity is a party or by which any of them or
any of their respective properties or assets is bound, or (c) violate any Law
applicable to any Investor Entity, or any of their respective properties or
assets, except (in the case of clause (b) or (c)), for violations, breaches,
defaults, rights or Liens which (i) purport to become effective upon the
occurrence of the Bankruptcy Case, (ii) individually or in the aggregate,
would not materially adversely affect the ability of the Investor to perform
its obligations under this Agreement or any of the Transaction Documents to
which it is a party or (iii) would not have a Material Adverse Effect.
Section 4.5 Litigation.
(a) Except as set forth in Section 4.5 of the Investor
Disclosure Schedule, there is no Litigation pending or, to the Knowledge of
the Investor, threatened in writing against any Investor Entity or involving
any of its properties or assets by or before any court, arbitrator or other
Governmental Entity which (i) is reasonably likely to prevent or materially
delay consummation of the transactions contemplated by this Agreement or any
of the other Transaction Documents or (ii) if resolved adversely to such
Investor Entity would have a Material Adverse Effect.
(b) Except as set forth in Section 4.5 of the Investor
Disclosure Schedule, no Investor Entity is in default under or in breach of
any order, judgment or decree of any court, arbitrator or other Governmental
Entity, and no Investor Entity is a party or subject to any order, judgment or
decree of any court, arbitrator or other Governmental Entity, except, in each
case, where such default, or breach, or such order, judgment or decree, would
not (i) prevent or materially delay consummation of the transactions
contemplated by this Agreement or any of the other Transaction Documents or
(ii) have a Material Adverse Effect.
Section 4.6 Consents and Approvals. Except for the Governmental
Requirements, no consent, approval, authorization of, declaration, filing, or
registration with any Governmental Entity or any third party is required to be
made or obtained by any Investor Entity in connection with the execution,
delivery, and performance of this Agreement or any of the other Transaction
Documents contemplated hereby, except for such consents, approvals,
authorizations, declarations, filings, or registrations the failure of which
to so file or obtain would not (i) prevent or materially delay consummation of
the transactions contemplated by this Agreement or any of the other
Transaction Documents or (ii) have a Material Adverse Effect.
Section 4.7 Sufficient Available Funds. The Investor presently has
undrawn capital commitments drawable by it upon ten (10) Business Days' notice
in an amount sufficient to pay the Purchase Price and from the date hereof
through and including the Closing will continue to have, undrawn capital
commitments sufficient to pay such amounts and otherwise satisfy all of its
financial obligations under this Agreement. Other than the ten (10) Business
Day notice referred to above, there are no conditions to the Investor's
ability to draw down such capital commitments through the Closing Date.
Section 4.8 Beneficial Ownership. As of the date of this
Agreement, the Investor has no record or beneficial ownership of, and does not
hold investment authority over, any securities of the Company.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 Conduct of Business Pending Closing. Subject to the
Exceptions, and except as set forth in Section 5.1 of the Company Disclosure
Schedule, or as consented to by the Investor (which consent shall not be
unreasonably withheld), during the period from the date of this Agreement
through and including the Closing Date, the Company shall not, and shall not
permit the Subsidiary to:
(a) conduct its business other than in the Ordinary Course
of Business;
(b) other than dividends and distributions by the
Subsidiary to the Company, (i) declare, set aside or pay any dividends
(payable in cash, stock, property or otherwise) on, or make any other
distributions in respect of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) purchase, redeem or otherwise acquire any capital
stock in the Company or the Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(c) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any of its shares of capital stock or any other voting
securities or any securities convertible into, exercisable for or exchangeable
with, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, except for the issuance of shares of
Common Stock pursuant to (i) the exercise of Options and Warrants outstanding
on the date hereof, (ii) any mandatory provisions of any Plan and (iii) the
conversion of Series A Preferred outstanding on the date hereof;
(d) amend its charter, bylaws or other comparable
organizational documents other than in accordance with this Agreement;
(e) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any "business" as defined in
Rule 3-05(a)(2) of Regulation S-X;
(f) other than with respect to Permitted Liens, sell,
exchange, lease, sublease or otherwise dispose of any of the Company Real
Property or other assets of the Company or Subsidiary (other than Intellectual
Property), except for dispositions in the Ordinary Course of Business of (x)
inventory, (y) receivables pursuant to the Receivables Facility or (z) other
property or assets that are not material to the operation of the business of
the Company and the Subsidiary taken as a whole;
(g) other than (x) with respect to Permitted Liens and (y)
licenses in the Ordinary Course of Business, (i) sell, pledge, dispose of,
transfer, license, encumber, abandon or fail to maintain, or (ii) authorize
the sale, pledge, disposition, transfer, encumbrance, abandonment or failure
to maintain of, any rights to items of material Intellectual Property;
(h) other than the Existing Credit Facility, the DIP
Financing, the New Credit Facility and the High Yield Offering, incur any
indebtedness for borrowed money or issue any debt securities or options,
warrants, calls or other rights to acquire any debt securities of the Company,
or assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any Person, in each case in excess of $1 million and up to an
aggregate of $2.5 million, except under the Receivables Facility and for
surety bonds issued in the Ordinary Course of Business;
(i) authorize or make aggregate commitments with respect to
capital expenditures in excess of $2.5 million above the aggregate capital
expenditures reflected in the Company Plan;
(j) increase the compensation payable or to become payable
or the benefits provided to, or pay any bonus (other than a bonus paid or
options required to be paid or issued pursuant to a Plan in effect as of the
date hereof) to, any director, officer or employee of the Company or the
Subsidiary, or grant any severance or termination pay to, or enter into or
modify any employment or severance agreement with, any director, officer or
other employee of the Company or of the Subsidiary, or establish, adopt, enter
into or amend, except as required to comply with applicable law, any
collective bargaining, bonus, profit-sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other Plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer, consultant or
employee, other than (x) pursuant to the Key Employee Retention Plan, (y) for
payments to non-executive employees pursuant to existing Plans and policies of
the Company or (z) suspension of the Company's 1998 Employee Stock Purchase
Plan;
(k) terminate the employment of any executive officer
(other than by accepting the resignations of Xxxx X. Xxxxxxxx or Xxxx Xxxxxx)
of the Company other than for cause;
(l) pay, loan or advance any amount to, or sell, transfer
or lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or purchase any properties or assets from, or enter into any
Contract with, any Five Percent Holder, or any of the Company's or the
Subsidiary's executive officers or directors (or immediate family members
thereof), other than payment of compensation and benefits in the Ordinary
Course of Business or as permitted under Section 5.1(j) hereof;
(m) other than (x) in the Ordinary Course of Business and
(y) as required under the terms of any existing Contract or any other Contract
entered into in accordance with this Section 5.1, pay, discharge or satisfy
any claim, liability or obligation (absolute, accrued, contingent or
otherwise) (not otherwise subject to clause (o) below) in excess of $1
million;
(n) other than any Contract entered into with respect to
the Financing, the DIP Financing or High Yield Offering, enter into any
Contract that (i) is outside the Ordinary Course of Business and (ii) (x)
presents a material risk of delaying the Closing, (y) requires the Company to
make payments in excess of $1 million, or (z) subjects the Company or the
Subsidiary to any material non-compete or other similar material restriction
on the conduct of their businesses that would be binding following the
Closing;
(o) other than pursuant to the Bankruptcy Plan, effect any
settlement or compromise of any pending or threatened Litigation in respect of
which the Company or the Subsidiary is or could have been a party, unless such
individual settlement (i) includes an unconditional written release of the
Company and the Subsidiary, in form and substance reasonably satisfactory to
the Company, from all liability on claims that are the subject matter of such
proceeding, (ii) does not include any statement as to any admission of fault,
culpability or failure to act by or on behalf of the Company and the
Subsidiary and (iii) involves the payment by the Company of less than $2
million (in excess of any payments made pursuant to or by insurance policies)
individually and, when taken together with all other such individual
settlements, involved payment by the Company of less than $5 million in the
aggregate (in excess of any payments made pursuant to or by insurance
policies);
(p) change its methods of accounting, except as required by
changes in GAAP or SEC accounting; make or change any Tax election, change any
annual Tax accounting period, adopt or change any method of Tax accounting,
file any amended Tax Return, enter into any closing agreement, settle any Tax
claim or assessment, surrender any right to claim a Tax refund, consent to the
extension or waiver of the limitations period applicable to any Tax claim or
assessment, or take or omit to take any other action if such action or
omission would have the effect of materially increasing the Tax liability of
the Company or the Subsidiary, except as required by law;
(q) modify, amend or otherwise alter the Bankruptcy Plan in
a manner that is adverse to the Investor (other than in accordance with the
terms of this Agreement);
(r) make any voluntary pre-payments or other voluntary
distributions on or in respect of the Senior Notes or the Sub Debt; or
(s) agree to take any of the foregoing actions.
Section 5.2 Directors' and Officers' Indemnification and
Insurance.
(a) On or prior to the Closing Date, the Company shall put
in place and, thereafter, the Company shall maintain in effect for not less
than six years after the Closing Date, the Company's current directors' and
officers' insurance policies, if such insurance is obtainable (or policies
equivalent in all material respects to those maintained by or on behalf of the
Company and the Subsidiary on the date hereof, and having at least the same
coverage and containing terms and conditions no less advantageous to the
current and all former directors and officers of the Company) with respect to
acts or failures to act prior to the Closing Date; provided, however, that in
order to maintain or procure such coverage, the Company shall not be required
to maintain or obtain policies providing such coverage except to the extent
such coverage can be provided at an annual cost of no greater than three (3)
times the most recent premium paid by the Company for such coverage for the
period from June 25, 2003 through June 25, 2004 (the "Cap"); provided,
further, that if equivalent coverage cannot be obtained, or can be obtained
only by paying an annual premium in excess of the Cap, the Company shall be
required to only obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.
(b) From and after the Closing Date, the Company shall
indemnify and hold harmless to the fullest extent permitted under applicable
law (including by any Governmental Entity), each person who is, or has been at
any time prior to the date hereof or who becomes prior to the Closing Date, an
officer or director of the Company or the Subsidiary (each, an "Indemnified
Party") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys fees), judgments, fines, penalties and amounts paid in
settlement in connection with any Litigation arising out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in their capacities
as such, which acts or omissions occurred prior to the Closing Date, whether
asserted or claimed prior to, at or after the Closing Date.
(c) The Company shall keep in effect for a period of not
less than six years from the Closing Date (or, in the case of matters
occurring prior to the Closing Date which have not been resolved prior to the
sixth anniversary of the Closing Date, until such matters are finally
resolved) all provisions in the Company's certificate of incorporation and
bylaws that provide for exculpation of director and officer liability and
indemnification (and advancement of expenses related thereto) of the past and
present officers and directors of the Company to the fullest extent permitted
by the DGCL and other applicable laws (including by any Governmental Entity),
and such provisions shall not be amended except as either required by
applicable Law or to make changes permitted by Law that would enhance the
rights of past or present officers and directors to indemnification or
advancement of expenses.
(d) If the Company or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or other entity and
shall not be the surviving entity of the consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Company
shall assume all of the obligations set forth in this Section 5.2.
(e) The provisions of this Section 5.2 are intended to be
for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
Section 5.3 No Solicitation of Alternative Proposals.
(a) Except as set forth in this Section 5.3, neither the
Company nor the Subsidiary shall, directly or indirectly through any of its
officers, directors, employees, financial advisors, investment bankers,
attorneys, accountants or other representatives or agents (collectively,
"Representatives"), or otherwise, (i) solicit, initiate, facilitate (including
by way of furnishing information), seek, assist or encourage the submission of
any Alternative Proposal, or (ii) except as determined by the Board of
Directors in good faith to be necessary to satisfy the fiduciary duties of the
Board of Directors under applicable law, after consultation with outside legal
counsel and financial advisors, in response to any bona fide written
Alternative Proposal which did not result from a breach of Section 5.3(a)(i),
participate in any discussions or negotiations regarding, or furnish to any
Person, any information (provided that, prior to furnishing such information,
the Company enters into a customary confidentiality agreement on terms no less
favorable to the Company than those contained in the Confidentiality
Agreement) with respect to, or otherwise cooperate in any way with respect to,
any bona fide written Alternative Proposal. The Company shall, and shall
direct or cause its Representatives to, immediately cease and cause to be
terminated any discussions or negotiations with any parties that may be
ongoing with respect to any Alternative Proposal.
(b) Except as set forth in this Section 5.3(b), the Board
of Directors shall not (i) prior to commencement of the Bankruptcy Case,
withhold, withdraw, amend, change or modify, or publicly propose to withhold,
withdraw, amend, change or modify, in a manner adverse to the Investor, the
approval or recommendation by the Board of Directors of this Agreement, (ii)
prior to commencement of the Bankruptcy Case, approve or recommend, or
publicly propose to approve or recommend, any Alternative Proposal or (iii)
cause or permit the Company to enter into any letter of intent or any
agreement, contract or commitment with respect to any Alternative Proposal
("Alternative Agreement") or seek Bankruptcy Court approval of an Alternative
Agreement or Alternative Proposal. Notwithstanding the foregoing, the Board of
Directors may take any of the actions referred to above in this Section 5.3(b)
with regard to a Superior Proposal in the event that the Board of Directors
determines in good faith that such action is necessary to satisfy its
fiduciary duties under applicable law, after consultation with outside legal
counsel and financial advisors; provided that, prior to or contemporaneous
with taking any action referred to in clause (iii) above with regard to an
Alternative Proposal, the Company has provided the notice required by the last
sentence of subparagraph (c) below and the Board of Directors shall cause the
Company to terminate this Agreement pursuant to Section 8.1(h) hereof.
(c) The Company shall, within 24 hours of receipt thereof,
advise the Investor of (i) any Alternative Proposal, Stand Alone Proposal or
written request for information with respect to any Alternative Proposal or
Stand Alone Proposal, the material terms and conditions of such Alternative
Proposal, Stand Alone Proposal or request and the identity of the Person
making such Alternative Proposal, Stand Alone Proposal or request and (ii) any
changes in any such Alternative Proposal, Stand Alone Proposal or request. The
Company shall provide the Investor with at least two (2) Business Days written
notice prior to entering into any Alternative Agreement.
(d) As used herein, (i) "Alternative Proposal" shall mean
any proposal or offer from any Person other than the Investor or any Affiliate
of the Investor relating to an Acquisition Transaction, other than a Stand
Alone Proposal and (ii) "Superior Proposal" shall mean an Alternative Proposal
with terms that the Board of Directors determines in good faith (after
receiving advice of the Company's outside financial adviser), taking into
account all relevant aspects of the proposal and the Person making the
proposal, would, if consummated, result in a transaction that is (x) more
favorable to the Company's stakeholders than the transactions contemplated by
this Agreement, and (y) reasonably capable of being completed.
(e) Nothing contained herein shall in any manner limit,
restrict or preclude the Company or its Representatives from engaging in any
discussions or negotiations with, providing any information to, or entering
into any letter of intent, agreement, contract or commitment with any
proponent of a Stand Alone Proposal or any Representatives thereof. In no
event shall the taking of any action in respect of a Stand Alone Proposal
constitute a withdrawal or change in recommendation of this Agreement by the
Board of Directors.
Section 5.4 Access to Information.
(a) Until the Closing Date, the Company shall use its
reasonable best efforts to (i) afford to the officers, employees, accountants,
counsel, financing sources and other representatives of the Investor
(collectively, "Advisors"), reasonable access during normal business hours to
its properties (including access to existing real property appraisals and
existing Phase I environmental reports), books, contracts, commitments and
records; (ii) furnish the Investor and its Advisors with copies of all such
contracts, books and records and other existing documents and data as the
Investor and/or its Advisors may reasonably request; (iii) make available
during normal business hours to the Advisors the appropriate individuals
(including management personnel, attorneys, accountants and other
professionals) for discussion of the Company's business, properties, prospects
and personnel as the Investor may reasonably request; and (iv) furnish the
Investor and its Advisors with such additional financial, operating and other
data and information concerning the Company and the Subsidiary as the Investor
and/or its Advisors may reasonably request and as may be reasonably available
to the Company; provided, however, that nothing in this Section 5.4(a) or
otherwise shall require the Company to furnish to the Investor or its Advisors
any materials prepared by the Company's financial advisors or legal advisors.
(b) The Investor shall keep all information disclosed to
the Persons identified in clause (a) above pursuant to this Agreement
confidential in accordance with the terms of the Confidentiality Agreement.
Notwithstanding anything to the contrary contained herein or in the
Confidentiality Agreement, the parties hereto and each of their respective
employees, representatives or other agents, are permitted to disclose to any
and all Persons, without limitations of any kind, the tax treatment and tax
structure of the transactions contemplated hereby and all materials of any
kind (including opinions or other tax analyses) that are or have been provided
to such parties related to such tax treatment and tax structure; provided,
however, that the foregoing permission to disclose the tax treatment and tax
structure does not permit the disclosure of any information that is not
relevant to understanding the tax treatment or tax structure of the
transactions contemplated hereby (including the identity of any party and the
amounts paid in connection with the transactions); provided, further, however,
that the tax treatment and tax structure shall be kept confidential to the
extent necessary to comply with federal or state securities laws.
Section 5.5 Consents. The Company shall cooperate with the
Investor and use its reasonable best efforts to (a) solicit and obtain all of
the Governmental Requirements, all Third Party Consents and all License
Consents as well as any other consents, waivers, approvals, authorizations or
orders required for the consummation of transactions contemplated by this
Agreement and the other Transaction Documents and (b) timely make all
necessary filings under the HSR Act and seek to obtain early termination of
the waiting period under the HSR Act.
Section 5.6 Restructuring.
(a) The Company, the Subsidiary and the Investor shall use
their reasonable best efforts to effectuate the Restructuring. In furtherance
of and without limiting the generality of the foregoing, the Company and the
Subsidiary shall commence a Bankruptcy Case and promptly propose a Bankruptcy
Plan and related Disclosure Statement, with the Bankruptcy Court and promptly
seek to obtain the Confirmation Order with respect to the Bankruptcy Plan and
the Break-Up Payment Order. The Company shall provide the Investor an
opportunity to review and comment on the Disclosure Statement prior to the
filing thereof and shall reasonably consider the Investor's comments thereto.
(b) The Company, the Subsidiary and the Investor shall use
their reasonable best efforts to cause the Bankruptcy Plan to be confirmed as
promptly as practicable. Except as may be otherwise mutually agreed in writing
by the Company and the Investor, the Bankruptcy Plan shall provide as follows:
(i) the Existing Credit Facility shall be reduced in
principal amount by approximately $67.3 million, with the remaining
balance being refinanced via a new approximately $391 million senior
secured credit facility and approximately $197.4 million in new senior
unsecured notes with a ten (10) year maturity (or cash to the extent the
High Yield Offering is conducted in such manner and amount as to reduce
or repay, in whole or in part, the Existing Credit Facility) and the
Lenders shall have waived any right to the "Asset Sale Fee" and "Excess
Leverage Fee" as defined in the Existing Credit Facility;
(ii) the Receivables Facility shall be repaid in full
and terminated;
(iii) the holders of the Senior Notes will be offered
new senior unsecured notes in the aggregate principal amount of
approximately $29.1 million with a 10 year maturity (or cash to the
extent the High Yield Offering is conducted in such manner and amount as
to reduce or repay, in whole or in part, the Senior Notes);
(iv) each holder of the Sub Debt will be offered its pro
rata share, determined in accordance with the fully accreted value at
maturity of the Sub Debt, of such holder's Sub Debt as a portion of the
fully accreted value at maturity of all Sub Debt (with cash amounts
rounded down to the nearest cent), of approximately $110 million in cash
and shares of New Common Stock that represent approximately 29.5% of the
outstanding New Common Stock on a fully diluted basis as of the Closing
Date (subject to adjustment pursuant to Section 5.6(d) hereof);
(v) holders of the Series A Preferred and Common Stock,
together with those parties with claims arising from the purchase and
sale of the Common Stock (including holders of options or warrants to
purchase shares of Common Stock), will be offered shares of New Common
Stock that represent approximately 4.9% of the outstanding New Common
Stock on a fully diluted basis as of the Closing Date (subject to
adjustment pursuant to Section 5.6(d) hereof);
(vi) all of the outstanding shares of Common Stock and
the Series A Preferred will be cancelled on or immediately prior to the
Closing with no further rights or obligations relating thereto and that,
as of the Closing, the authorized capital stock of the Reorganized
Company will consist of a number of shares of New Common Stock
determined by the Investor;
(vii) no executory contracts or leases shall be
rejected, other than the rejection of Company Leases as determined by
the Investor; in the event of a rejection of any Company Lease, the
Company shall pay all termination, settlement or other costs relating to
such rejection (collectively, the "Rejection Amounts");
(viii) all other claims against the Company shall be
unimpaired; provided that, to the extent the Investor and the Company
mutually agree, the Bankruptcy Plan may impair Litigation claims.
(c) Notwithstanding the foregoing provisions of clause
(b)(v) above, in the event that the inclusion of this provision would prevent
the confirmation of the Bankruptcy Plan under Section 1129 of the Bankruptcy
Code (including the "cramdown" provisions thereof) the Bankruptcy Plan and
this Section 5.6 shall be deemed to have been modified or abrogated to the
extent necessary to obtain confirmation of the Bankruptcy Plan (without the
Investor being required to provide additional consideration).
(d) In the event that, immediately prior to the Closing
(assuming the consummation of the Bankruptcy Plan), Net Debt exceeds the
Maximum Net Debt Amount then (i) the number of Investor Shares to be issued to
the Investor at the Closing shall be increased to that number of Investor
Shares that represents the Adjusted Percentage of the outstanding shares of
New Common Stock on a fully diluted basis as of the Closing Date and (ii) the
percentages of New Common Stock set forth in Sections 5.6(b)(iv) and (v)
hereof shall be proportionately reduced.
(e) In the event that immediately prior to the Closing
(assuming consummation of the Bankruptcy Plan), Net Debt is less than the
Maximum Net Debt Amount, then the Company may, in its sole discretion, utilize
cash in the amount of such difference to effectuate the Restructuring
(including cash under bank borrowings).
(f) In connection with and conditioned upon the
consummation of the Bankruptcy Plan, the Investor intends for the Reorganized
Company to adopt a management stock option plan containing terms and
conditions (including the number of shares of New Common Stock authorized
thereunder) as shall be approved by the Investor.
(g) The Company shall propose the Bankruptcy Plan, and (i)
if this Agreement has been terminated prior to the commencement of the
Bankruptcy Case under circumstances in which the Investor is entitled to the
Break-Up Payment, a motion (the "Break-Up Payment Claim Motion") seeking
allowance as an Administrative Claim in the Company's Bankruptcy Case of the
Investor's claim for payment of the Break-Up Payment (the "Allowed Break-Up
Payment Claim"), together with all necessary supporting papers and a proposed
Break-Up Payment Claim Order substantially in the form of the order attached
hereto as Exhibit B, or (ii) if this Agreement remains in force at the time of
the commencement of the Bankruptcy Case, a motion (the "Break-Up Payment
Motion") for approval of the Break-Up Payment as an administrative expense in
the Bankruptcy Case, together with all necessary supporting papers and a
proposed Break-Up Payment Order substantially in the form of the order
attached hereto as Exhibit C.
NOTHING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO BE A
SOLICITATION OR OFFER TO SELL OR EXCHANGE SECURITIES TO ANY PERSON OTHER THAN
THE INVESTOR.
Section 5.7 Investor Agreement. At or prior to the Closing, the
Company shall enter into the Investor Agreement.
Section 5.8 Agreements with Five Percent Holders. The Company
shall use reasonable best efforts to seek to obtain the consents referred to
in Section 7.2(m) hereof.
Section 5.9 Corporate Governance. Immediately prior to the
Closing, the Company shall cause the resignations of certain directors of the
Company as shall be specified by the Investor in a manner consistent with the
Investor Agreement.
Section 5.10 Releases. The Company shall use reasonable best
efforts to ensure that the Confirmation Order shall provide, among other
things, that the directors, officers, advisors, attorneys, investment bankers
and agents of the Company, the Investor and their respective affiliates,
members, managers, shareholders, partners, representatives, employees,
attorneys and agents are released, to the extent permitted by applicable Laws
(including by any Governmental Entity), from any and all Litigation related to
the Restructuring or the Restructuring Transaction.
Section 5.11 Notification of Certain Matters. From the date hereof
through the Closing, the Company shall give prompt notice to the Investor of
the occurrence, or failure to occur, of any event the occurrence or failure of
which caused any of the Company's respective representations or warranties
contained in this Agreement to be untrue or inaccurate in any material
respect; provided, however, that no such notification shall be deemed for any
purpose under this Agreement to permit the Company to limit, alter or amend
its representations and warranties contained herein.
Section 5.12 Refinancing Transactions. The Company and the
Subsidiary shall use their reasonable best efforts to assist the Investor in
effecting the Refinancing Transactions.
Section 5.13 Closing Fee. At the Closing, the Company shall pay to
the Investor (a) a fee of $6 million plus (b) up to $2.5 million in
Reimbursable Expenses (such amount paid pursuant to this clause (b), the
"Actual Investor Reimbursable Expenses").
Section 5.14 Invoices for Professional Services. The Company and
the Subsidiary shall request each of their respective Representatives to
submit invoices to them no earlier than three (3) Business Days prior to the
Closing Date in respect of any amounts payable by the Company and/or the
Subsidiary to such Representatives as of the date of such invoice. Such
invoices shall include a reasonable estimate of the expected fees payable to
such Representatives for the period from the date of such invoice through the
Closing Date.
ARTICLE VI
COVENANTS OF THE INVESTOR
Section 6.1 Consents. The Investor shall cooperate with the
Company and use its reasonable best efforts to (a) obtain all of the
Governmental Requirements, all Third Party Consents and all License Consents,
as well as any other consents, waivers, approvals, authorizations or orders
required for the consummation of transactions contemplated by this Agreement
and the other Transaction Documents, and (b) timely make all necessary filings
under the HSR Act and obtain early termination of the waiting period under the
HSR Act.
Section 6.2 Commitment Letter. The Investor shall use reasonable
best efforts to obtain the Commitment Letter by August 31, 2003. In the event
that the Commitment Letter is provided to the Company by such date and
thereafter the Commitment Letter (or any Replacement Commitment) expires or is
terminated by the lenders thereunder, then the Investor shall use reasonable
best efforts to obtain a renewal of the Commitment Letter (or any Replacement
Commitment) or a new commitment letter (in either case, a "Replacement
Commitment"), on terms and conditions that satisfy the definition of
Commitment Letter on or before the date that is thirty (30) days after the
date on which the Commitment Letter (or any Replacement Commitment) expired or
was terminated (the "Commitment Cure Date").
Section 6.3 Financing. The Investor shall use its reasonable best
efforts to effect (collectively, the "Refinancing Transactions"):
(a) either (i) one or more amendments to the Existing
Credit Facility such that the Company and the Subsidiary are provided with the
appropriate level of liquidity as is needed in order to effectuate the
Restructuring and to obtain confirmation of the Bankruptcy Plan or (ii) the
entry into definitive agreements with respect to the New Credit Facility, in
either case, with a term loan in a minimum principal amount of $391 million
and a revolving credit facility in a minimum principal amount of $50 million
and on customary terms for a credit facility of similar principal amount for a
similarly situated borrower of comparable size with a similar credit profile
as the Company and which is emerging from a case under Chapter 11 of the
Bankruptcy Code (in either case, the "Financing");
(b) an offering of high yield debt securities in an amount
sufficient to pay cash (i) to the Lenders in lieu of the new senior unsecured
notes referred to in Section 5.6(b)(i) hereof and (ii) to the holders of the
Senior Notes in lieu of the new senior unsecured notes referred to in Section
5.6(b)(iii) hereof (the "High Yield Offering");
(c) to the extent that the High Yield Offering is not
effected, the issuance of the new senior unsecured notes referred to in
Sections 5.6(b)(i) and 5.6(b)(iii) hereof; and
(d) such other refinancing transactions as may be mutually
agreed upon by the Investor and the Company and which are incorporated within
the Bankruptcy Plan.
Section 6.4 Approval of Bankruptcy Plan. As long as this Agreement
is in effect, the Investor agrees with respect to all of the Sub Debt, Common
Stock, Preferred Stock and any other securities of the Company it may hold, if
any, (a) to vote, or cause to be voted, timely in favor of the Bankruptcy
Plan, (b) not to revoke or withdraw such vote, or permit such vote to be
revoked or withdrawn, and (c) to forbear, or cause to be forborne, exercising
its remedies under the indentures governing the Sub Debt. The Investor shall
furnish such information as the Company may reasonably request in connection
with any Bankruptcy Case and will otherwise reasonably support the Company's
preparation and presentation of any motion, filing, disclosure statement or
other pleading in the Bankruptcy Case consistent with the terms of this
Agreement.
Section 6.5 Sufficient Available Funds. The Investor shall
promptly notify the Company of any event or circumstance which at any time
from the date of this Agreement through and including the Closing Date could
(i) result in or be reasonably expected to result in insufficient funds being
available to the Investor or (ii) hinder or reasonably be expected to hinder
the Investor's financial ability to perform its obligations under this
Agreement. No such notice shall limit, alter or amend the Investor's
representations and warranties contained in Section 4.7 hereof.
Section 6.6 Notification of Certain Matters. From the date hereof
through the Closing, the Investor shall give prompt notice to the Company of
the occurrence, or failure to occur, of any event the occurrence or failure of
which caused any of the Investor's representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect; provided,
however, that no such notification shall be deemed for any purpose under this
Agreement to permit the Investor to limit, alter or amend its representations
and warranties contained herein.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The respective
obligation of each party to consummate the transactions contemplated in this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions:
(a) HSR Approval. The applicable waiting period (and any
extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), relating to the transactions contemplated by
the Transaction Documents shall have been terminated or shall have expired.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction (collectively, "Restraints") preventing consummation
of any of the transactions contemplated in this Agreement shall be in effect.
No Law shall be in effect which prohibits the transactions contemplated by
this Agreement.
(c) Bankruptcy Case. The Bankruptcy Plan shall have been
approved by the Bankruptcy Court pursuant to the Confirmation Order, and the
Confirmation Order shall be in form and substance reasonably satisfactory to
the Company and the Investor and shall be final and non-appealable.
(d) Governmental Requirements. The Governmental
Requirements shall have been satisfied, made or obtained and be in effect on
the Closing Date.
(e) Charter Amendment. The Company shall have filed with
the Secretary of State of the State of Delaware the Charter Amendment and
shall have received confirmation from the Secretary of State as to the
effectiveness thereof.
Section 7.2 Conditions to the Obligations of the Investor. The
obligation of the Investor to consummate the transactions contemplated in this
Agreement with respect to the Investment shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions:
(a) Representations and Warranties. As of the date of this
Agreement and as of the Closing Date, the representations and warranties of
the Company set forth in this Agreement (without giving effect to any
materiality or Material Adverse Effect qualifications contained therein) shall
be true and correct, except where the failures of such representations and
warranties to be so true and correct shall not, individually or in the
aggregate, result in a Material Adverse Effect.
(b) Performance of Obligations. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing.
(c) Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect.
(d) Intellectual Property Licenses. Either (i) the
Confirmation Order shall expressly provide that each Material License be (x)
in full force and effect following the Closing, (y) free and clear of any
Liens other than any Liens granted in connection with the New Credit Facility
and (z) if applicable, assumed by the Company or the Subsidiary (as
appropriate) pursuant to Section 365 of the Bankruptcy Code or (ii) the
License Consents shall have been obtained and shall be in effect on the
Closing Date.
(e) Third Party Consents. The Third Party Consents shall
have been obtained and be in effect on the Closing Date, except where the
failure to obtain such consents does not constitute a Material Adverse Effect.
(f) Bankruptcy Order Regarding New Common Stock. The
Bankruptcy Court shall have entered an order to the effect that all shares of
New Common Stock to be outstanding or subject to issuance upon completion of
the Restructuring shall at the time of their issuance be duly authorized and
validly issued and outstanding, fully paid and nonassessable, free and clear
of any Liens, issued in compliance with all federal and state securities laws
and not issued in violation of, or subject to any, preemptive rights or other
rights to subscribe for or purchase securities.
(g) Minimum EBITDA. Cumulative Actual EBITDA shall not have
been less than the EBITDA Threshold.
(h) Officer's Certificate. The Company shall have furnished
the Investor with a certificate, dated as of the Closing Date, and signed on
behalf of it by a duly authorized officer to the effect that, to such
officer's knowledge, the conditions set forth in Sections 7.2(a), 7.2(b) and
7.2(c) hereof have been satisfied.
(i) Investor Agreement. The Company shall have executed and
delivered the Investor Agreement.
(j) Financing. The Company shall have (i) received the
Financing, and (ii) repaid in full the Receivables Facility.
(k) Personnel. Xxxx X. Xxxxxxxx shall have resigned as
Interim Chief Executive Officer of the Company effective on or prior to the
Closing Date and Xxxxxxxx X. Xxxxxxxx shall have been named Chief Executive
Officer of the Company.
(l) Opinion. The Investor shall have received the opinion
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP that, based solely upon its review
of the docket in the Bankruptcy Case, the Confirmation Order is
non-appealable.
(m) Five Percent Holder Agreements. Each of Fenway
Partners, Inc., MDC Management Company III, L.P. and their respective
Affiliates (other than portfolio companies) shall have consented to the
termination of each agreement between them and the Company or the Subsidiary,
other than any securities of the Company, or such agreements shall otherwise
be of no force and effect following the Closing.
Section 7.3 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated in this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions:
(a) Representations and Warranties. As of the date of this
Agreement and as of the Closing Date, the representations and warranties of
the Investor set forth in this Agreement (without giving effect to any
materiality or material adverse effect qualifiers contained therein) shall be
true and correct except where the failures of such representations and
warranties to be true and correct shall not, individually or in the aggregate,
result in a material adverse effect on the ability of the Investor to fulfill
its obligations under this Agreement and the other Transaction Documents.
(b) Performance of Obligations. The Investor shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing.
(c) Officer's Certificate. The Investor shall have
furnished the Company with a certificate, dated as of the Closing Date, and
signed on behalf of it by a duly authorized officer to the effect that, to the
best of such officer's knowledge, the conditions set forth in Sections 7.3(a)
and 7.3(b) hereof have been satisfied.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated in this Agreement may be abandoned at any time prior
to the Closing Date notwithstanding the fact that any requisite authorization
and approval of the transactions contemplated in this Agreement shall have
been received and no party hereto shall have any liability to any other party
hereto (provided that any such termination shall not relieve any party from
liability for any breach hereof prior to such termination nor shall it
terminate the Company's obligations under Section 5.3(c) hereof or this
Article VIII):
(a) by the mutual written consent of the Investor and the
Company;
(b) by the Investor or the Company, if the Closing has not
occurred by February 20, 2004 (the "Expiration Date"); provided, that (i) the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur by such date and (ii) in the event that, after
commencement of the Bankruptcy Case, the Board of Directors withdraws or
changes its recommendation of this Agreement in a manner materially adverse to
the Investor or recommends an Alternative Proposal then the Company may not so
terminate until June 19, 2004;
(c) by the Investor or the Company, if there shall be any
Law that makes consummation of the purchase of the Investor Shares hereunder
illegal or otherwise prohibited or if any Governmental Entity shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the purchase of the Investor Shares
hereunder and such order, decree, ruling or other action shall have become
final and non-appealable;
(d) by the Investor or the Company, if the Company enters
into a letter of intent or any agreement, contract or commitment with respect
to a Stand Alone Proposal;
(e) by the Investor, if (i) the Board of Directors
withdraws or changes its recommendation of this Agreement in a manner
materially adverse to the Investor prior to commencement of the Bankruptcy
Case, (ii) the Board of Directors recommends an Alternative Proposal prior to
commencement of the Bankruptcy Case, or (iii) the Company enters into an
Alternative Agreement prior to commencement of the Bankruptcy Case, or (iv)
the Company enters into an Alternative Agreement after commencement of the
Bankruptcy Case and such Alternative Agreement is approved by the Bankruptcy
Court;
(f) (i) by the Investor, if any of the conditions to the
obligations of the Investor set forth in Section 7.1 hereof or Section 7.2
hereof are not satisfied at or prior to the Closing, and such failure cannot
be or has not been cured within thirty days after the giving of written notice
to the Company; and (ii) by the Company, if any of the conditions to the
obligations of the Company set forth in Section 7.1 hereof or Section 7.3
hereof are not satisfied at or prior to the Closing, and such failure cannot
be or has not been cured within thirty days after the giving of written notice
to the Investor; provided, that the right to terminate this Agreement pursuant
to this Section 8.1(f) shall not be available to any party who at such time is
in material breach of any of its obligations hereunder; or
(g) by the Company (i) on or after August 31, 2003, if the
Investor has not provided to the Company by such date copies of the Commitment
Letter, or (ii) on or after any Commitment Cure Date, if a Replacement
Commitment is not in full force and effect; or
(h) by the Company, if (i) the Board of Directors
determines in good faith, after consultation with outside legal counsel and
financial advisors, that entering into an Alternative Agreement with regard to
a Superior Proposal is necessary to satisfy the fiduciary duties of the Board
of Directors under applicable law; provided that the Company shall have the
right to terminate this Agreement pursuant to this subparagraph (h) only if it
has complied with the provisions of Section 5.3 hereof, and shall comply with
the requirements of Section 8.2 hereof relating to any required payment
(including the timing of any payment) of the Break-Up Payment or Allowed
Break-Up Payment Claim, as the case may be, prior to termination of this
Agreement pursuant to this Section 8.1(h).
Section 8.2 Fees and Expenses.
(a) The Investor shall be entitled to receive from the
Company a payment in an aggregate amount equal to $10,000,000 (the
"Termination Payment") if at the time of termination of this Agreement the
Investor is not in material breach of any of its obligations hereunder, and
(i) the Investor terminates this Agreement pursuant to Section 8.1(e) hereof
or the Company terminates this Agreement pursuant to Section 8.1(h) hereof and
(ii) in the case of termination by the Investor pursuant to Section 8.1(e)(i)
or (ii) hereof, within nine months following such termination, the Company
enters into an Alternative Agreement.
(b) The Investor shall be entitled to reimbursement by the
Company for (i) all of the Investor's Reimbursable Expenses up to an aggregate
amount of $2.5 million if at the time of termination of this Agreement, the
Investor is not in material breach of any of its obligations hereunder and
this Agreement is terminated pursuant to Section 8.1(d) hereof and (ii) all of
the Investor's Reimbursable Expenses up to an aggregate amount of $1.0 million
if at the time of termination of this Agreement, the Investor is not in
material breach of any obligations hereunder and this Agreement is terminated
pursuant to Section 8.1(g)(i) hereof. Notwithstanding anything contained
herein to the contrary, in no event shall the Investor be entitled to any
reimbursement pursuant to this Section 8.2(b) in the event that the Investor
is entitled to a Termination Payment.
(c) If this Agreement (i) is terminated prior to the
commencement of the Bankruptcy Case and the Board of Directors has determined
not to commence a Bankruptcy Case (for any reason), then the Break-Up Payment
shall be paid to the Investor no later than two (2) Business Days following
the date upon which the Break-Up Payment becomes payable to the Investor
pursuant to Section 8.2(a) hereof or Section 8.2(b) hereof, (ii) is terminated
prior to the commencement of the Bankruptcy Case and the Company at such time
in good faith intends to file the Bankruptcy Case, then distribution to be
made on account of the Allowed Break-Up Payment Claim shall be made as ordered
by the Bankruptcy Court; provided, that if the Bankruptcy Case is not filed
within six months after the Break-Up Payment becomes payable pursuant to
Section 8.2(a) hereof or Section 8.2(b) hereof, the Break-Up Payment shall be
paid within two (2) Business Days after the expiration of such six month
period, or (iii) remains in force at the time of the commencement of the
Bankruptcy Case, then any payment of the Break-Up Payment, in same day funds,
to the Investor shall occur (x) upon the closing of the first Alternative
Proposal completed following termination of this Agreement, or (y) as
otherwise prescribed in the Break-Up Payment Order if it shall have been
entered by the Bankruptcy Court.
(d) The Company shall promptly, but in no event later than
three (3) Business Days after commencement of the Bankruptcy Case, take all
action reasonably necessary, including filing any motion, proposed order and
supporting documents, to seek approval from the Bankruptcy Court of the
Company's obligation to pay the Break-Up Payment to the Investor as an
Administrative Claim in the Bankruptcy Case.
(e) The Company acknowledges and agrees that (i) the
payment of the Break-Up Payment or, if applicable, the allowance of the
Allowed Break-Up Payment Claim and the Company's agreement to request
Administration Claim status therefore is an integral part of the transactions
contemplated by this Agreement, (ii) in the absence of the Company's
obligations to make this payment and agree to request such status, the
Investor would not have entered into this Agreement and (iii) time is of the
essence with respect to the payment of the Break-Up Payment.
(f) Except as set forth above in this Section 8.2, all fees
and expenses incurred in connection with this Agreement and the other
Transaction Documents shall be paid by the party incurring such expenses,
whether or not the Restructuring is consummated.
ARTICLE IX
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN
COVENANTS; NATURE OF REMEDIES
None of the representations and warranties of the Company or the
Investor contained in Articles III or IV hereof, including the Company
Disclosure Schedule and the Investor Disclosure Schedule, or any certificate
or instrument delivered in connection herewith at or prior to the Closing, and
none of the covenants contained in Articles V and VI hereof (other than
Section 5.9) shall survive the Closing. Section 5.9 hereof and the parties'
other respective covenants and agreements set forth herein that by their
specific terms contemplate performance after Closing (including the Company's
obligations pursuant to Article VIII hereof) shall survive the Closing
indefinitely unless otherwise set forth herein. The Investor's sole remedy for
(x) a breach of the Company's representations or warranties or (y) a failure
of any of the conditions to the Investor's obligation to consummate the
transactions contemplated in this Agreement to be satisfied other than by
reason of fraud or an intentional breach of an agreement of the Company
contained in this Agreement shall be to terminate this Agreement, subject to
any rights it may have under Section 8.2 hereof.
ARTICLE X
CERTAIN DEFINITIONS
Section 10.1 Certain Definitions. For purposes of this Agreement,
the following terms shall have the meanings specified in this Section 10.1.
"Acquisition Transaction" means any (i) refinancing,
restructuring, or reorganization of the capital structure of the Company, (ii)
acquisition of all or a substantial part of the assets of the Company or a
majority of the voting securities of the Company, or (iii) merger, business
combination, recapitalization, restructuring, liquidation or dissolution
involving the Company, whether or not in the context of a case filed under the
Bankruptcy Code.
"Adjusted EBITDA" means (a) EBITDA of the Company for the relevant
period, as set forth in the Company Plan, less (b) amounts expended from July
1, 2003 through the end of the relevant period for marketing and other related
expenses in respect of the introduction by a competitor of the Company of new
products consistent with the marketing plan previously provided to the
Investor which are in excess of the amount of marketing and other related
expenses set forth in the Company Plan up to an aggregate amount of $2.5
million.
"Adjusted Percentage" means, expressed as a percentage, a
fraction, the numerator of which equals the Purchase Price and the denominator
of which equals (a) $910.7 million plus (b) the Maximum Net Debt Adjustment
minus (c) the Net Debt as of the Closing Date.
"Administrative Claim" means a claim entitled to administrative
expense priority under Sections 503(b) and/or 507(a)(1) of the Bankruptcy
Code.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
"Bankruptcy Case" means all legal proceedings instituted in a
United States Bankruptcy Court in connection with the Restructuring
Transaction; provided, that for all purposes relating to the approval or
payment of the Break-Up Payment to which the Investor becomes entitled prior
to the commencement of the Bankruptcy Case hereunder, "Bankruptcy Case" shall
mean all legal proceedings instituted in a United States Bankruptcy Court by
the Company subsequent to the date of such termination in connection with the
Company's restructuring of its financial circumstances and/or capitalization.
"Bankruptcy Code" means Title 11 of the United States Code, 11
U.S.C. ss. 101, et seq., as now in effect or hereafter amended.
"Bankruptcy Court" means the United States Bankruptcy Court or
other U.S. federal court of competent jurisdiction in which the Bankruptcy
Case is pending.
"Bankruptcy Plan" means the plan of reorganization under Chapter
11 of the Bankruptcy Code containing the terms set forth in Section
5.6(b)(i)-(viii) hereof, with such changes or supplements thereto as may be
mutually agreed by the Company and the Investor.
"Board of Directors" means the Board of Directors of the Company.
"Break-Up Payment" means, (a) in the event that the Investor is
entitled to receive the Termination Payment pursuant to Section 8.2(a) hereof,
the Termination Payment, or (b) in the event that the Investor is entitled to
receive Reimbursable Expenses pursuant to Section 8.2(b) hereof, such
Reimbursable Expenses.
"Break-Up Payment Order" means an order of the Bankruptcy Court
approving the Break-Up Payment as an administrative expense of the Company's
bankruptcy estate.
"Business Day" shall have the meaning provided in the Bankruptcy
Code.
"Charter Amendment" means an amendment to the Company's
certificate of incorporation in form and substance reasonably satisfactory to
the Investor and in compliance with Section 1123(a)(6) of the Bankruptcy Code.
"Claim" means any claim, demand, action, suit, lawsuit,
litigation, hearing, arbitration, proceeding or appeal, whether civil or
criminal, administrative or otherwise, by or before any Governmental Authority
or arbitrator.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Leased Real Property" means all interests in real
property pursuant to the Company Leases.
"Commitment Letter" means a commitment letter from credible
financing sources which (a) has a term of at least four months, (b) provides
for the Financing, (c) is in commercially reasonable form and (d) is not
subject to any due diligence condition.
"Company Plan" means the business plan of the Company, dated as of
June 13, 2003, previously provided to the Investor.
"Company Real Property" means, collectively, the Company Owned
Real Property and the Company Leased Real Property.
"Condition Satisfaction Date" means the date on which the
conditions set forth in Sections 7.1(a)-(d), 7.2(c)-(f) and 7.2(m) have
been satisfied.
"Confidentiality Agreement" means the Confidentiality, Secrecy and
Non-Disclosure Agreement between X.X. Childs Associates, L.P. and the Company
dated March 25, 2003.
"Confirmation Order" means the order entered by the Bankruptcy
Court in the Bankruptcy Case confirming the Bankruptcy Plan pursuant to
Section 1129 of the Bankruptcy Code. The Confirmation Order shall provide,
among other things, (i) that the sale of the Investor Shares pursuant to this
Agreement shall be free and clear of all Liens, (ii) an express finding that
the parties to the Bankruptcy Case and the Investor have acted in good faith,
and (iii) that the issuance of shares of New Common Stock to creditors under
the Bankruptcy Plan is exempt from registration under the Securities Act.
"Contract" means any agreement, contract or obligation (whether
written or oral) that is legally binding.
"Contract Consents" means the consents of third parties required
under Contracts to which the Company is a party or pursuant to which it or any
of its assets or properties is subject.
"Creditor Consents" means such consents or agreements of creditors
and security holders as shall be required to effectuate the Restructuring
Transaction.
"Cumulative Actual EBITDA" means EBITDA for the EBITDA Period, as
determined pursuant to Section 2.3 hereof.
"Cumulative Targeted EBITDA" means Adjusted EBITDA for the EBITDA
Period.
"Derivative Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to hedge the Company or its Subsidiary
against fluctuations in interest rates.
"Derivative Amount" means (a) any amounts paid by the Company in
respect of the settlement and/or termination of any Derivative Agreement less
(b) any amounts contemplated to be paid in the ordinary course as contemplated
in the Company Plan through September 30, 2003.
"DGCL" means the Delaware General Corporation Law.
"DIP Financing" means a credit facility that will provide the
Company and the Subsidiary with the appropriate level of debtor-in-possession
financing on or after the commencement of the Bankruptcy Case, on terms
reasonably acceptable to both the Company and the Investor.
"Disclosure Statement" means the disclosure statement filed under
Section 1125 of the Bankruptcy Code in connection with the Bankruptcy Plan in
the Bankruptcy Case.
"Disclosure Statement Order" means an order entered by the
Bankruptcy Court approving the Disclosure Statement.
"EBITDA" means, for any period, all as determined in accordance
with GAAP, the consolidated net income (or net loss) of the Company and the
Subsidiary for such period adjusted (without duplication) as follows: plus (a)
the sum of (i) depreciation expense, (ii) amortization expense, (iii) non-cash
expenses related to writedowns of property, plant, equipment, intangible
assets and other non-current assets, (iv) net total federal, state and local
income tax expense, (v) gross interest expense for such period less gross
interest income for such period, (vi) extraordinary losses that would appear
as such on an income statement in accordance with GAAP, (vii) any
non-recurring charge or restructuring charge that has been deducted in the
calculation of operating income, (viii) the cumulative effect of any change in
accounting principles, and (ix) costs and expenses incurred by the Company or
the Subsidiary during such period including any success fees which would be
payable upon the Closing for the financial advisors, investment bankers,
attorneys, accountants or other professionals retained by them in connection
with the Restructuring, less (b) extraordinary gains that would appear as such
on an income statement in accordance with GAAP.
"EBITDA Differential" means an amount equal to the lesser of (a)
Cumulative Targeted EBITDA minus Cumulative Actual EBITDA and (b) $15 million;
provided that in the event that Cumulative Actual EBITDA is greater than
Cumulative Targeted EBITDA, the EBITDA Differential shall equal zero.
"EBITDA Period" means the period from June 1, 2003 through (a) in
the event that the Condition Satisfaction Date occurs during the first 21 days
of a calendar month, the last day of the month immediately preceding the full
month immediately preceding the Condition Satisfaction Date or (ii) in the
event that the Condition Satisfaction Date occurs after the first 21 days of a
calendar month, the last day of the full month immediately preceding the
Condition Satisfaction Date.
"EBITDA Threshold" means, with respect to the EBITDA Period, an
amount equal to the sum of (a) 75% of Adjusted EBITDA for the month of June,
2003 plus (b) 85% of Adjusted EBITDA for subsequent months.
"Environmental Laws" means all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or
the environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with the Company, would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Exceptions" means any action, event, item, matter or circumstance
that is (a) required or permitted by (i) this Agreement or any other
Transaction Document or (ii) the Restructuring Transaction or (b) disclosed in
the SEC Reports.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Credit Facility" means the Fifth Amended And Restated
Credit Agreement among the Company, the lenders listed therein, XX Xxxxxx
Xxxxx Bank (formerly known as The Chase Manhattan Bank), as Administrative
Agent, and certain other agents, dated as of November 1, 1999, as amended at
any time, and all documents (including without limitation any security
agreements or guarantees) related thereto.
"FDA" means the U.S. Food and Drug Administration and any
successor Governmental Entity.
"Five Percent Holder Agreements" means (a) the Securityholders
Agreement, dated as of April 8, 1998, by and among Aurora/VDK LLC, MBW
Investors LLC, VDK Foods LLC and the other parties signatory thereto, (b) the
Advisory Agreement, dated as of April 8, 1998, between MDC Management Company
III, L.P. and Aurora/VDK LLC, Van xx Xxxx'x, Inc., VDK Holdings, Inc., the
Company and Aurora Foods Holdings Inc. and (c) the Advisory Agreement, dated
as of April 8, 1998, among Fenway Partners, Inc. and Aurora/VDK LLC, Van xx
Xxxx'x, Inc., VDK Holdings, Inc., the Company and Aurora Foods Holdings Inc.
"Five Percent Holder" means any Person who "beneficially owns" (as
defined in Rules 13d-3 and 13d-5 of the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all securities that any such
Person has the right to acquire, whether or not such right is exercisable
immediately), five percent (5%) or more of any class of the Company's capital
stock, and shall include the officers, directors, employees, and partners of
such Person.
"Governmental Entity" means any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as such
by, or regulated as such under, any Environmental Law.
"Indebtedness" means, as applied to any Person, (a) all
indebtedness for borrowed money, (b) that portion of obligations with respect
to capital leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (c) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money (other than accounts payable incurred in the ordinary course of
business and accrued expenses incurred in the ordinary course of business),
(d) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (i) due more than six months from the date of
incurrence of the obligation in respect thereof or (ii) evidenced by a note or
similar written instrument, and (e) all indebtedness of the type described in
clauses (a) through (d) above secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person; provided that obligations under the Derivative Agreements do
not constitute Indebtedness.
"Intellectual Property" means all (a) patents and patent
applications; (b) trademarks, trade names, service marks, designs, logos,
slogans and general intangibles of like nature, and registrations and
applications therefor and the goodwill related thereto; (c) Internet domain
names (d) computer software programs (other than commercially available
"off-the-shelf" software programs); (e) copyrights and registrations and
applications therefor; and (f) trade secrets, know-how, inventions, processes,
confidential information, formulae, algorithms, models and methodologies; in
each case, owned by the Company or the Subsidiary or used in their respective
businesses as currently conducted.
"IRS" means the Internal Revenue Service.
"Key Employee Retention Plan" means a plan to be proposed by the
Company to retain key employees pending consummation of the Bankruptcy Plan
providing for payments no greater than $200,000 individually or $1 million in
the aggregate.
"Knowledge of the Company" means the actual knowledge of one or
more of Xxxx X. Xxxxxxxx, Xxxxxxx X. XxXxxxxxx, Xxxxxxx X. Xxxxxx, Xxxx Xxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxxx, and Xxxx X. Xxxxxx.
"Knowledge of the Investor" means the actual knowledge of Xxxx X.
Childs, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx, and Xxxxx X. Xxxxx.
"Laws" means all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and
bodies of law.
"Lenders" means the lenders under the Existing Credit Facility.
"License Consents" means the consents of the licensors under the
Material Licenses.
"Lien" means any mortgage, deed of trust, lien (statutory or
other), pledge, hypothecation, assignment, claim, charge, security interest,
conditional sale agreement, title, exception, or encumbrance, option, right of
first offer or refusal, easement, servitude, voting or transfer restriction,
or any other right of another to or adverse claim or any kind.
"Material Adverse Effect" means any change, effect, event,
occurrence or development that is, or is reasonably likely to be, materially
adverse to the business, results of operations or condition (financial or
otherwise) of the Company and the Subsidiary, taken as a whole, other than any
change, effect, event or occurrence relating to or arising out of (a) the
economy or securities markets generally, (b) this Agreement or the
transactions contemplated hereby or the announcement thereof, (c) the filing
of the Bankruptcy Case, (d) any actions taken, or announcements made, by the
Investor or its Affiliates or Representatives, or (e) war, armed conflicts,
terrorist acts or similar external events or the material escalation thereof.
"Material Licenses" means the licenses granted pursuant to the
agreements set forth in items 22 and 78-85 of Section 3.11(a) of the Company
Disclosure Schedule.
"Maximum Net Debt Amount" means (a) $606.0 million plus the
Maximum Net Debt Adjustment.
"Maximum Net Debt Adjustment" means the EBITDA Differential, plus
or minus (a) the Working Capital Adjustment Amount, plus (b) the Derivative
Amount, plus (c) the Settlement Amount, plus (d) all Rejection Amounts, plus
(e) the Actual Investor Reimbursable Expenses, plus (f) all commitment and
facility fees incurred in connection with the Financing, plus (g) up to $2.7
million in respect of premiums paid to maintain and/or procure directors' and
officers' insurance pursuant to Section 5.2(a) hereof.
"Net Debt" means, as of any day, the total Indebtedness of the
Company and the Subsidiary on such day, net of cash on hand on such day, in
each case, as would be shown on a consolidated balance sheet of the Company
and the Subsidiary as of such day prepared in accordance with GAAP.
"New Credit Facility" means a new senior credit facility that will
provide the Company and the Subsidiary with the appropriate level of liquidity
needed in order to effectuate the Restructuring and obtain confirmation of the
Bankruptcy Plan.
"Ordinary Course of Business" means the ordinary course of
business of the Company and the Subsidiary.
"Permitted Liens" means (a) any Lien permitted or required under
the Existing Credit Facility; (b) any Lien permitted or required under the New
Credit Facility; (c) any Lien approved by the Bankruptcy Court, including,
Liens granted pursuant to a cash collateral and/or debtor-in-possession
financing order and Liens granted as adequate protection; (d) any Lien granted
pursuant to any forbearance agreements, or amendments thereto, entered into
with respect to the Existing Credit Facility, including the Vendor Lien
Program; (e) Liens for Taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings if adequate reserves with
respect thereto are maintained on the Company's financial statements in
accordance with GAAP; (f) with respect to Company Real Property, (i) any Liens
or other title defects which are not in a liquidated amount and which do not,
individually or in the aggregate, interfere materially with the current use or
materially detract from the value or marketability of such property (assuming
its continued use in the manner in which it is currently used) or (ii) Liens
on Company Owned Real Property that are identified on title commitments or
title policies (x) which do not, individually or in the aggregate, interfere
materially with the current use or materially detract from the value or
marketability of such property (assuming its continued use in the manner in
which it is currently used) and (y) with respect to which no material breach
exists; and (g) inchoate materialmen's, mechanics', carriers', workmen's,
repairmen's and similar Liens arising in the Ordinary Course of Business and
not past due and payable or the payment of which is being contested in good
faith by appropriate proceedings.
"Person" means any individual, firm, corporation, limited
liability company, partnership, company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Plan" means each deferred compensation and each bonus or other
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance,
retention or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(1) of ERISA); each profit sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); each
employment, termination, retention or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed
to by the Company or any ERISA Affiliate, or to which the Company or any ERISA
Affiliate is party, whether written or oral, for the benefit of any current
employees, officers, independent contractors, or directors of the Company or
the Subsidiary, including the Key Employee Retention Plan.
"Receivables Facility" means the Receivables Facility, dated as of
April 19, 2000 as amended, by and between the Company and XX Xxxxxx Xxxxx Bank
(formerly known as The Chase Manhattan Bank) and all documents related
thereto.
"Regulatory Approvals" means all approvals, consents, waivers,
certificates, and other authorizations reasonably required to be obtained
from, or any filings required to be made with, the FDA or any other federal,
state, foreign or municipal regulatory agency having jurisdiction over the
Company or the Investor in order to consummate the transactions contemplated
by this Agreement and the other Transaction Documents.
"Reimbursable Expenses" means the reasonable legal, accounting,
consulting and other out-of-pocket fees and expenses, which fees and expenses
are supported by customary and appropriate documentation delivered to the
Company, which documentation relates to the amount of the expense and which
fees and expenses were incurred by the Investor or on its behalf in connection
with any of the transactions contemplated by this Agreement and that have not
previously been reimbursed.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Reorganized Company" means the Company as reorganized pursuant to
the Restructuring.
"Restructuring" means the restructuring of the combined
capitalization of the Company and the Subsidiary pursuant to the Bankruptcy
Plan.
"Restructuring Transaction" means any or all of the following: (i)
deferral by the Company of payments due on the Sub Debt, (ii) initiation and
implementation of the Vendor Lien Program, (iii) discussions and negotiations
with the Company's creditors in order to reduce or refinance outstanding
senior and subordinated indebtedness of the Company, (iv) adoption and
implementation of the Key Employee Retention Plan and suspension of the
Company's 1998 Employee Stock Purchase Plan, (v) negotiation and
implementation of the DIP Financing, (vi) negotiations and establishment of a
New Credit Facility (or amendment of the Existing Credit Facility in
accordance with Section 6.3(a) hereof), (vii) negotiation and implementation
of the High Yield Offering, (viii) commencement of the Bankruptcy Case and
adoption and implementation of the Bankruptcy Plan, and (ix) any other
transaction, filing, case, action or event, or other series of transactions,
filings, cases, actions or events (including, without limitation, a consent
solicitation, a prenegotiated plan or any other bankruptcy case), whereby the
completion of which, as evidenced by a final order, if applicable, the
Company, in all material respects, shall have effectuated the Restructuring.
"SEC" means the United States Securities and Exchange Commission
and any successor Governmental Entity.
"SEC Reports" means all annual reports, quarterly reports, proxy
statements and other reports filed by the Company with the SEC under the
Exchange Act since December 31, 2001 and through the date of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Senior Notes" means the 12% Senior Unsecured Notes of the
Company, dated June 27, 2002 and July 2, 2002, respectively, and due October
1, 2006, in the aggregate principal amount of $25 million.
"Settlement Amount" means any amounts paid by the Company in
settlement of any pending Litigation.
"Stand Alone Proposal" means any proposal in respect of an
Acquisition Transaction proposed by an official or unofficial committee of the
Company's creditors, which does not contemplate an equity infusion other than
from (i) creditors generally (e.g., a rights offering), or (ii) Persons who as
of July 1, 2003 held 5% or more of any class of the Company's outstanding
indebtedness (other than any private equity Affiliates of such Persons).
"Sub Debt" means the Company's 9 7/8% Senior Subordinated Notes
due 2007, the Company's 9 7/8% Series C Senior Subordinated Notes due 2007,
and the Company's 8 3/4% Senior Subordinated Notes due 2008.
"Sub Debt Holder" means a holder or group of holders of, or a
committee representing holders of, Sub Debt.
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance, unemployment, social security,
alternative minimum or withholding taxes or charges imposed by any
Governmental Entity, and includes any interest and penalties (civil or
criminal) on or additions to any such taxes.
"Tax Return" means a report, return, form or other information
required to be supplied to a Governmental Entity with respect to Taxes
including, where permitted or required, combined or consolidated returns.
"Transaction Documents" means this Agreement and the Investor
Agreement.
"Vendor Lien Program" means the program initiated by the Company
in connection with the Restructuring under which the Company is offering
vendors the ability to obtain a junior secured lien on substantially all of
the assets of the Company in return for making shipments after July 1, 2003 on
customary terms.
"Working Capital" means (a) the sum of (i) net accounts receivable
plus (ii) total inventories net of reserves plus (iii) prepaid expenses (other
than in respect of premiums paid to maintain or procure directors' and
officers' insurance pursuant to Section 5.2(a) hereof) minus (b) the sum of
(i) accounts payable plus (ii) accrued expenses excluding accrued interest,
accrued dividends and plant shutdown reserves, in each case, of the Company
and the Subsidiary on a consolidated basis.
"Working Capital Adjustment Amount" means the following: (a) in
the event that the Working Capital determined from the Initial Calculation is
greater than $54.8 million, the Maximum Net Debt Amount shall be increased by
an amount equal to such excess; and (b) in the event that the Working Capital
determined from the Initial Calculation is less than $54.8 million, the
Maximum Net Debt Amount shall be reduced by an amount equal to such
deficiency.
"Working Capital Date" means a date no more than ten (10) days
prior to the second Business Day after the Condition Satisfaction Date;
provided, that Working Capital amounts in respect of (a) net accounts
receivable, total inventories and accounts payable shall be as of a date no
more than five (5) days prior to such second Business Day and (b) accrued
expenses incurred in connection with the Restructuring shall be accrued
through the Closing Date.
Section 10.2 References to Other Definitions. For purposes of this
Agreement, each of the following terms shall have the meaning assigned to such
term on the page set forth opposite such term in the index below.
Actual Investor Reimbursable Expenses - Section 5.13........................34
Advisors - Section 5.4(a)...................................................29
Agreement - PREAMBLE.........................................................1
Agreement in Principle - PREAMBLE............................................1
Allowed Break-Up Payment Claim - Section 5.6(g).............................32
Alternative Agreement - Section 5.3(b)......................................28
Alternative Proposal -Section 5.3(d)........................................29
Auditor - Section 2.3(b).....................................................4
Break-Up Payment Claim Motion - Section 5.6(g)..............................32
Break-Up Payment Motion - Section 5.6(g)....................................33
Cap - Section 5.2(a)........................................................27
Closing - Section 2.1........................................................2
Closing Date - Section 2.1...................................................2
Commitment Cure Date - Section 6.2..........................................34
Common Stock - Section 3.3(a)................................................7
Company - PREAMBLE...........................................................1
Company Disclosure Schedule - ARTICLE III....................................5
Company Facilities - Section 3.17(a)........................................18
Company Leases - Section 3.16(a)............................................17
Company Material Contract - Section 3.11(b).................................12
Company Owned Real Property - Section 3.16(a)...............................17
Current 10-K - Section 3.11(a)..............................................11
Expiration Date - Section 8.1(b)............................................39
Financing - Section 6.3(a)..................................................35
GAAP - Section 3.5...........................................................8
Governmental Requirements - Section 3.8.....................................10
High Yield Offering - Section 6.3(b)........................................35
HSR Act - Section 7.1(a)....................................................36
Indemnified Party - Section 5.2(b)..........................................27
Initial Calculation - Section 2.3(a).........................................4
Investment - Section 1.2.....................................................2
Investor - PREAMBLE..........................................................1
Investor Agreement - PREAMBLE................................................1
Investor Disclosure Schedule - ARTICLE IV...................................20
Investor Entities -Section 4.2..............................................22
Investor Shares - Section 1.1................................................2
Litigation - Section 3.7(a)..................................................9
New Common Stock - PREAMBLE..................................................1
Non-U.S. Plan - Section 3.13(b).............................................13
Options - Section 3.3(a).....................................................7
Permits - Section 3.10......................................................10
Preferred Stock - Section 3.3(a).............................................7
Proceeding - Section 11.2...................................................55
Purchase Price - Section 1.2.................................................2
Refinancing Transactions - Section 6.3......................................35
Rejection Amounts - Section 5.6(b)(vii).....................................32
Replacement Commitment - Section 6.2........................................34
Representatives - Section 5.3(a)............................................28
Restraints - Section 7.1(b).................................................36
Selected Courts - Section 11.2(a)...........................................55
Series A Preferred - Section 3.3(a)..........................................7
Subsidiary - Section 3.1(b)..................................................6
Superior Proposal -Section 5.3(d)...........................................29
Termination Payment - Section 8.2(a)........................................40
Third Party Consents - Section 3.8..........................................10
Warrants - Section 3.3(a)....................................................7
ARTICLE XI
MISCELLANEOUS
Section 11.1. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
giving effect to conflicts of law principles thereof.
Section 11.2 Jurisdiction; Forum; Service of Process; Waiver of
Jury. With respect to any suit, action or proceeding ("Proceeding") arising
out of or relating to this Agreement, each of the Company and the Investor
hereby irrevocably:
(a) submits to the exclusive jurisdiction of the courts of
the State of Delaware and of the United States of America, in each case
located in New Castle County, or any federal bankruptcy court where the
Bankruptcy Case is pending (the "Selected Courts"), for any Litigation arising
out of or relating to this Agreement or the other Transaction Documents and
the transactions contemplated hereby and thereby (and agrees not to commence
any Litigation relating hereto or thereto except in such courts) and waives
any objection to venue being laid in the Selected Courts whether based on the
grounds of forum non conveniens or otherwise;
(b) consents to service of process in any Proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, or
by recognized international express carrier or delivery service, to the
Company or the Investor at their respective addresses referred to in Section
11.5 hereof; provided, however, that nothing herein shall affect the right of
any party hereto to serve process in any other manner permitted by law; and
(c) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
Section 11.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors by operation of law and permitted assigns of the parties
hereto. No assignment of this Agreement may be made by any party at any time,
whether or not by operation of law, without the other party's prior written
consent. The Investor shall be permitted to assign its rights and obligations
under this Agreement to any of its Affiliates, in each case without the
consent of any other party hereto. Except as set forth in Section 5.2 hereof,
only the parties to this Agreement or their permitted assigns shall have
rights under this Agreement.
Section 11.4 Entire Agreement; Amendment. This Agreement and the
other Transaction Documents constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and supercede
all prior agreements relating to the subject matter hereof (specifically
excluding the Confidentiality Agreement which remains in effect in accordance
with its terms). Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, modified, supplemented, waived, discharged
or terminated other than by a written instrument signed by the Company and by
the Investor expressly stating that such instrument is intended to amend,
modify, supplement, waive, discharge or terminate this Agreement or such term
hereof. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
Section 11.5 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy
(with receipt confirmed), nationally recognized overnight courier or first
class registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address
as may hereafter be designated in writing by such party to the other party:
(i) if to the Company, to:
Aurora Foods Inc.
00000 Xxxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: J. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxx, Esq.
(ii) if to the Investor, to:
X.X. Childs Equity Partners III, L.P.
000 Xxxxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx, XX 00000-0000
Fax: 000-000-0000
Attn: Xxxx X. Childs
Xxxx X. Xxxxxx
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
All such notices, requests, consents and other communications shall be deemed
to have been given or made if and when delivered personally or by overnight
courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice).
Section 11.6 Delays or Omissions. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing
to the Company or the Investor upon any breach or default of any party under
this Agreement, shall impair any such right, power or remedy of the Company or
the Investor nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of the Company or the Investor of any breach or default under this
Agreement, or any waiver on the part of any such party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law, in equity, or otherwise afforded to the
Company or the Investor shall be cumulative and not alternative.
Section 11.7 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.8 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provisions; provided, that, no such severability shall
be effective if it materially changes the economic benefit of this Agreement
to any party. Any provision held invalid or unenforceable only in part or
degree will remain in full force to the extent not held invalid or
unenforceable.
Section 11.9 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.
Section 11.10 Acknowledgment. The parties acknowledge and agree
that the Confidentiality Agreement, dated October 2, 2002, between the
Investor and Xxxxxxx Xxxxx & Co., as Agent for the Company, has been
terminated and is no longer in force or effect.
Section 11.11 No Public Announcement. Neither the Company nor the
Investor shall make any press release, public announcement or filing with any
Governmental Entity concerning the transactions contemplated by the
Transaction Documents, except as and to the extent that any such party shall
be obligated to make any such disclosure by this Agreement or by law or rule
of the New York Stock Exchange, and then only after consultation with the
other regarding the basis of such obligation and the content of such press
release, public announcement or filing or as the parties shall mutually agree.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by the Transaction Documents shall be in the
form heretofore agreed to by the parties.
Section 11.12 Further Actions; Reasonable Best Efforts.
(a) Without waving any right to terminate this Agreement
under Section 8.1 hereof, upon the terms and subject to the conditions hereof,
each of the parties agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by the Transaction Documents,
including without limitation (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all steps
as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging any of the Transaction Documents or the
consummation of the transactions contemplated thereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity or any Restraint vacated or reversed, and (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, the
Transaction Documents.
(b) In connection with and without limiting the foregoing,
the parties shall use reasonable best efforts (i) to take all action necessary
to ensure that no state takeover statute or similar statute or regulation is
or becomes applicable to the Transaction Documents or any of the other
transactions contemplated hereby or thereby and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Transaction
Documents or any other transaction contemplated thereby, to take all action
necessary to ensure that the transactions contemplated by the Transaction
Documents may be consummated as promptly as practicable on the terms
contemplated thereby and otherwise to minimize the effect of such statute or
regulation on the transactions contemplated by the Transaction Documents.
Section 11.13 Interpretation.
(a) When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a Person are also
to its permitted successors and assigns.
(b) 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 provisions of this Agreement.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be executed as of the date first above written.
AURORA FOODS INC.
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Interim
Chief Executive Officer
X.X. CHILDS EQUITY PARTNERS III, L.P.
By: X.X. Childs Advisors III, L.P.,
its general partner
By: X.X. Childs Associates, L.P., its
general partner
By: X.X. Childs Associates, Inc., its
general partner
By: /s/ XXXX X. XXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
EXHIBIT A
INVESTOR AGREEMENT
TERM SHEET
Parties: Aurora Foods Inc. (the "Company") and X.X. Childs Equity Partners III,
L.P. (the "Investor").
Board Seats
-----------
o The Company's board of directors (the "Board") shall be comprised of a
maximum of seven directors.
o The Investor will have the right to designate the number of directors
necessary to give the Investor a majority representation on the Board.
The Investor's right to designate Board members terminates in the
event it holds less than 50% of the Investor Shares.
o The Sub Debt Holders will have the right to designate one member of
the Company's Board, subject to the Investor's reasonable approval.
Management Fee
--------------
o For so long as the Investor holds 50% of the shares issued under the
Stock Purchase Agreement, the Company will pay the Investor a monthly
management fee of $60,000.
Registration Rights
-------------------
Demand Rights
-------------
o Commencing on the earlier of (i) the second anniversary of the Closing
or (ii) six months after a public offering, holders of at least a
majority of shares of the common stock issued pursuant to the Stock
Purchase Agreement ("Registrable Securities") may request that the
Company file a registration statement covering Registrable Securities
having specified net proceeds.
o The Agreement provides for two demand registrations.
o The Company is not obligated to effect any demand registration (i)
after the ten year anniversary of the Closing or (ii) during a period
in which any other registration statement involving the Registrable
Securities has been filed or has been declared effective within the
prior 90 days.
o The Company has the right to delay any demand registration for up to
90 days if it determines that the filing of a registration statement
would require it disclose material confidential information. The
Company may exercise this right on two occasions during any
twelve-month period.
o In the event of an underwriter cutback, the Registrable Securities
take priority over other shares being registered.
Piggyback Rights
----------------
o Piggyback rights commence on the earlier of (i) the second anniversary
of the Closing or (ii) six months after a public offering.
o In the event of an underwriter cutback, shares other than Registrable
Securities take priority over Registrable Securities.
Expenses
--------
o The Company pays registration expenses of all demand and piggyback
registrations, exclusive of underwriters' discounts. The Company does
not pay the fees of any advisors to any holder of Registrable
Securities.
Lock-Up Provision
-----------------
o 180-day lock-up.
Transfer of Registration Rights
--------------------------------
o The registration rights may be transferred in connection with a
transfer by the Investor of at least 50% of the then outstanding
Registrable Securities.
Indemnification
---------------
o The parties will provide customary rights to indemnification in
connection with any registration.
EXHIBIT B
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - x
:
In re: : Chapter 11
:
AURORA FOODS INC., : Case No. 03-_____ ( )
et al., :
: Jointly Administered
Debtors. :
:
- - - - - - - - - - - - - - - - - - - x
ORDER ALLOWING BREAK-UP PAYMENT CLAIM AS
ADMINISTRATIVE CLAIM(1)
Upon the motion, dated July [__], 2003 (the "Motion"),(2) of
Aurora Foods Inc. and its subsidiary, Sea Coast Foods, Inc., debtors and
debtors-in-possession (together, the "Debtors"), for entry of an order
allowing as an administrative claim the Allowed Break-Up Payment Claim
described in Section 8.2 of the stock purchase agreement (the "Purchase
Agreement"); and the Court having reviewed the Motion and any declaration
--------
(1) To be used if seeking allowance of Break-Up Payment as administrative
claim following prepetition termination of Purchase Agreement.
(2) Unless otherwise defined herein, initially capital ized terms used
herein shall have the meanings ascribed to them in the Motion or the
Purchase Agreement.
in support of the Motion; and the Court having determined that the relief
requested in the Motion is in the best interests of the Debtors, their
estates, their creditors, and other parties in interest; and it appearing that
notice of the Motion was good and sufficient under the particular
circumstances and that no other or further notice need be given; and upon the
record herein; and after due deliberation thereon; and good and sufficient
cause appearing therefor, it is hereby
ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is GRANTED.
2. The Debtors have articulated good and sufficient reasons for
allowance of the Allowed Break-Up Payment Claim as an administrative claim
payable solely in accordance with the terms of the Purchase Agreement in the
Debtors' Chapter 11 cases. Allowance of the Allowed Break-Up Payment Claim as
an administrative claim under Section 8.2 of the Purchase Agreement is
reasonable and appropriate considering, among other things, (i) the size and
nature of the proposed equity investment by the Investor, (ii) the efforts
expended by the Investor in seeking to consummate the transactions
contemplated by the Purchase Agreement, and (iii) the fact that the Purchase
Agreement was entered into in express contemplation of a chapter 11 filing by
the Debtors.
3. Allowance of the Allowed Break-Up Payment Claim as an
administrative claim was an integral part of the transactions contemplated by
the Purchase Agreement and, in the absence of the Debtors' obligation to
request administrative claim status for such claim as specified in the
Purchase Agreement, the Investor would not have entered into the Purchase
Agreement.
4. Subject to the satisfaction of the conditions specified in either
Section 8.2(a) or Section 8.2(b), as the case may be, the Allowed Break-Up
Payment Claim in the amount of $10,000,000 as provided for in Section 8.2(a)
of the Purchase Agreement or in an aggregate amount of up to $2,500,000 as
provided for in Section 8.2(b) of the Purchase Agreement be, and is hereby,
allowed as an administrative claim in the Chapter 11 cases of the Debtors,
payable solely in accordance with the terms of the Purchase Agreement.
5. The Debtors shall be jointly and severally liable for all
distributions to be made on account of the Allowed Break-Up Payment Claim.
6. The terms and provisions of this Order shall be binding in all
respects upon the Debtors, their estates, their respective affiliates,
successors and assigns, and any trustee, responsible person, estate
administrator, representative, or similar person subsequently appointed for or
in connection with any of Debtors' estates or affairs in these Chapter 11
cases or in any subsequent case(s) under the Bankruptcy Code involving any of
the Debtors.
7. Nothing contained in the plan(s) of reorganization confirmed for
Debtors in these Chapter 11 cases shall conflict with or derogate from the
terms of this Order and, in the event of any inconsistency between such
plan(s) and this Order, the terms of this Order shall govern.
Dated: Wilmington, Delaware
[__], 2003
______________________________
United States Bankruptcy Judge
EXHIBIT C
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - - x
:
In re: : Chapter 11
:
AURORA FOODS INC., : Case No. 03-_____ ( )
et al., :
: Jointly Administered
Debtors. :
:
- - - - - - - - - - - - - - - - - - - - x
ORDER APPROVING BREAK-UP PAYMENT PROVISION OF STOCK
PURCHASE AGREEMENT
Upon the motion, dated July [__], 2003 (the "Motion"),(1) of Aurora
Foods Inc. and its subsidiary, Sea Coast Foods, Inc., debtors and
debtors-in-possession (together, the "Debtors"), for entry of an order under
11 U.S.C. ss. 105(a), 363, 503, and 507 approving the proposed break-up
payment provision (the "Break-Up Payment Provision") of the stock purchase
agreement (the "Purchase Agreement") and approving payment pursuant to the
terms and conditions set forth in the Purchase Agreement; and the Court having
-------------------
(1) Unless otherwise defined herein, initially capital ized terms used
herein shall have the meanings ascribed to them in the Motion or the
Purchase Agreement.
reviewed the Motion and any declaration in support of the Motion; and the
Court having determined that the relief requested in the Motion is in the best
interests of the Debtors, their estates, their creditors, and other parties in
interest; and it appearing that notice of the Motion was good and sufficient
under the particular circumstances and that no other or further notice need be
given; and upon the record herein; and after due deliberation thereon; and
good and sufficient cause appearing therefor, it is hereby
ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is GRANTED.
2. The Debtors have articulated good and sufficient reasons for
approving the Break-Up Payment to the Investor. The Debtors' payment to the
Investor of the Break-Up Payment under Section 8.2 of the Purchase Agreement
is (a) an actual and necessary cost and expense of preserving the Debtors'
estates, within the meaning of section 503(b) of the Bankruptcy Code, (b) of
substantial benefit to the Debtors, their estates, their creditors, and other
parties-in-interest, (c) reasonable and appropriate considering, among other
things, the size and nature of the proposed equity investment by the Investor
and the efforts that have been and will be expended by the Investor in seeking
to consummate the transactions contemplated by the Purchase Agreement,
including, but not limited to, procurement of the New Credit Facility, and (d)
necessary to ensure that the Investor will continue to pursue its proposed
investment in the Debtors and the other transactions contemplated by the
Purchase Agreement.
3. Payment of the Break-Up Payment is an integral part of the
transactions contemplated by the Purchase Agreement and, in the absence of the
Debtors' obligations to make, and agreement to request administrative claim
status for, such payment as specified in the Purchase Agreement, the Investor
would not have entered into the Purchase Agreement. Accordingly, the Investor
is unwilling to hold open its offer to pursue the proposed equity investment
in the Debtors and consummate the other transactions contemplated by the
Purchase Agreement unless it is assured of the Debtors' ability, right, and
obligation to pay the Break-Up Payment.
4. The Break-Up Payment Provision of the Purchase Agreement in
accordance with Section 8.2 of the Purchase Agreement be, and hereby is,
approved and the Debtors are authorized and directed to make the Break-Up
Payment in accordance with the terms of the Purchase Agreement.
5. The terms and provisions of this Order shall be binding in all
respects upon the Debtors, their estates, their respective affiliates,
successors and assigns, and any trustee, responsible person, estate
administrator, representative, or similar person subsequently appointed for or
in connection with any of Debtors' estates or affairs in these Chapter 11
cases or in any subsequent case(s) under the Bankruptcy Code involving any of
the Debtors.
6. Nothing contained in the plan(s) of reorganization confirmed for
Debtors in these Chapter 11 cases shall conflict with or derogate from the
terms of this Order and, in the event of any inconsistency between such
plan(s) and this Order, the terms of this Order shall govern.
Dated: Wilmington, Delaware
[__], 2003
______________________________
United States Bankruptcy Judge
