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Form 8-K
(March 21, 2001)
Exhibit 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX & XXXXXXXX CORPORATION
GPP MERGER CORPORATION
GENERAC PORTABLE PRODUCTS, INC.
AND
THE BEACON GROUP III - FOCUS VALUE FUND, L.P.
DATED AS OF MARCH 21, 2001
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
1.1 Accounts 1
1.2 Acquisition 2
1.3 Affiliate or Affiliates 2
1.4 Agreement 2
1.5 Xxxxxx 2
1.6 Xxxxxx Closing Certificate 2
1.7 Xxxxxx Counsel Opinion 2
1.8 Cash Amount 2
1.9 Certificate of Merger 2
1.10 Closing 2
1.11 Closing Date 2
1.12 Code 2
1.13 Common Stock 2
1.14 Confidentiality Agreement 2
1.15 Contracts 3
1.16 Disclosure Schedule 3
1.17 Dissenting Share 3
1.18 Employee Benefit Plans 3
1.19 Equipment 3
1.20 ERISA 3
1.21 Escrow Agent 3
1.22 Escrow Agreement 3
1.23 Escrow Deposit 3
1.24 Estimated Cash Amount 4
1.25 Existing Contracts 4
1.26 Existing Indebtedness 4
1.27 Existing Insurance Policies 4
1.28 Existing Investments 4
1.29 Existing Liens 4
1.30 Existing Litigation 4
1.31 Existing Permits 4
1.32 Existing Plans 4
1.33 Financial Information 4
1.34 GAAP 5
1.35 GPP 5
1.36 GPPD 5
1.37 GPP Closing Certificate 5
1.38 GPP Counsel Opinion 5
1.39 GPP Group 5
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1.40 GPPW 5
1.41 HSR Act 5
1.42 Indebtedness 5
1.43 Indemnifying Shareholder 5
1.44 Intangible Assets 5
1.45 Inventory 6
1.46 Investment 6
1.47 Knowledge of GPP 6
1.48 Law 6
1.49 Lien 6
1.50 LLC 6
1.51 Material Adverse Effect 6
1.52 Merger 6
1.53 Merger Payment Statement 6
1.54 Merger Price 7
1.55 Notes 7
1.56 Offsets 7
1.57 Option 7
1.58 Paying Agent 7
1.59 Paying Agent Agreement 7
1.60 Per Share Merger Price 7
1.61 Permitted Liens 7
1.62 Person 7
1.63 Preferred Stock 8
1.64 Real Property 8
1.65 Records 8
1.66 Shareholder 8
1.67 Special Indemnity Matters 8
1.68 Subsidiary 9
1.69 Transaction Costs 9
1.70 U.K. Business 10
1.71 U.K. Property 10
1.72 United Kingdom 10
1.73 Warrant 10
1.74 Other Terms 10
ARTICLE II
THE MERGER 11
2.1 The Merger 11
2.2 Effective Time of Merger 11
2.3 Corporate Matters 11
2.4 Conversion of Stock 12
2.5 Procedure for Payment of Cash Amount 13
2.6 Adjustment of Cash Amount 13
2.7 Earnout 17
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ARTICLE III
OTHER AGREEMENTS 18
3.1 Access and Cooperation 18
3.2 Disclosure Schedule 19
3.3 Duties Concerning the Closing 20
3.4 Deliveries of Information; Consultation 20
3.5 Acquisition Proposals 20
3.6 Public Announcements 21
3.7 Employee and Employee Benefit Matters 21
3.8 Noncompetition 22
3.9 Representative 24
3.10 Shareholder Approval 24
3.11 HSR and Foreign Competition Filings 25
3.12 Notes 25
3.13 Collection of Accounts 26
3.14 Obsolete Inventory 26
3.15. Director and Officer Indemnification 27
3.16. Certain Financing Matters 27
3.17. Estoppel Certificates 27
3.18. Pay-Out Letter 27
3.19. Title Policy 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GPP 28
4.1 Organization; Business 28
4.2 Ownership; Capitalization 28
4.3 Authorization; Enforceability 29
4.4 No Violation or Conflict 29
4.5 Financial Information; Books and Records 30
4.6 Assets 30
4.7 Contingent and Undisclosed Liabilities 31
4.8 Taxes 32
4.9 Absence of Certain Changes 35
4.10 Existing Plans 36
4.11 Compliance with Law 38
4.12 Litigation 39
4.13 Existing Contracts 39
4.14 Performance of Contracts 41
4.15 Existing Insurance Policies 42
4.16 Environmental Protection 42
4.17 Labor Matters 44
4.18 Brokers 45
4.19 Disclosure 45
4.20 Intangible Assets 45
4.21 Product Matters 46
4.22 Customers; Suppliers; Certifications 46
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4.23 Relationships with Related Parties 46
4.24 Real Property 47
4.25 Data Protection 48
ARTICLE V
REPRESENTATIONS AND WARRANTIES 48
5.1 Organization; Business 49
5.2 Authorization; Enforceability 49
5.3 No Violation or Conflict 49
5.4 Ownership 49
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF XXXXXX 49
6.1 Organization; Business 49
6.2 Authorization; Enforceability 50
6.3 No Violation or Conflict 50
6.4 Brokers 50
6.5 Consents and Approvals 50
6.6 Financing 50
6.7 Litigation 50
ARTICLE VII
CONDUCT OF BUSINESS BY GPP PENDING THE MERGER 51
7.1 Carry on in Regular Course 51
7.2 Use of Assets 51
7.3 No Default 51
7.4 Existing Insurance Policies 51
7.5 Employment Matters 51
7.6 Contracts and Commitments 51
7.7 Preservation of Relationships 51
7.8 Compliance with Laws 51
7.9 Taxes 51
7.10 Indebtedness 52
7.11 Amendments 52
7.12 Issuance of Stock or Membership Interests 52
7.13 Dividends; Redemption 52
7.14 No Dispositions or Acquisitions 52
7.15 Capital Expenditures 52
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF XXXXXX AND ACQUISITION 52
8.1 Compliance with Agreement 52
8.2 No Litigation 52
8.3 Representations and Warranties of GPP
and the Indemnifying Shareholder 53
8.4 No Material Adverse Effect 53
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8.5 HSR Act Waiting Period and Foreign
Competition Filings 53
8.6 Consents and Approvals 54
8.7 Shareholder Approval 54
8.8 Certificate of Merger 54
8.9 Closing Deliveries 54
8.10 [Intentionally Omitted] 55
8.11 Financing 55
8.12 Shareholders Agreement 55
8.13 Securities Law Compliance 55
8.14 Title Policy 55
8.15 Employment Contract 55
8.16 Environmental and Branch Registration Matters 55
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF GPP 56
9.1 Compliance with Agreement 56
9.2 No Litigation 56
9.3 Representations and Warranties of Xxxxxx 56
9.4 Consents and Approvals 56
9.5 HSR Act Waiting Period and Foreign Competition
Filings 57
9.6 Shareholder Approval 57
9.7 Certificate of Merger 57
9.8 Estimated Cash Amount 57
9.9 Deliveries 57
ARTICLE X
INDEMNITIES 58
10.1 Indemnity by Shareholders 58
10.2 Indemnity by Xxxxxx 59
10.3 Provisions Regarding Indemnities 59
10.4 Indemnification Procedure 62
ARTICLE XI
DISPUTE RESOLUTION MECHANISMS 64
11.1 Dispute 64
11.2 Process 64
11.3 Negotiations 64
11.4 Mediation 64
11.5 Submission to Adjudication 65
11.6 General 65
ARTICLE XII
TERMINATION; MISCELLANEOUS 66
12.1 Termination 66
12.2 Rights Surviving Termination; Waiver 67
12.3 Survival of Representations and Warranties 67
12.4 Entire Agreement; Amendment 67
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12.5 Expenses 67
12.6 Governing Law 67
12.7 Assignment 68
12.8 Notices 68
12.9 Counterparts; Headings 69
12.10 Interpretation 69
12.11 Severability 69
12.12 Specific Performance 70
12.13 No Reliance 70
12.14 Exhibits and Disclosure Schedule 70
12.15 No Strict Construction 70
12.16 Third Party Beneficiaries 70
12.17 Waiver of Jury Trial 70
12.18 Certain Indemnification Matters 70
SIGNATURES 71
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EXHIBITS
1. Form of Xxxxxx Closing Certificate
2. Form of Xxxxxx Counsel Opinion
3. Form of Certificate of Merger
4. Form of Escrow Agreement
5. Form of GPP Closing Certificate
6. Form of GPP Counsel Opinion
7. Form of Paying Agent Agreement
8. Criteria for Obsolete Inventory
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of this 21st day
of March, 2001 by and among XXXXXX & XXXXXXXX CORPORATION, GPP MERGER
CORPORATION, GENERAC PORTABLE PRODUCTS, INC., and THE BEACON GROUP III - FOCUS
VALUE FUND, L.P.
RECITALS
WHEREAS, Briggs desires to acquire all of the outstanding
shares of capital stock of GPP; and
WHEREAS, the respective Boards of Directors of Xxxxxx and
Acquisition have: (a) determined that the merger of GPP and Acquisition pursuant
to, and subject to all of the terms and conditions of, this Agreement is
advisable, fair to, and in the best interests of, Xxxxxx and Acquisition and
their respective shareholders; and (b) approved the Merger, this Agreement and
the transactions contemplated by this Agreement; and
WHEREAS, the Board of Directors of GPP has: (a) determined
that the merger of GPP and Acquisition pursuant to, and subject to all of the
terms and conditions of, this Agreement is advisable, fair to, and in the best
interests of, GPP and its shareholders; and (b) approved the Merger, this
Agreement and the transactions contemplated by this Agreement; and
WHEREAS, Xxxxxx, GPP and Acquisition desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the Recitals and of the
mutual covenants, conditions and agreements set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified:
1.1 Accounts. "Accounts" shall mean all of the accounts
receivable, notes receivable and similar rights of GPP or an Affiliate.
1.2 Acquisition. "Acquisition" shall mean GPP Merger
Corporation, a Delaware corporation and a wholly owned Subsidiary of Briggs.
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1.3 Affiliate or Affiliates. "Affiliate" or "Affiliates" shall
mean any one or more of GPPD, GPPW or LLC, as the case may be.
1.4 Agreement. "Agreement" shall mean this Agreement and Plan
of Merger, the Exhibits attached hereto and the Disclosure Schedule, as the same
may be amended from time to time in accordance with the terms hereof.
1.5 Xxxxxx. "Xxxxxx" shall mean Xxxxxx & Xxxxxxxx Corporation,
a Wisconsin corporation.
1.6 Xxxxxx Closing Certificate. "Xxxxxx Closing Certificate"
shall mean the closing certificate of Xxxxxx in substantially the form of
EXHIBIT 1 attached to this Agreement.
1.7 Xxxxxx Counsel Opinion. "Xxxxxx Counsel Opinion" shall
mean the opinion of Xxxxxxx & Xxxxx LLP in substantially the form of EXHIBIT 2
attached to this Agreement.
1.8 Cash Amount. "Cash Amount" shall mean an amount equal to:
(a) Fifty-Five Million and 00/100 Dollars ($55,000,000); minus (b) the greater
of the amount, if any, by which the Stockholders Equity is less than One Hundred
Three Million and 00/100 Dollars ($103,000,000) or the amount, if any, by which
the Working Capital of the GPP Group is less than Sixty-Five Million and 00/100
Dollars ($65,000,000); minus (c) the Transaction Costs.
1.9 Certificate of Merger. "Certificate of Merger" shall mean
the Certificate of Merger in substantially the form of EXHIBIT 3 attached
hereto.
1.10 Closing. "Closing" shall mean the conference to be held
at 10:00 A.M., Central Daylight Time, on the Closing Date at the offices of
Xxxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or
such other time and place as the parties may mutually agree to in writing, at
which the transactions contemplated by this Agreement shall be consummated.
1.11 Closing Date. "Closing Date" shall mean the later of: (a)
April 30, 2001; or (b) such date which is two business days after satisfaction
or waiver of the conditions (excluding conditions that, by their terms, are to
be satisfied on the Closing Date) set forth in Articles VIII and IX.
1.12 Code. "Code" shall mean the Internal Revenue Code of
1986, as the same may be in effect from time to time.
1.13 Common Stock. "Common Stock" shall mean the twelve
thousand (12,000) authorized shares of GPP's common stock, $.01 par value per
share.
1.14 Confidentiality Agreement. "Confidentiality Agreement"
shall mean the letter agreement between LLC and Xxxxxx dated as of November 30,
2000, as the same may be amended from time to time in accordance with its terms.
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1.15 Contracts. "Contracts" shall mean all of the contracts,
agreements, leases, licenses and commitments to which GPP or an Affiliate is a
party or by which GPP or an Affiliate is bound.
1.16 Disclosure Schedule. "Disclosure Schedule" shall mean the
Disclosure Schedule, dated the date of this Agreement, delivered by GPP to
Xxxxxx contemporaneously with the execution and delivery of this Agreement, as
the same may be amended from time to time after the date of this Agreement and
prior to the Closing Date in accordance with the terms of this Agreement.
1.17 Dissenting Share. "Dissenting Share" shall mean a share
of Common Stock held by any shareholder of GPP who has exercised such
shareholder's appraisal rights under the DGCL.
1.18 Employee Benefit Plans. "Employee Benefit Plans" shall
mean any pension plan, profit sharing plan, bonus plan, incentive compensation
plan, stock ownership plan, stock purchase plan, stock option plan, stock
appreciation plan, employee benefit plan, employee benefit policy, retirement
plan, fringe benefit program, insurance plan, severance plan, disability plan,
health care plan, sick leave plan, death benefit plan, employment agreement, or
any other plan or program to provide retirement income, health and welfare
benefits, fringe benefits or other benefits to former or current employees of
GPP or an Affiliate, whether or not such plan is in writing.
1.19 Equipment. "Equipment" shall mean all machinery,
toolings, equipment, furniture, fixtures, motor vehicles, furnishings, parts,
tools, dies, jigs, patterns, machine tools, office equipment, transportation
equipment, computers, leasehold improvements, construction in progress and other
items of tangible personal property which are owned by GPP or an Affiliate and
used by or useful to GPP or an Affiliate in the operation of their respective
businesses.
1.20 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to time.
1.21 Escrow Agent. "Escrow Agent" shall mean the escrow agent
which is a party to the Escrow Agreement.
1.22 Escrow Agreement. "Escrow Agreement" shall mean the
Escrow Agreement among Xxxxxx, the Representative and the Escrow Agent in
substantially the form of EXHIBIT 4 attached hereto, as the same may be amended
from time to time in accordance with its terms.
1.23 Escrow Deposit. "Escrow Deposit" shall mean an amount
equal to: (a) Eight Million One Hundred Thousand and 00/100 Dollars
($8,100,000); plus (b) the amount, if any, by which the Additional Escrow Amount
exceeds Four Million One Hundred Thousand and 00/100 Dollars ($4,100,000). For
purposes hereof, the "Additional Escrow Amount" shall equal Six Million One
Hundred Thousand and 00/100 Dollars ($6,100,000) multiplied by a fraction,
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the numerator of which is the aggregate principal amount of Notes outstanding
after consummation of the Tender Offer and the denominator of which is One
Hundred Ten Million and 00/100 Dollars ($110,000,000).
1.24 Estimated Cash Amount. "Estimated Cash Amount" shall be
an amount equal to: (a) Fifty-Five Million and 00/100 Dollars ($55,000,000);
minus (b) the greater of the amount, if any, by which the Estimated Stockholders
Equity is less than One Hundred Three Million and 00/100 Dollars ($103,000,000)
or the amount, if any, by which the Estimated Working Capital of the GPP Group
is less than Sixty-Five Million and 00/100 Dollars ($65,000,000); minus (c) the
Transaction Costs.
1.25 Existing Contracts. "Existing Contracts" shall mean those
Contracts that are listed or briefly described on the Disclosure Schedule.
1.26 Existing Indebtedness. "Existing Indebtedness" shall mean
all of the Indebtedness of GPP or an Affiliate, all of which is listed on the
Disclosure Schedule.
1.27 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect and owned
by GPP or an Affiliate, all of which are listed on the Disclosure Schedule.
1.28 Existing Investments. "Existing Investments" shall mean
all Investments of GPP or an Affiliate, all of which are listed on the
Disclosure Schedule.
1.29 Existing Liens. "Existing Liens" shall mean all Liens
affecting any of the material assets of GPP or an Affiliate, all of which are
listed on the Disclosure Schedule.
1.30 Existing Litigation. "Existing Litigation" shall mean
those suits, audit inquiries from governmental authorities, charges, workers
compensation claims, claims for bodily injury, product warranty claims,
litigation, arbitrations, and similar proceedings, governmental investigations,
citations and similar actions of any kind to which GPP or an Affiliate is a
party, which are listed on the Disclosure Schedule.
1.31 Existing Permits. "Existing Permits" shall mean all
permits, licenses, approvals, qualifications, permissions and governmental
authorizations (including Environmental Permits) obtained or held by GPP or an
Affiliate with respect to the conduct of their respective businesses as
presently conducted, all of which are listed on the Disclosure Schedule.
1.32 Existing Plans. "Existing Plans" shall mean all Employee
Benefit Plans of GPP or an Affiliate, all of which are listed on the Disclosure
Schedule.
1.33 Financial Information. "Financial Information" shall
mean:
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(a) the audited consolidated financial statements of the GPP
Group for the fiscal years ended December 31, 2000 (which will be delivered to
Xxxxxx by March 31, 2001 pursuant to Section 3.4) and December 31, 1999; and
(b) the unaudited consolidated financial statements of the GPP
Group for the fiscal year ended December 31, 2000 and the interim period ended
February 24, 2001.
1.34 GAAP. "GAAP" shall mean generally accepted accounting
principles as consistently applied by the GPP Group throughout all periods.
1.35 GPP. "GPP" shall mean Generac Portable Products, Inc., a
Delaware corporation.
1.36 GPPD. "GPPD" shall mean GPPD, Inc., a Delaware
corporation.
1.37 GPP Closing Certificate. "GPP Closing Certificate" shall
mean the closing certificates of GPP and the Indemnifying Shareholder in
substantially the form of EXHIBIT 5 attached to this Agreement.
1.38 GPP Counsel Opinion. "GPP Counsel Opinion" shall mean one
or more opinions of counsel to GPP containing the opinions set forth in EXHIBIT
6 attached to this Agreement.
1.39 GPP Group. "GPP Group" shall mean GPP and the Affiliates.
1.40 GPPW. "GPPW" shall mean GPPW, Inc., a Wisconsin
corporation.
1.41 HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
1.42 Indebtedness. "Indebtedness" shall mean all liabilities
or obligations of the relevant Person, whether primary or secondary or absolute
or contingent: (a) for borrowed money; (b) that are evidenced by notes, bonds,
debentures or similar instruments; or (c) that secure the liabilities or
obligations of others by Liens on any assets of that Person; or (d) relating to
the guaranty, creation or assumption of any liability or obligation of any other
Person.
1.43 Indemnifying Shareholder. "Indemnifying Shareholder"
shall mean The Beacon Group III - Focus Value Fund, L.P., a Delaware limited
partnership.
1.44 Intangible Assets. "Intangible Assets" shall mean all of
the intellectual property owned or used by GPP or an Affiliate in their
respective businesses, including but not limited to rights in trade secrets,
know-how, Internet domain names, web sites content, inventions, software,
drawings, blue prints, operating methods and procedures, proprietary
information, processes, technical knowledge, formulae, logos, United States and
foreign patents, patent applications, trade names (including, to the extent GPP
or an Affiliate has rights thereto,
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the name "Generac Portable Products"), trademarks, service marks, trademark
registrations, service xxxx registrations, copyrights, copyright applications
and customer lists.
1.45 Inventory. "Inventory" shall mean all inventories of GPP
or an Affiliate, including raw materials, store inventories, work in process and
finished goods, wherever located.
1.46 Investment. "Investment" by any Person shall mean: (a)
any transfer or delivery of cash, stock or other property or value by that
Person in exchange for Indebtedness, stock or any other security of another
Person; (b) any loan, advance or capital contribution to or in any other Person;
or (c) any investments in any fixed property or fixed assets other than fixed
properties and fixed assets acquired in the ordinary course of business of the
relevant Person.
1.47 Knowledge of GPP. "Knowledge of GPP" shall mean any
actual knowledge of the following employees of GPP or an Affiliate: Xx. Xxxxxxxx
Xxxxxx, Xx. Xxxx Xxxx, Xx. Xxxxxx Xxxxxx, Xx. Xxx Xxxxxxxx, Xx. Xxxxx Xxxxxxxx,
Xx. Xxxxx Xxxxxxx, Xx. Xxxxxxx Xxxxxx, Ms. Xxxxxxxx Xxxxxxx, Xx. Xxxxxx Xxxxxx
and Mr. Xxxxx Xxxxx.
1.48 Law. "Law" shall mean any foreign, federal, state, local,
common or other law, rule, regulation or governmental requirement of any kind,
and the rules, regulations and orders promulgated thereunder.
1.49 Lien. "Lien" shall mean, with respect to any asset: (a)
any pledge, lien, charge, claim, restriction, condition, covenant, imposition,
overriding interest (as defined in Section 70 of the Land Registration Act of
1925), security interest or other encumbrance of any kind; (b) the interest of a
vendor or lessor under any conditional sale agreement, financing lease or other
title retention agreement relating to such asset; and (c) any option, right of
first offer or right of first refusal.
1.50 LLC. "LLC" shall mean Generac Portable Products, LLC, a
Delaware limited liability company.
1.51 Material Adverse Effect. "Material Adverse Effect" shall
mean any material adverse change, or any circumstance reasonably likely to
result in a material adverse change, in the GPP Group's consolidated financial
position, assets, liabilities, results of operations, business or operations.
1.52 Merger. "Merger" shall mean the merger of Acquisition
with and into GPP pursuant to this Agreement.
1.53 Merger Payment Statement. "Merger Payment Statement"
shall mean a letter of transmittal in a form mutually acceptable to Xxxxxx and
GPP. The Merger Payment Statement shall include the following provisions to be
consented to by each of the Shareholders: (a) appointment of the Representative
to act on behalf of the Shareholders under this Agreement; (b) indemnification
of the Representative for actions taken under this Agreement; (c) agreement to
indemnify (including by contribution) for claims hereunder up to the amount of
the
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consideration received by such Shareholder for such Shareholder's shares of
Common Stock; and (d) agreement to the Option Payments described in Section
2.4(c).
1.54 Merger Price. "Merger Price" shall mean the sum of: (a)
the Cash Amount; and (b) the Earnout.
1.55 Notes. "Notes" shall mean the 11 1/4% Senior Subordinated
Notes Due 2006 of LLC.
1.56 Offsets. "Offsets" shall mean amounts set off against the
Earnout pursuant to Sections 2.6(h)(i), 3.12(c), 3.13, 3.14 and 10.3(g)(i).
1.57 Option. "Option" shall mean an option issued by GPP to
purchase shares of Common Stock.
1.58 Paying Agent. "Paying Agent" shall mean the paying agent
which is a party to the Paying Agent Agreement.
1.59 Paying Agent Agreement. "Paying Agent Agreement" shall
mean the Paying Agent Agreement among Xxxxxx, GPP, the Representative and the
Paying Agent in substantially the form of EXHIBIT 7 hereto, as the same may be
amended from time to time in accordance with its terms.
1.60 Per Share Merger Price. "Per Share Merger Price" shall
mean an amount equal to: (a) the Merger Price; divided by (b) the sum of (i) the
total number of shares of Common Stock outstanding as of the Effective Time of
Merger, and (ii) the total number of shares of Common Stock covered by Warrants
outstanding as of the Effective Time of Merger.
1.61 Permitted Liens. "Permitted Liens" shall mean those of
the Existing Liens which are expressly noted as Permitted Liens on the
Disclosure Schedule and the following:
(a) Liens for taxes, assessments or other governmental
charges not net delinquent or which are being contested in good faith and by
appropriate proceedings;
(b) Carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations which are not yet due; and
(c) Deposits to secure the performance of bids, tenders,
trade or government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business.
1.62 Person. "Person" shall mean and include a natural person,
corporation, trust, partnership, limited liability company, limited liability
partnership, association,
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unincorporated organization, governmental entity, agency or branch or department
thereof, or any other legal entity.
1.63 Preferred Stock. "Preferred Stock" shall mean the Twenty
Thousand (20,000) authorized shares of GPP's preferred stock, $.01 par value per
share.
1.64 Real Property. "Real Property" shall mean any real
property owned or leased by GPP or an Affiliate.
1.65 Records. "Records" shall mean all books, documents and
records owned or used by GPP or an Affiliate in the conduct of their respective
businesses, including personnel, medical and accounting records, correspondence,
governmentally required records, engineering data, designs, drawings, blue
prints, plans, specifications, lists, customer lists, computer media, software
and software documentation, sales literature, catalogues, promotional items,
advertising materials and other written materials.
1.66 Shareholder. "Shareholder" shall mean any Person who
holds Common Stock at the Effective Time of Merger, including without limitation
any Person who holds a Warrant on the date hereof which is exercised in part or
in full prior to or upon the consummation of the Merger, and any Person who
holds a Warrant at the Effective Time of Merger.
1.67 Special Indemnity Matters. "Special Indemnity Matters"
shall mean the following:
(a) GPP's or any Affiliate's relationship prior to the
Effective Time of Merger with Xx. Xxxxx Xxxxx Xxxxxxx;
(b) to the extent existing at or prior to the Effective Time
of Merger, the environmental, health and safety matters that are the subject of
recommendations in Section 5.0 of the report prepared by URS Dames & Xxxxx dated
as of 21 March 2001 and entitled "Final Report Phase I Environmental Assessment
and Health & Safety Review Generac Portable Products Winsford, Cheshire on
behalf of Xxxxxx & Xxxxxxxx Corporation";
(c) the failure at or prior to the Effective Time of Merger
to have a storm water permit for the GPP Group's Jefferson, Wisconsin facility;
(d) any failure at or prior to the Effective Time of Merger
of the GPP Group's German service center to be in compliance with applicable
Environmental Laws relating to petrol handling and disposal practices and such
other Laws applicable to the operation of a repair center;
(e) any failure by GPP or any Affiliate at or prior to the
Effective Time of Merger to conduct the Tender Offer in compliance with all
applicable Laws;
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(f) any claim relating to Options (including without
limitation the treatment of the Options described in this Agreement);
(g) the GPP Group's practices prior to the Effective Time of
Merger with respect to transfer pricing, management fees and interest expense in
Europe;
(h) any liability of GPP or an Affiliate relating to the
situation described in the U.S. Consumer Product Safety Commission letter and
incident report included in the Disclosure Schedule or to the claims described
in the insurance loss report included in the Disclosure Schedule;
(i) the GPP Group's sales and use tax payment practices
prior to the Effective Time of Merger;
(j) any failure by the GPP Group to file an income tax
return in any state in which the GPP Group did not file with respect to periods
prior to the Effective Time of Merger;
(k) the GPP Group's practices prior to the Effective Time of
Merger relating to the issuance and content of Forms W-2 and 1099;
(l) any liability of the GPP Group relating to its temporary
employee engagement practices prior to the Effective Time of Merger;
(m) the failure of the GPP Group to have appropriately
registered and maintained a United Kingdom branch registration for LLC; and
(n) any liability of GPP or an Affiliate for the following
matters described in the Disclosure Schedule: (i) the alleged infringement of
European Patent No. 612,138; (ii) the "Lighthouse Logo" trademark matter; and
(iii) the G-FORCE trademark matter.
1.68 Subsidiary. "Subsidiary" of any Person shall mean another
Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first Person.
1.69 Transaction Costs. "Transaction Costs" shall mean an
amount representing all fees and expenses incurred by GPP, the Affiliates and
the Shareholders (in each case, if such expenses are an obligation of GPP or an
Affiliate at the Effective Time of Merger) in connection with the Merger, this
Agreement and the transaction contemplated by this Agreement, including the fees
and expenses of counsel, investment bankers, brokers, accountants and other
experts incident to the negotiation and preparation of this Agreement and the
consummation of the Merger and the other transactions described in this
Agreement. Transaction Costs shall be evidenced by invoices delivered to Xxxxxx
on or prior to the Closing Date.
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1.70 U.K. Business. "U.K. Business" means the business of GPP
and its Affiliates as currently or previously conducted in the United Kingdom.
1.71 U.K. Property. "U.K. Property" means the real property
located at Xxxxxx Drive, Woodford Park Industrial Estate, Winsford, Cheshire CW7
2JZ, England.
1.72 United Kingdom. "United Kingdom" means the United Kingdom
of Great Britain and Northern Ireland.
1.73 Warrant. "Warrant" shall mean a warrant to purchase
shares of Common Stock.
1.74 Other Terms. The following terms shall have the meanings
specified in the Sections of this Agreement listed in the following table:
TERM SECTION
---- -------
Acquisition Proposal 3.5(a)(i)
Affected Employee 3.7(a)
Calculation 2.6(c)
Cap 10.3(e)(ii)
CERCLA 4.16(f)
Closing Balance Sheet 2.6(a)(i)
Closing Consideration 2.7(a)(i)
Competing Business 4.24
Competing Transaction 3.5(a)(ii)
Consent Action 3.10(a)
CPR 11.4
DGCL 2.1
Disclosure Schedule Change 3.2(b)
Dispute 11.1
Earnout 2.7(a)(iv)
EBITDA 2.7(a)(ii)
EBITDA Period 2.7(a)(iii)
Effective Time of Merger 2.2
Enterprise Value 2.7(a)(v)
Environmental Claim 4.16(a)(i)
Environmental Hazardous Materials 4.16(a)(ii)
Environmental Laws 4.16(a)(iii)
Environmental Permits 4.16(a)(iv)
Environmental Release 4.16(a)(v)
ERISA Affiliate 4.10(b)
Estimated Balance Sheet 2.6(a)(ii)
Estimated Stockholders Equity 2.6(a)(iii)
Estimated Working Capital of the GPP Group 2.6(a)(iv)
Independent Accountants 2.6(f)
Injunction 8.2(a)
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TERM SECTION
---- -------
Losses 10.1
Net Book Value 2.6(a)(v)
Option Payment 2.4(c)
Pro-Rata Portion 4.2(a)
Replacement 11.6(g)
Representative 3.9
Request 11.4
Special Meeting 3.10(a)
Stockholders Equity 2.6(a)(vi)
Surviving Corporation 2.1
Tender Costs 3.12(b)
Tender Offer 3.12(a)
Working Capital of the GPP Group 2.6(a)(vii)
Zero Coupon Notes 3.16
ARTICLE II
THE MERGER
2.1 The Merger. At the Effective Time of Merger and upon and
subject to the terms and conditions of this Agreement, Acquisition shall be
merged with and into GPP, which will be the surviving corporation in the Merger
(the "Surviving Corporation") and shall continue to be governed by the Laws of
the State of Delaware and the separate existence of Acquisition shall thereupon
cease. The Merger shall be pursuant to the provisions of, and shall be with the
effects provided in, the Delaware General Corporation Law ("DGCL").
2.2 Effective Time of Merger. Subject to the terms and
conditions of this Agreement, on the Closing Date, Xxxxxx, Acquisition and GPP
will cause the Certificate of Merger to be executed, delivered and filed as
provided in the DGCL. The Merger shall become effective at the latest of: (a)
April 30, 2001; (b) the time of the receipt of the Certificate of Merger by the
Delaware Secretary of State; or (c) at such later time as Xxxxxx, Acquisition
and GPP may agree and as may be set forth in the Certificate of Merger;
provided, however, that to the extent permitted by Law and GAAP, for tax and
accounting purposes the parties shall treat the Merger as being effective as of
12:01 a.m. on the date of the Merger. The date and time on which the Merger
shall become effective is referred to in this Agreement as the "Effective Time
of Merger."
2.3 Corporate Matters.
(a) Certificate of Incorporation of Surviving Corporation.
The Certificate of Incorporation of GPP as in effect immediately prior to the
Effective Time of Merger shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable Law.
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(b) Bylaws of Surviving Corporation. The Bylaws of GPP as in
effect immediately prior to the Effective Time of Merger shall be the Bylaws of
the Surviving Corporation until amended in accordance with applicable Law.
(c) Directors and Officers of Surviving Corporation. The
duly qualified and acting directors of Acquisition immediately prior to the
Effective Time of Merger shall be the directors of the Surviving Corporation, to
hold office as provided in the Bylaws of the Surviving Corporation. The duly
qualified and acting officers of GPP immediately prior to the Effective Time of
Merger shall be the officers of the Surviving Corporation, to hold office as
provided in the Bylaws of the Surviving Corporation.
2.4 Conversion of Stock.
(a) Conversion of Common Stock and Warrants. At the
Effective Time of Merger, by virtue of the Merger and without any action on the
part of Acquisition, GPP, Xxxxxx or the Shareholders:
(i) each outstanding share of Common Stock (other than
a Dissenting Share) shall be converted into the right to receive an amount equal
to the Per Share Merger Price;
(ii) each outstanding Warrant shall be converted into
the right to receive an amount equal to the Per Share Merger Price (less the
applicable exercise price thereof) multiplied by the number of shares of Common
Stock covered by such Warrant, and each such Warrant shall then be canceled; and
(iii) each Dissenting Share shall be converted into
the right to receive payment with respect thereto from the Surviving Corporation
in accordance with the DGCL.
(b) Conversion of Acquisition Common Stock . At the
Effective Time of Merger, each outstanding share of Acquisition's common stock
shall be converted into one share of common stock of the Surviving Corporation.
(c) Cancellation of Options. Prior to the Effective Time
of Merger, GPP shall seek to enter into an agreement with each holder of an
Option providing for the cancellation of such Option without any liability or
cost to GPP. In exchange for such cancellation, the holder of the Option shall
enter into an agreement with the Representative, acting on behalf of the
Shareholders, entitling the holder to receive from the Shareholders the payment
described in this Section 2.4(c). After the Merger, if the final calculation of
the Earnout pursuant to Section 2.7 results in an Earnout payment being due
(which Earnout shall be calculated for this purpose as if no Option Payments
were due), then each holder of an Option which had vested prior to the Merger,
in part or in full, shall be entitled to receive payment from the Shareholders
of an amount equal to the amount, if any, by which: (i) the Per Share Merger
Price (calculated after finalization of the Earnout but without deduction for
any Offsets or Option Payments and, for this purpose only, assuming that the
shares of Common Stock subject to
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vested Options were outstanding as of the Effective Time of Merger), exceeds
(ii) the aggregate exercise price of the vested portion of such Option (the
"Option Payment").
2.5 Procedure for Payment of Cash Amount.
(a) At Closing, Xxxxxx shall:
(i) deliver the Estimated Cash Amount, less the Escrow
Deposit, to the Paying Agent by wire transfer of immediately available funds to
be held and disbursed at or following the Effective Time of Merger in accordance
with the Paying Agent Agreement; and
(ii) deposit the Escrow Deposit with the Escrow Agent by
wire transfer of immediately available funds to be held and disbursed following
the Effective Time of Merger in accordance with the provisions of the Escrow
Agreement.
(b) The Paying Agent Agreement shall provide that, at or
immediately after the Effective Time of Merger, the Paying Agent shall pay or
shall cause to be paid to each Shareholder who has returned to the Surviving
Corporation a completed Merger Payment Statement, duly signed by such
Shareholder, an amount equal to the "Net Merger Payment" as shown on such Merger
Payment Statement. Each such payment shall be made in the name instructed on the
Merger Payment Statement by the Shareholder entitled to such payment.
(c) Any portion of the Estimated Cash Amount or Cash Amount
not disbursed by the Paying Agent after one (1) year after the Closing Date
shall be paid to the Surviving Corporation and thereafter all Shareholders shall
be entitled to look to the Surviving Corporation as general creditors with
respect to the cash payable upon surrender of their certificates. Any portion of
the Earnout not disbursed by the Paying Agent after one (1) year after delivery
of the Earnout payment to the Paying Agent shall be paid to the Surviving
Corporation and thereafter all Shareholders shall be entitled to look to the
Surviving Corporation as general creditors with respect to the cash payable upon
surrender of their certificates.
(d) Any portion of the Escrow Deposit available for
distribution to the Shareholders pursuant to the terms of the Escrow Agreement
shall be paid to the Shareholders based on their respective Pro-Rata Portions of
the remaining balance of such Escrow Deposit.
2.6 Adjustment of Cash Amount.
(a) Definitions. As used in this Agreement:
(i) "Closing Balance Sheet" shall mean a consolidated
balance sheet of GPP and the Affiliates immediately prior to the Effective Time
of Merger to be prepared in good faith by Xxxxxx and delivered to the
Representative following the Closing which shall: (A) be prepared in accordance
with GAAP (unless specifically provided otherwise herein), except that it shall
exclude any adjustments required by GAAP as a result of the transactions
contemplated in this Agreement, (B) include appropriate warranty and bad debt
reserves for the
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GPP Group's German operations; (C) include appropriate Inventory shrinkage and
warranty reserves for the GPP Group's United States operations; and (D) reflect
the Net Book Value of all of the assets of GPP and the Affiliates and of all of
the liabilities of GPP and the Affiliates.
(ii) "Estimated Balance Sheet" shall mean an estimate of the
consolidated balance sheet of GPP and the Affiliates immediately prior to the
Effective Time of Merger to be prepared in good faith by GPP and delivered to
Xxxxxx which shall: (A) be prepared in accordance with GAAP (unless specifically
provided otherwise herein), except that it shall exclude any adjustments
required by GAAP as a result of the transactions contemplated in this Agreement,
(B) include warranty and bad debt reserves in amounts reasonably acceptable to
Xxxxxx for the GPP Group's German operations; (C) include Inventory shrinkage
and warranty reserves in amounts reasonably acceptable to Xxxxxx for the GPP
Group's United States operations; and (D) reflect the estimated Net Book Value
of all of the assets of GPP and the Affiliates and of all of the liabilities of
GPP and the Affiliates.
(iii) "Estimated Stockholders Equity" shall mean, in each
case as shown on the Estimated Balance Sheet and excluding other comprehensive
income and any additional paid-in capital recorded in connection with the
issuance of the Warrants associated with GPP's $15 million zero coupon notes (if
applicable): (A) the Net Book Value of all assets of GPP and the Affiliates;
minus (B) the Net Book Value of all liabilities of GPP and the Affiliates other
than for Transaction Costs.
(iv) "Estimated Working Capital of the GPP Group" shall
mean, in each case as shown on the Estimated Balance Sheet: (a) the Net Book
Value of all Accounts, Inventory, prepaid expenses and other current assets of
GPP and the Affiliates, minus (b) the Net Book Value of all accounts payable,
accrued expenses and revolving credit loans of GPP and the Affiliates (but
excluding the current portion of long-term debt); calculated on a consolidated
basis in accordance with GAAP.
(v) "Net Book Value" shall mean, for any asset, the amount
equal to the net book value of that asset immediately prior to the Effective
Time of Merger and, for any liability, the book amount of such liability
immediately prior to the Effective Time of Merger.
(vi) "Stockholders Equity" shall mean, in each case as shown
on the Closing Balance Sheet and excluding other comprehensive income and any
additional paid-in capital recorded in connection with the issuance of the
Warrants associated with GPP's $15 million zero coupon notes (if applicable):
(A) the Net Book Value of all assets of GPP and the Affiliates; minus (B) the
Net Book Value of all liabilities of GPP and the Affiliates other than for
Transaction Costs.
(vii) "Working Capital of the GPP Group" shall mean, in each
case as shown on the Closing Balance Sheet: (a) the Net Book Value of all
Accounts, Inventory, prepaid expenses and other current assets of GPP and the
Affiliates, minus (b) the Net Book Value of all accounts payable, accrued
expenses and revolving credit loans of GPP and the
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Affiliates (but excluding the current portion of long-term debt); calculated on
a consolidated basis in accordance with GAAP.
(b) Estimated Closing Balance Sheet. No less than five (5)
business days prior to the Closing Date, GPP shall prepare or cause to be
prepared and delivered to Xxxxxx the Estimated Balance Sheet and a calculation
of the Estimated Cash Amount based upon the Estimated Balance Sheet and invoices
representing the Transaction Costs. GPP shall cooperate and confer with Xxxxxx
to discuss any reasonable objections Xxxxxx may have with respect to the
Estimated Balance Sheet or the calculation by GPP of the Estimated Cash Amount,
or both. Xxxxxx and the Representative shall in good faith endeavor to agree on
the amounts of the Estimated Stockholders Equity, the Estimated Working Capital
of the GPP Group and the Estimated Cash Amount and such agreed upon amounts
shall be used for purposes of proceeding with the Closing; provided that, if
Xxxxxx and the Representative cannot agree on such amounts, the average of
Xxxxxx'x amounts and the Representative's amounts shall be used for purposes of
proceeding with the Closing.
(c) Closing Financial Adjustments. Following the Closing
Date, Xxxxxx shall prepare the Closing Balance Sheet and a calculation of the
Cash Amount (the "Calculation") based upon the Closing Balance Sheet and
invoices representing the Transaction Costs. Xxxxxx shall deliver to the
Representative, as promptly as practicable after the Closing Date and in any
event within ninety (90) calendar days after the Closing Date, the Closing
Balance Sheet and the Calculation.
(d) Bases for Objection. The only bases upon which the
Representative may dispute any matter in the Closing Balance Sheet or the
Calculation are: (i) the inaccuracy of such matter, whether factually or
numerically; or (ii) that the Closing Balance Sheet or the Calculation, or both,
were not prepared as provided in this Agreement.
(e) Objection by the Representative. The Closing Balance
Sheet and the Calculation shall be final and binding on the parties unless the
Representative objects to any matter in the Closing Balance Sheet or the
Calculation within thirty (30) calendar days after receipt of the Closing
Balance Sheet and the Calculation by: (i) notifying Xxxxxx in writing of such
objection; and (ii) delivering to Xxxxxx a detailed statement describing the
basis for such objection along with the Representative's calculation of the Cash
Amount. If Xxxxxx agrees with the objection of the Representative and the
calculations of the Representative, the amount paid by Xxxxxx pursuant to
Section 2.5(a) of this Agreement shall be adjusted in the manner set forth in
Section 2.6(h) of this Agreement. If Xxxxxx does not agree with the objection of
the Representative or with the calculations of the Representative, Xxxxxx shall,
within fifteen (15) calendar days after receipt of the objection of the
Representative, notify the Representative in writing of such fact.
(f) Independent Accountants. The parties shall thereafter
use reasonable efforts to resolve the dispute; provided, that if they are unable
to resolve their dispute within thirty (30) days following the expiration of the
fifteen (15) day period described in Section 2.6(e) above, by notice by Xxxxxx
or the Representative to the other the disagreement between the Representative
and Xxxxxx may then be submitted by either party for resolution to
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the Milwaukee, Wisconsin office of Ernst & Young (the "Independent
Accountants"). If Ernst & Young is unable or unwilling to serve as the
Independent Accountants, the Independent Accountants shall be the Milwaukee,
Wisconsin office of another "Big 5" accounting firm chosen by lot (after
excluding any such firm that has provided substantial services within the
preceding five (5) years to Xxxxxx, GPP, an Affiliate or the Indemnifying
Shareholder). Xxxxxx and the Representative, on behalf of the other
Shareholders, shall execute a reasonable engagement letter if requested by the
Independent Accountants. The Independent Accountants shall act as an arbitrator
to determine, based on the provisions of this Section 2.6, only those items in
dispute. Within ten (10) business days after the Independent Accountants have
been retained, Xxxxxx and the Representative shall furnish, at their own
expense, to the Independent Accountants and the other party its position with
respect to each matter in dispute. Within five (5) business days after the
expiration of such ten (10) day period, Xxxxxx and the Representative may
deliver to the Independent Accountants and to the other party its response to
the other's position on each matter in dispute. With each submission, Xxxxxx and
the Representative may also furnish to the Independent Accountants such other
information and documents as it deems relevant or such information and documents
that may be requested by the Independent Accountants with appropriate copies or
notification being given to the other party; provided that Xxxxxx shall furnish
to the Independent Accountants the "work papers" with respect to Closing Balance
Sheet and the Calculation. The Independent Accountants may, at their discretion,
conduct a conference concerning the disagreement with the Representative and
Xxxxxx, at which conference each party shall have the right to present
additional documents, materials and other information and to have present its
advisors, counsel and accountants. In connection with such process, there shall
be no hearings, oral examinations, testimony, depositions, discovery or other
similar proceedings conducted by any party or by the Independent Accountants.
(g) Decision. The Independent Accountants shall choose one
of the two positions on each disputed matter within forty-five (45) days after
the submissions provided for in subsection (f) above have been delivered to the
Independent Accountants. The Independent Accountants' determination as to each
item in dispute shall be set forth in a written statement delivered to Xxxxxx
and the Representative and shall be final and binding on the parties. The
Independent Accountants shall determine the proportion of their fees and
expenses to be paid by each of the Representative and Xxxxxx, based primarily on
the degree to which the Independent Accountants have accepted the positions of
the respective parties.
(h) Adjustments.
(i) If the Estimated Cash Amount used at Closing is in
excess of the Cash Amount as finally determined pursuant to this Section 2.6,
the Shareholders shall promptly pay such excess to Xxxxxx. Such payment shall
first be made out of the escrow fund maintained by the Escrow Agent. Thereafter,
Xxxxxx shall have the right to either set off any amount due against the Earnout
or recover the excess from the Shareholders, who shall then have the right to be
reimbursed from the Earnout payment available for distribution to the
Shareholders, if any, for any amount so paid before such Earnout payment is
distributed to the Shareholders pursuant to Section 2.7(b)(z) or (c).
Thereafter, or in the event Xxxxxx chooses to recover such excess from the
Earnout and no Earnout is payable pursuant to the provisions of Section 2.7 of
this Agreement, the Shareholders shall be responsible for the remaining amount
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due. If the Cash Amount as finally determined by this Section 2.6 exceeds the
Estimated Cash Amount used at Closing, Xxxxxx shall pay such excess to the
Shareholders by depositing an amount equal to the excess with the Paying Agent.
(ii) Any payment pursuant to Section 2.6(h)(i) of this
Agreement shall include interest on the amount due from the Effective Time of
Merger to and including the date paid in full at an annual interest rate equal
to the prime rate of interest established on the Closing Date by M&I Xxxxxxxx &
Xxxxxx Bank, Milwaukee, Wisconsin.
2.7 Earnout.
(a) Definition. As used in this Agreement:
(i) "Closing Consideration" shall mean the sum of: (A) the
Cash Amount; (B) the Transaction Costs; and (C) the amount of Existing
Indebtedness outstanding at the Closing (including any Indebtedness being paid
at the Closing pursuant to Section 3.12 hereof).
(ii) "EBITDA" shall mean the net income of the GPP Group for
the applicable period plus all interest, income taxes, depreciation and
amortization deducted in the calculation of such net income, but without giving
effect to any loss, expense, income or revenue not incurred in the ordinary
course of business, and calculated consistent with the following guidelines: (A)
the calculation shall include the sourcing of engines and components based on
arms' length terms; (B) the charges for any services provided by Xxxxxx that
were performed by GPP or an Affiliate prior to the Effective Time of Merger
shall be evaluated based on those expenses incurred by GPP or such Affiliate
prior to the Effective Time of Merger; and (C) advertising shall be charged to
the GPP Group on a basis consistent with the targeted nature of such advertising
(i.e., generator and pressure washer end products). EBITDA shall be calculated
for the GPP Group on a consolidated basis in accordance with GAAP
(iii) "EBITDA Period" shall mean the twelve (12) month
period ending June 30, 2002.
(iv) "Earnout" shall mean an amount equal to: (A) forty
percent (40%) of: (1) the Enterprise Value, minus (2) the Closing Consideration;
up to a maximum amount such that the Closing Consideration plus the amount
calculated pursuant to this subsection (A) does not exceed Three Hundred Fifty
Million Dollars ($350,000,000); minus (B) the aggregate Option Payments.
(v) "Enterprise Value" shall mean the EBITDA for the EBITDA
Period multiplied by six (6).
(b) Payment. As promptly as practicable following June 30, 2002,
and in any event on or prior to September 30, 0000, Xxxxxx shall deliver to the
Representative, (i) financial statements of the GPP Group for the EBITDA Period;
(ii) a statement setting forth its calculation of the EBITDA for the EBITDA
Period; and (iii) a statement setting forth its
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calculation of the Earnout assuming that no Option Payments are due. Within
thirty (30) following its receipt of the foregoing, the Representative shall
deliver to Xxxxxx its calculation of the aggregate Option Payments due. Promptly
following receipt of the Representative's calculation, Xxxxxx shall deliver to
the Paying Agent by wire transfer of immediately available funds: (y) for
delivery to the holders of Options entitled to an Option Payment, the aggregate
amount of Option Payments due; and (z) for delivery to the Shareholders in
accordance with the provisions of this Agreement, the Earnout, less all Offsets.
(c) Objection by the Representative. The EBITDA calculation
provided by Xxxxxx pursuant to Section 2.7(b)(i)(B) of this Agreement shall be
final and binding on the parties unless the Representative objects thereto
within thirty (30) calendar days after receipt of such calculation by: (i)
notifying Xxxxxx in writing of such objection; and (ii) delivering to Xxxxxx a
detailed statement describing the basis for such objection along with the
Representative's calculation of the EBITDA. If Xxxxxx agrees with the objection
of the Representative and the EBITDA calculation of the Representative, Xxxxxx
shall pay any additional Earnout payment resulting from the EBITDA calculation
of the Representative by promptly depositing the same with the Paying Agent for
delivery to the Shareholders. If Xxxxxx does not agree with the objection of the
Representative or with the EBITDA calculation of the Representative, Xxxxxx
shall, within fifteen (15) calendar days after receipt of the objection of the
Representative, notify the Representative in writing of such fact. The parties
shall thereafter use reasonable efforts to resolve the dispute; provided, if
they are unable to resolve their dispute within thirty (30) days following the
expiration of the fifteen (15) day period described above, by notice by Xxxxxx
or the Representative to the other, the disagreement between the Representative
and Xxxxxx may then be submitted to, and resolved by, Independent Accountants in
the manner set forth in Sections 2.6(f) and (g) of this Agreement. If, following
such resolution, an additional Earnout payment is owed by Xxxxxx, an amount
equal to such additional Earnout payment shall be deposited with the Paying
Agent within ten (10) calendar days after the date of determination, along with
interest on the amount due from September 30, 2002 to and including the date
paid in full at the interest rate set forth in Section 2.6(h)(ii) of this
Agreement.
(d) Confidentiality. In the course of his duties pursuant to
this Section 2.7 and elsewhere in this Agreement, the Representative may be
exposed to information concerning Xxxxxx and its Subsidiaries that is or
includes material nonpublic information. The Representative agrees to keep all
information provided to it by Xxxxxx or any of its Subsidiaries confidential and
acknowledges that applicable securities laws prohibit any Person who has
material nonpublic information about a company from purchasing or selling
securities of such company or from communicating such information to any other
Person under circumstances where it is reasonably foreseeable that such Person
is likely to purchase or sell such securities.
ARTICLE III
OTHER AGREEMENTS
3.1 Access and Cooperation. Upon reasonable notice, GPP shall
afford to the officers, employees, accountants, legal counsel, agents and other
representatives of Xxxxxx
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reasonable access to all of the properties, books, contracts, financial
information, commitments and records of GPP and the Affiliates during normal
business hours. Subject to the preceding sentence, Xxxxxx shall be entitled, at
its own expense, to: (i) conduct appraisals of the equipment, buildings and
properties of GPP and the Affiliates; (ii) conduct, on reasonable prior notice
to and subject to the approval (not to be unreasonably withheld) of GPP,
environmental and occupational safety inspections of the properties of GPP and
the Affiliates; (iii) communicate, on reasonable prior notice to and subject to
the approval (not to be unreasonably withheld) of GPP, with employees, vendors,
customers and other Persons having business dealings with GPP and the
Affiliates; and (iv) have a survey of each parcel of owned Real Property
prepared (provided, however, that any inability of Xxxxxx to obtain such a
survey prior to Closing shall not be a breach of this Agreement so long as GPP
has abided by its access and cooperation obligations set forth in this Section
3.1). GPP agrees to assist Xxxxxx, and shall be permitted to participate with
Xxxxxx, in connection with all such activities.
3.2 Disclosure Schedule.
(a) Disclosure Schedule. Contemporaneously with the
execution and delivery of this Agreement, GPP is delivering to Xxxxxx the
Disclosure Schedule, which is accompanied by a certificate signed by the
President and Chief Executive Officer of GPP, stating that the Disclosure
Schedule is being delivered pursuant to this Agreement and is the Disclosure
Schedule referred to in this Agreement. The Disclosure Schedule is deemed to
constitute an integral part of this Agreement and to modify the representations,
warranties, covenants or agreements of GPP contained in this Agreement to the
extent that such representations, warranties, covenants or agreements expressly
refer to the Disclosure Schedule.
(b) Updates. Prior to the Closing Date, GPP shall update the
Disclosure Schedule by written notice to Xxxxxx to reflect any matters that
occur from and after the date of this Agreement which, if existing on the date
of this Agreement, would have been required to be described in the Disclosure
Schedule (a "Disclosure Schedule Change"). For purposes of determining the
accuracy of the representations and warranties contained in Article IV and
Article V and the liability of the Shareholders under Article X for breaches
thereof, the Disclosure Schedule shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any Disclosure Schedule Change (other
than a Disclosure Schedule Change reflecting Existing Contracts entered into
following the date of this Agreement that are consistent with GPP's and the
Affiliates' obligations in Article VII or changes to the Existing Insurance
between the date of this Agreement and the Closing Date), except that if the
subject matter of the Disclosure Schedule Change is such that it results in a
failure of the condition set forth in Section 8.3 and Xxxxxx and Acquisition
waive the satisfaction of such condition as a condition to the performance of
their obligations hereunder, then none of Xxxxxx, Acquisition, GPP or an
Affiliate shall be entitled to recover for such Loss pursuant to Article X.
Xxxxxx acknowledges that if it is entitled to recover for a Loss pursuant to the
preceding sentence and the Closing Balance Sheet includes a liability relating
to the subject matter of the Disclosure Schedule Change, then the amount so
reflected in the Closing Balance Sheet shall not constitute a Loss for purposes
of Article X.
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3.3 Duties Concerning the Closing. Each party to this Agreement
shall: (a) use reasonable best efforts to obtain any third party consents or
approvals required by this Agreement; and (b) use reasonable best efforts to
cause all of the conditions precedent set forth in Articles VIII and IX of this
Agreement to be satisfied.
3.4 Deliveries of Information; Consultation. From time to time prior
to the Closing Date:
(a) Deliveries by GPP. GPP shall furnish promptly to Xxxxxx:
(i) the monthly financial statements of GPP and the Affiliates (as prepared by
GPP and the Affiliates in accordance with their normal accounting procedures)
promptly after such financial statements are available; and (ii) all other
information concerning the operations, properties and personnel of GPP and the
Affiliates as Xxxxxx may reasonably request; provided that in each of clauses
(i) and (ii) above, GPP shall not be required to furnish any financial statement
or any other information which it would not otherwise have available in the
ordinary course of business. In addition, GPP shall furnish to Xxxxxx the
following: (y) no later than March 31, 2001, the audited consolidated financial
statements of the GPP Group for the fiscal year ended December 31, 2000; and (z)
promptly after receipt thereof, (A) notice that any insurer has refused coverage
or has assumed a defense with a reservation of rights, and (B) except with
respect to those policies which GPP or an Affiliate chooses not to renew, notice
of cancellation or any other indication that any insurance policy is no longer
in full force and effect or will not be renewed or that the issuer of any such
policy is not willing or able to perform its obligations thereunder.
(b) Consultation. GPP shall confer and consult with
designated representatives of Xxxxxx on an as-requested basis to discuss any
Disclosure Schedule Changes and to report on operational matters of GPP and the
Affiliates and the general status of ongoing business operations of GPP and the
Affiliates (including, without limitation, any request by the other party to an
Existing Contract to renegotiate the terms of such Existing Contract).
(c) Acquisitions. GPP shall notify Xxxxxx immediately: (i)
of any Acquisition Proposal; (ii) of any inquiry received from any Person
concerning an Acquisition Proposal; (iii) of any request from any Person for
confidential information concerning the business of GPP and the Affiliates in
connection with an Acquisition Proposal; and (iv) if any Person seeks to
initiate or continue any discussions or negotiations with GPP or an Affiliate
concerning a Competing Transaction or an Acquisition Proposal.
3.5 Acquisition Proposals.
(a) Definitions. As used in this Agreement, the following
terms shall have the meanings specified:
(i) "Acquisition Proposal" shall mean any inquiry, proposal
or offer relating to a Competing Transaction; and
(ii) "Competing Transaction" shall mean any or all of the
following, other than the transactions described in this Agreement or any other
transaction
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between Xxxxxx and GPP: (A) a merger or share or membership interest exchange,
consolidation, reorganization, combination or similar transaction which involves
or affects GPP or an Affiliate; or (B) a sale, transfer or other disposition of
all or substantially all of the assets of GPP or an Affiliate in a single
transaction or a series of related transactions; or (C) a sale, exchange offer
or tender offer for, or acquisition by any Person or group of Persons of,
beneficial ownership of a controlling interest in GPP or an Affiliate in a
single transaction or series of related transactions; or (D) a public
announcement of a proposal, plan, intention or agreement to do any of the
foregoing.
(b) Acquisition Proposals. GPP and the Indemnifying
Shareholder shall not, nor shall GPP permit an Affiliate or GPP's or the
Affiliates' shareholders, partners, members, officers, directors, managers,
agents or authorized representatives (including, without limitation, any
investment banker, attorney or accountant retained or engaged by that party) to:
(i) initiate, solicit, or encourage any inquiries concerning an Acquisition
Proposal or a Competing Transaction; (ii) engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any Person relating to an Acquisition Proposal or a Competing Transaction;
(iii) facilitate any effort or attempt to make or implement an Acquisition
Proposal; or (iv) consummate, agree or commit to consummate an Acquisition
Proposal or a Competing Transaction. GPP shall immediately cease or cause to be
terminated any existing activities, discussions or negotiations with any Person
with respect to any of the foregoing activities.
3.6 Public Announcements. Subject to each party's disclosure
obligations imposed by Law, Xxxxxx and GPP will cooperate and consult with each
other prior to the Closing in the development and distribution of all news
releases, disclosures to customers and suppliers of GPP and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated by this Agreement and shall not issue any press
release or public statement without the approval of the other parties, which
approval shall not be unreasonably withheld.
3.7 Employee and Employee Benefit Matters.
(a) Xxxxxx agrees that those individuals who are employed by
GPP or any Affiliate immediately prior to the Effective Time of Merger shall
continue to be employees of GPP or such Affiliate, as the case may be, as of the
Effective Time of Merger (each such employee, an "Affected Employee"); provided,
however, that this Section 3.7 shall not be construed to limit the ability of
the applicable employer to terminate the employment of any Affected Employee at
any time.
(b) For a period of 14 months following the Closing Date,
Xxxxxx shall, or shall cause GPP to, provide each Affected Employee with
employee benefits that are no less favorable in the aggregate than those
provided to each such Affected Employee immediately prior to the Closing Date,
it being acknowledged and agreed that (i) Xxxxxx'x XXX plan may be substituted
for GPP's bonus plan, (ii) Xxxxxx shall be entitled to freeze the pension plan
currently maintained for the benefit of the Affected Employees and merge such
plan into Xxxxxx'x pension plan, so long as Xxxxxx provides substantially
equivalent retirement benefits to such Affected
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Employees following the Effective Time of Merger, and (iii) Xxxxxx shall be
entitled to determine in its sole discretion to whom it grants employee stock
options. Xxxxxx shall, for a period of 14 months following the Closing Date,
maintain (or cause GPP to maintain) a severance pay practice, program or
arrangement for the benefit of each Affected Employee that is no less favorable
than such practice, program or arrangement in effect immediately prior to the
Closing Date with respect to such Affected Employee.
(c) Xxxxxx shall pay, or cause GPP to pay, all amounts due
after the Effective Time of Merger to any Affected Employee under any bonus plan
or program maintained by GPP or any Affiliate in accordance with the terms
thereof; provided that any such amounts that are payable solely as a result of
the Merger shall be Transaction Costs for purposes of this Agreement.
(d) Xxxxxx shall, or shall cause GPP to, give Affected
Employees full credit for purposes of eligibility and vesting and benefit
accrual (except for the benefit accruals under any defined benefit pension plan)
under such employee benefit plans or arrangements maintained by Xxxxxx in which
such Affected Employees participate for such Affected Employees' service with
GPP or any Affiliate to the same extent recognized by GPP or such Affiliate
immediately prior to the Closing Date.
(e) Xxxxxx shall, or shall cause GPP to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans in which such Affected Employees may
be eligible to participate after the Closing Date and (ii) provide each Affected
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such Affected Employees are eligible
to participate in after the Closing Date.
3.8 Noncompetition.
(a) Noncompetition. In consideration of the benefits
accruing directly and indirectly to the Indemnifying Shareholder pursuant to
this Agreement, the Indemnifying Shareholder agrees that, if the transactions
contemplated by this Agreement are consummated, the Indemnifying Shareholder
will not, directly or indirectly, for the period of five (5) years from and
after the Effective Time of Merger, anywhere in North America or in any European
country in which GPP or an Affiliate had operations or customers at the
Effective Time of Merger, own, manage, operate, control, finance, participate
in, consult with, or be connected in any manner with, the operation, ownership,
management or control of any enterprise engaged in the business of, or any
business similar to, the business conducted by GPP and the Affiliates at the
Effective Time of Merger.
(b) Exception. Notwithstanding the provisions of Section
3.8(a) of this Agreement, the Indemnifying Shareholder shall not be prohibited
from owning or acquiring securities of any corporation or other business
enterprise that may be engaged in activities described in the foregoing
subsection (a), provided that: (i) the Indemnifying Shareholder is not a
consultant or advisor to and does not have the right to designate any officer,
director or
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31
employee of such corporation or business enterprise; (ii) such securities are
held for investment purposes only and represent less than five percent (5%) of
the total equity interests of such corporation or business enterprise; and (iii)
such securities are listed on a national securities exchange or are regularly
quoted in the over the counter market by one or more members of the National
Association of Securities Dealers.
(c) Nonsolicitation. In consideration of the benefits
accruing directly and indirectly to the Indemnifying Shareholder pursuant to
this Agreement, the Indemnifying Shareholder agrees that the Indemnifying
Shareholder will not, directly or indirectly, for the period of three (3) years
from and after the Effective Time of Merger: (i) induce or attempt to induce any
employee of GPP or any Affiliate as of the Effective Time of Merger to leave the
employ of GPP or such Affiliate; (ii) hire, or solicit the hiring of (other than
through a general advertisement), any Person who is an employee of GPP or any
Affiliate as of the Effective Time of Merger or was an employee of GPP or any
Affiliate at any time during the one year preceding the Effective Time of
Merger; or (iii) knowingly induce or attempt to induce any customer, supplier,
licensee, reseller, independent contractor, developer, agent, sales
representative or reseller of GPP or any Affiliate to cease its business or
decrease its business with GPP or such Affiliate.
(d) Confidentiality. The Indemnifying Shareholder
acknowledges and agrees that the Indemnifying Shareholder is familiar with trade
secrets and with other confidential information relating to GPP and the
Affiliates. The Indemnifying Shareholder agrees that it shall not use or
disclose, or knowingly permit to be used or disclosed, any non-public
proprietary or confidential information of GPP or an Affiliate, including
without limitation, non-public proprietary or confidential customer lists,
supplier lists, technology, know how, trade secrets and procedures, except for
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by the Indemnifying Shareholder, (ii) is or becomes
available to the Indemnifying Shareholder on a nonconfidential basis from a
source other than Xxxxxx, GPP or an Affiliate provided that such source is not
prohibited from disclosing such information by a contractual, legal or fiduciary
obligation, (iii) is required to be disclosed by applicable law or to any
governmental agency, (iv) is required to be disclosed in legal proceedings
involving the Indemnifying Shareholder or (v) is necessary or desirable to be
disclosed pursuant to the federal or state securities laws.
(e) Certain Acknowledgments. The Indemnifying Shareholder
acknowledges and agrees that Xxxxxx would be irreparably damaged if the
Indemnifying Shareholder were to breach any of its covenants contained in to
this Section 3.8 and that any such breach would result in a significant loss of
the goodwill of the business. The Indemnifying Shareholder further acknowledges
and agrees that the covenants and agreements set forth in this Section 3.8 were
a material inducement to Xxxxxx to enter into this Agreement and to perform its
obligations hereunder, and that Xxxxxx would not obtain the benefit of the
bargain set forth in this Agreement as specifically negotiated by the parties if
the Indemnifying Shareholder breached the provisions of this Section 3.8 in any
material respect. The Indemnifying Shareholder has consulted with legal counsel
regarding the agreements set forth in this Section 3.8 and based on such
consultation has determined and hereby acknowledges that such covenants are
reasonable in terms of duration, scope and area restrictions and are necessary
to protect the goodwill,
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confidential and trade secret information, and human resources of the business
and the substantial investment in the business made by Xxxxxx hereunder.
(f) Enforcement. If the Indemnifying Shareholder breaches
any of the covenants set forth in this Section 3.8, in addition to any remedies
available under law, Xxxxxx shall have the right and remedy to have the
covenants set forth in this Section 3.8 specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
any such covenants would cause irreparable injury to Xxxxxx and that money
damages would not provide an adequate remedy to Xxxxxx.
3.9 Representative. By approving this Agreement, the
Shareholders shall be deemed to have irrevocably made, constituted and appointed
the Indemnifying Shareholder as their true and lawful attorney-in-fact to take
all action required under this Agreement on behalf of the Shareholders,
including without limitation the resolution of all disputes and the collection
and disbursement of funds, in their name and xxxxx and further ratify and
approve all such actions as their own (such Person is referred to herein as the
"Representative").
3.10 Shareholder Approval.
(a) GPP shall promptly take all steps necessary to either:
(i) cause a special meeting of its shareholders (the "Special Meeting") to be
duly called, noticed, convened and held as soon as practicable for the purposes
of voting to approve this Agreement, the transactions contemplated hereby and
all matters related thereto; or (ii) obtain the unanimous written consent of its
shareholders to this Agreement, the transactions contemplated hereby and all
matters related thereto (the "Consent Action"). In connection with the Special
Meeting or the Consent Action, the Board of Directors of GPP shall, subject to
its fiduciary duties, unanimously recommend to the shareholders that the
shareholders vote in favor of the approval of this Agreement, the transactions
contemplated hereby and all matters related thereto, and the members of the
Board of Directors shall use their reasonable best efforts to secure the
required approval of the shareholders, including voting any of their shares in
favor of such approval.
(b) In connection with the Special Meeting or the Consent
Action, GPP will prepare such notices and other documentation as may be required
by Law to be furnished to the shareholders, which shall include, without
limitation: (i) a copy of this Agreement; (ii) information, notices and forms
relating to a shareholder's appraisal rights as required by the DGCL; and (iii)
subject to its fiduciary duties, the unanimous recommendation of GPP's Board of
Directors that the shareholders approve this Agreement and the transactions
contemplated hereby as soon as practicable and, in any event, no later than the
time required by Law and GPP's Certificate of Incorporation and Bylaws.
(c) The Indemnifying Shareholder hereby irrevocably agrees:
(i) to vote all shares of Common Stock beneficially
owned by the Indemnifying Shareholder or over which the Indemnifying Shareholder
otherwise exercises voting control as of the date hereof or at any time
hereafter in favor of this Agreement and the consummation of the transactions
contemplated hereby;
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(ii) to not sell, transfer, assign or otherwise dispose of
any shares of Common Stock other than in connection with the Merger; and
(iii) to not grant any proxy (other than for the approvals
described above) with respect to any shares of Common Stock.
3.11 HSR and Foreign Competition Filings. Xxxxxx and GPP have
filed with the Federal Trade Commission and the Antitrust Division of the
Department of Justice notifications required to be filed under the HSR Act.
Prior to making any communication, written or oral, with the Federal Trade
Commission or the Antitrust Division of the Department of Justice with respect
to this Agreement or the Merger, Xxxxxx and GPP shall consult with each other
with respect thereto. Xxxxxx and GPP shall consult with each other and cooperate
in all reasonable respects in connection with any actions required to be taken
under foreign competition Laws in connection with the transactions to be
consummated pursuant to this Agreement.
3.12 Notes.
(a) Tender Offer. Following the date hereof, GPP may cause
the LLC and GPPW to undertake an issuer tender offer (the "Tender Offer") with
the intention of retiring substantially all of the outstanding Notes as of the
Effective Time of Merger on such terms and conditions as are reasonably
acceptable to GPP and Xxxxxx. If a Tender Offer is commenced, X.X. Xxxxxx
Securities Inc. and Xxxxxxx, Sachs & Co. shall act as joint dealer managers in
connection with such Tender Offer. Any Tender Offer effected pursuant to this
Section 3.12 shall be conducted in compliance with all applicable Laws.
(b) Cost. The Shareholders shall be responsible for
seventy-five percent (75%) of the after-tax cost (using Xxxxxx'x then effective
tax rate) of all fees, expenses and other out-of-pocket costs incurred in
connection with any Tender Offer, including without limitation any "Consent
Payment" or similar payment provided for in the Tender Offer documentation
("Tender Costs"), and Xxxxxx shall be responsible for twenty-five percent (25%)
of such after-tax Tender Costs. The portion of the Tender Costs for which the
Shareholders are responsible as set forth herein (unless paid prior to the
Effective Time of Merger) shall be Transaction Costs for purposes of this
Agreement.
(c) Payments. Until the Notes are retired in full, the
Shareholders shall pay to Xxxxxx an amount equal to: (i) seventy-five percent
(75%) of the after-tax cost (using Xxxxxx'x then effective tax rate) over and
above the principal amount of Notes retired, which cost shall include, without
limitation, any applicable pre-payment premiums, incurred in connection with the
retirement of such Notes after the Effective Time of Merger; plus (ii) one
hundred percent (100%) of the after-tax spread (using Xxxxxx'x then effective
tax rate) between the stated interest rate on the outstanding Notes and 8.5% per
annum. For purposes of this Section 3.12(c), if the Notes are not fully retired
by July 1, 2002, the parties will effect the provisions hereof as if the Notes
then outstanding are fully retired on such date at the call price of 107.625%.
Any payment made to Xxxxxx under this Section 3.12(c) shall first be made out of
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the escrow fund maintained by the Escrow Agent. Thereafter, Xxxxxx shall have
the right to either set off any amount due against the Earnout or recover such
amount from the Shareholders, who shall then have the right to be reimbursed
from the Earnout payment available for distribution to the Shareholders, if any,
for any amount so paid before such Earnout payment is distributed to the
Shareholders pursuant to Section 2.7(b)(z) or (c). Thereafter, or in the event
Xxxxxx chooses to recover such amount from the Earnout and no Earnout is payable
pursuant to the provisions of Section 2.7 of this Agreement, the Shareholders
shall be responsible for the remaining amount due. Notwithstanding anything to
the contrary herein, the Shareholders shall not be required to pay to Xxxxxx any
portion of a pre-payment premium that is in excess of the premium that the
issuers of the Notes would be required to pay in order to call the Notes as of
July 1, 2002 pursuant to the terms of the Notes (i.e., 7.625%).
(d) Limitation. Subject to Section 10.1(a) as it relates to
a representation or warranty in Article IV regarding the Notes and Section
10.1(e) as it relates to a Tender Offer and except as provided in Sections
3.12(b) and (c), after the Effective Time of Merger the Shareholders shall not
have any obligation or liability with respect to, arising out of, or in
connection with, the Notes, including without limitation any liability to any
third party for any violation of any applicable Law arising out of the
retirement of the Notes.
3.13 Collection of Accounts. Following the Effective Time of
Merger, Xxxxxx shall cause GPP and the Affiliates to use commercially reasonable
efforts to collect the Accounts in a manner consistent with Xxxxxx'x practices
with respect to its own accounts; provided, however, Xxxxxx shall not be
required to threaten or commence litigation or to take other extraordinary means
in order to collect such Accounts; provided further that, in no event shall
Xxxxxx settle, write-off or discount such Account without the prior written
consent of the Representative. If any Account is not collected by Xxxxxx before
June 30, 2002, then upon receipt of notice thereof delivered by Xxxxxx to the
Representative the Shareholders shall pay to Xxxxxx the amount of such
uncollected Account, net of any reserve established therefor on the Closing
Balance Sheet. In exchange for any such payment, Xxxxxx shall assign and
transfer to the Representative, free and clear of Liens, the Account for which
payment was made and thereafter the Representative shall have the sole right to
collect such Account for the benefit of the Shareholders. Any payment made to
Xxxxxx under this Section 3.13 shall first be made out of the escrow fund
maintained by the Escrow Agent. Thereafter, Xxxxxx shall have the right to
either set off any amount due against the Earnout or recover such amount from
the Shareholders, who shall then have the right to be reimbursed from the
Earnout payment available for distribution to the Shareholders, if any, for any
amount so paid before such Earnout payment is distributed to the Shareholders
pursuant to Section 2.7(b)(z) or (c). Thereafter, or in the event Xxxxxx chooses
to recover such amount from the Earnout and no Earnout is payable pursuant to
the provisions of Section 2.7 of this Agreement, the Shareholders shall be
responsible for the remaining amount due.
3.14 Obsolete Inventory. If on June 30, 2002 Xxxxxx determines
that any of the Inventory is obsolete based upon the criteria set forth on
EXHIBIT 8, Xxxxxx shall give the Representative written notice that such
Inventory is obsolete and the Shareholders shall pay to Xxxxxx the value of such
Inventory, net of any reserve established therefor on the Closing Balance Sheet.
GPP shall thereafter use reasonable commercial efforts to sell such Inventory
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and shall pay the proceeds from any such sale to the Shareholders. Any payment
made to Xxxxxx under this Section 3.14 shall first be made out of the escrow
fund maintained by the Escrow Agent. Thereafter, Xxxxxx shall have the right to
either set off any amount due against the Earnout or recover such amount from
the Shareholders, who shall then have the right to be reimbursed from the
Earnout payment available for distribution to the Shareholders, if any, for any
amount so paid before such Earnout payment is distributed to the Shareholders
pursuant to Section 2.7(b)(z) or (c). Thereafter, or in the event Xxxxxx chooses
to recover such amount from the Earnout and no Earnout is payable pursuant to
the provisions of Section 2.7 of this Agreement, the Shareholders shall be
responsible for the remaining amount due.
3.15 Director and Officer Indemnification. For a period of six
(6) years from the Effective Time of Merger, Xxxxxx shall cause all rights to
indemnification by GPP and any Affiliate now existing in favor of each present
and former director, officer, employee, agent or representative of GPP and any
Affiliate as provided in GPP's or such Affiliate's certificate of incorporation
or bylaws (or both) or pursuant to other instruments or agreements in effect on
the date hereof which are set forth in the Disclosure Schedule, to survive the
Closing and to continue in full force and effect.
3.16 Certain Financing Matters. Subject to the availability of
adequate financing therefor, at the Closing, Xxxxxx shall: (a) retire the zero
coupon notes of the LLC (the "Zero Coupon Notes") held by the Indemnifying
Shareholder issued pursuant to the Unit Purchase Agreement dated as of November
20, 2000 between the LLC, the Company and the Indemnifying Shareholder at the
accreted value of the principal amount of such notes; and (b) retire the credit
facility under the Credit Agreement dated as of July 9, 1998, as amended, among
LLC, the Company, GPPW, Bankers Trust Company, as administrative agent, and the
various banks from time to time parties thereto. Nothing contained in this
Agreement shall be deemed to be a waiver by the Indemnifying Shareholder of any
rights it may have in connection with the Zero Coupon Notes.
3.17 Estoppel Certificates. Prior to Closing, GPP shall use
its reasonable best efforts to obtain an estoppel certificate in form and
substance reasonably acceptable to Xxxxxx from each owner of each parcel of Real
Property not owned by GPP or an Affiliate.
3.18 Pay-Out Letters. Prior to Closing, GPP shall provide such
assistance as Xxxxxx may reasonably request in obtaining pay-out letters for any
Indebtedness of GPP or an Affiliate other than the Notes.
3.19 Title Policy. GPP shall provide such affidavits as may be
customary and required for Xxxxxx to obtain the title policy described in
Section 8.14 hereof.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GPP
GPP hereby represents and warrants to Xxxxxx and Acquisition that:
4.1 Organization; Business.
(a) Organization; Qualification. GPP is a corporation duly
and validly organized and existing in good standing under the Laws of the State
of Delaware. GPPD is a corporation duly and validly organized and existing in
good standing under the Laws of the State of Delaware. GPPW is a corporation
duly and validly organized and existing in active status under the Laws of the
State of Wisconsin. LLC is a limited liability company duly and validly
organized and existing in good standing under the Laws of the State of Delaware.
GPP has no Subsidiaries other than the Affiliates. GPP and the Affiliates are
each duly qualified to do business as a foreign corporation or limited liability
company, as the case maybe, and are in good standing or active status, as the
case may be, in all jurisdictions in which either the ownership or use of their
respective assets or the operation of their respective businesses requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect.
(b) Power. GPP and each Affiliate has full corporate power
and authority and all material franchises, permits, licenses, approvals,
authorizations, registrations, grants and orders necessary to carry on their
respective businesses as now conducted and to own, lease and operate their
respective assets and properties.
(c) Properties. GPP and each Affiliate own or have the
right to use all material property, real or personal, tangible or intangible,
which is necessary for the operation of their respective businesses as currently
conducted and as currently contemplated to be conducted.
(d) Certificate of Incorporation and Bylaws; Officers and
Directors. Copies of the Certificate or Articles of Incorporation, as the case
may be, and Bylaws of GPP, GPPD and GPPW, and copies of the Certificate of
Formation and Operating Agreement of LLC, complete and correct as of the date of
this Agreement, have been delivered to Xxxxxx. The Disclosure Schedule contains
complete and accurate list of the directors and officers (with an identification
of the offices held) of GPP.
4.2 Ownership; Capitalization.
(a) Capitalization and Ownership. The Disclosure Schedule
sets forth: (i) the entire authorized capital stock of GPP, GPPD and GPPW, and
the entire authorized membership interests of LLC; (ii) the name of each
shareholder of GPP, GPPD and GPPW and of each member of LLC; (iii) the number of
shares of Common Stock of GPP owned by or available under Warrant to each
Shareholder, the number and type of shares of capital stock of
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37
GPPD and GPPW owned by each shareholder thereof and the number and type of
membership interests owned by each member of LLC; and (iv) the percentage of GPP
owned by each Shareholder on a fully diluted basis (the "Pro-Rata Portion"). No
shares of Preferred Stock are issued or outstanding. Except as set forth in the
Disclosure Schedule, no shares of Common Stock of GPP, no shares of capital
stock of GPPD or GPPW, and no membership interests of LLC are issued or
outstanding. Except as set forth in the Disclosure Schedule, no shares of
capital stock of GPP, GPPD or GPPW and no membership interests of LLC are
reserved for issuance or are held in treasury.
(b) Outstanding Capital Stock. All of the outstanding
capital stock of GPP, GPPD and GPPW and all of the outstanding membership
interests of LLC are duly authorized, validly issued, fully paid and
nonassessable. Except for this Agreement or as set forth in the Disclosure
Schedule, there are no options, warrants, conversion rights, subscriptions or
other agreements or understandings relating to the capital stock of GPP, GPPD or
GPPW or any membership interests of LLC.
(c) Options. The Disclosure Schedule sets forth the number
of Options outstanding, the holder of each outstanding Option, the number of
shares of Common Stock subject to each Option, an indication of the portion of
each Option that is vested and the exercise price of each Option.
4.3 Authorization; Enforceability.
(a) GPP. The execution, delivery and performance of this
Agreement by GPP and all of the documents and instruments required by this
Agreement to be executed, delivered and performed by GPP are within the
corporate power of GPP and have been duly authorized by the Board of Directors.
Except for obtaining the approval of the shareholders of GPP, no other corporate
or shareholder approval or proceeding on the part of GPP is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by GPP pursuant hereto or the consummation of the transactions
contemplated hereby and thereby.
(b) Enforceability. This Agreement is, and the other
documents and instruments required by this Agreement to be executed and
delivered by GPP will be, when executed and delivered by GPP, the legal, valid
and binding obligations of GPP, enforceable against GPP in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
4.4 No Violation or Conflict.
(a) No Violation. Except as set forth on the Disclosure
Schedule, the execution, delivery and performance of this Agreement by GPP do
not and will not, directly or indirectly (with or without notice or lapse of
time):
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(i) contravene, conflict with or violate the
Certificate of Incorporation or Bylaws of GPP, or violate any Law;
(ii) contravene, conflict with, violate or breach any
provision, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any material Existing Contract; or
(iii) result in the imposition or creation of any Lien
upon or with respect to any material assets of GPP or an Affiliate.
(b) Consents. Except as set forth in the Disclosure
Schedule, neither GPP nor any Affiliate will be required to give any notice to
or obtain any consent or approval from any Person or any governmental or
regulatory authority in connection with the execution and delivery of this
Agreement or the consummation or performance of the transactions contemplated by
this Agreement.
4.5 Financial Information; Books and Records.
(a) Financial Statements. GPP has delivered to Xxxxxx all
of the Financial Information. The Financial Information fairly presents in all
material respects the financial condition and the results of operations of GPP
and the Affiliates as at the respective dates thereof and for the periods
referred to therein, all in accordance with GAAP subject, in the case of the
interim financial statements, to: (i) audit adjustments (the effect of which is
not expected to be materially adverse); and (ii) the absence of footnotes
thereto (that, if presented, would not be expected to differ materially from
those included in the most recent audited balance sheet).
(b) Corporate Books. The minute books and other records of
GPP and the Affiliates, all of which have been made available to Xxxxxx, are
complete and correct in all material respects.
(c) Accounting Books. The accounting books and records of
GPP and the Affiliates: (i) are correct and complete in all material respects;
and (ii) are maintained in a manner consistent with past practice.
(d) Bank Accounts. The Disclosure Schedule sets forth the
name of each bank or other financial institution at which GPP or an Affiliate
maintains an account, safe deposit box or lockbox or with which GPP or an
Affiliate has an arrangement for safekeeping and the type and number of each
such account and the authorized signatures with respect thereto.
4.6 Assets.
(a) Title. Except as set forth in the Disclosure Schedule,
GPP and the Affiliates own good and valid title to or have valid leasehold or
other interest in all of their respective material assets, free and clear of any
and all Liens except: (a) the Existing Liens on
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the date of this Agreement; and (b) the Permitted Liens on the Closing Date. GPP
and the Affiliates are in possession of, and have control of, their respective
assets. Except as set forth on the Disclosure Schedule, no material asset of GPP
or an Affiliate is leased, rented, licensed or otherwise not owned by GPP or
such Affiliate.
(b) Real Property and Equipment. The Real Property and
Equipment, taken as a whole, are in good operating condition and repair and are
adequate in all material respects for the uses for which they are being put,
normal wear and tear excepted. The Disclosure Schedule contains a true and
complete list of all Real Property.
(c) Investments. Except for the Existing Investments,
neither GPP nor any Affiliate owns, or has any right to acquire, any material
Investment, nor does GPP or any Affiliate have any obligation to acquire any
Investment.
(d) Systems. GPP's and the Affiliates' management
information systems do not contain any defects which would have a Material
Adverse Effect.
(e) U.K. Property. With respect to the U.K. Property:
(i) Where the title requires registration at H.M. Land
Registry, the U.K. Property has been duly registered with title absolute and LLC
is the registered proprietor; or if where title to the U.K. Property does not
require registration at H.M. Land Registry, there is no caution registered
against first registration and no event has occurred in consequences of which
registration should have been effected.
(ii) There is no material agreement, obligation, event, or
other matter that is registered or, to the Knowledge of GPP, although not
registered, is capable of registration, as a local land charge, land charge,
caution, inhibition or notice.
(iii) Except as set forth in the Disclosure Schedule, to the
Knowledge of GPP, there is no circumstance which would entitle any third party
to exercise a right or power of entry or to take possession, or which would in
any other way adversely affect or restrict its continued possession, enjoyment
or use for the purposes of carrying on the business of GPP and the Affiliates.
(f) Grants. No asset used in the U.K. Business has been
acquired with the assistance of any governmental, local governmental,
quasi-governmental or regulatory grant, subsidy or aid or is held on terms that
any such grant, subsidy or aid is due to be repaid or reimbursed in any
circumstances.
4.7 Contingent and Undisclosed Liabilities. Except as set
forth in the Disclosure Schedule and except pursuant to the deposit and
collection of checks in the ordinary course of business, neither GPP nor an
Affiliate has guaranteed or become a surety for or is otherwise contingently
liable for the obligations of any other Person. To the Knowledge of GPP, neither
GPP nor an Affiliate has any material liabilities, obligations or indebtedness
(whether absolute, accrued, contingent or otherwise), other than those which:
(a) are reflected, reserved
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against or disclosed in the financial statements which are a part of the
Financial Information or in the Disclosure Schedule; or (b) arose or were
incurred in the ordinary course of business since February 24, 2001 and which
are consistent in amount and character with past practices and are not required
to be disclosed pursuant to this Agreement or the Disclosure Schedule.
4.8 Taxes. Except as set forth in the Disclosure Schedule:
(a) Tax Returns. GPP and the Affiliates have timely (taking
into account, if applicable, any extensions properly requested) and properly
filed all material federal, state, local and foreign tax returns (including but
not limited to income, business, franchise, sales, payroll, employee withholding
and social security and unemployment) which were required to be filed by them.
Neither GPP nor any Affiliate has received a claim or other notice in writing,
or to the Knowledge of GPP, any oral claim or notice, from any jurisdiction in
which it does not file a tax return that GPP or such Affiliate is or may be
subject to taxes assessed by such jurisdiction. GPP and the Affiliates have paid
or made adequate provision, in reserves reflected in the Financial Information
in accordance with generally accepted accounting principles, for the payment of
all material taxes (including interest and penalties) and withholding amounts
owed by it or assessable against it. All tax returns filed by GPP or an
Affiliate were complete and correct in all material respects. No tax
deficiencies have been proposed or assessed in writing or, to the Knowledge of
GPP, orally, against GPP or an Affiliate and GPP and the Affiliates have made
available true and correct copies of all of their tax returns and any work
papers relating thereto requested by Xxxxxx.
(b) Extensions. Neither GPP nor an Affiliate has consented
to any extension of the statute of limitations with respect to any open tax
returns.
(c) Tax Liens. There are no tax Liens upon any property or
assets of GPP or an Affiliate except for Liens for current taxes not yet due and
payable.
(d) Tax Examinations. No examination or audit of any tax
return or report of GPP or an Affiliate for any period not barred by the
applicable statute of limitations has occurred, no such examination is in
progress and, to the Knowledge of GPP, no such examination or audit is planned.
Neither GPP nor an Affiliate has received from the Internal Revenue Service or
other taxing authority any notice in writing or, to the Knowledge of GPP,
orally, of underpayment of taxes, assessment of additional taxes or other
deficiency which has not been paid, except for such matters as are being
disputed in good faith. Neither GPP nor an Affiliate has granted a power of
attorney with respect to any matter relating to Taxes.
(e) Employment Taxes. GPP and the Affiliates have properly
withheld and timely paid all withholding and employment taxes which they were
required to withhold and pay relating to salaries, compensation and other
amounts heretofore paid to or benefits provided to their employees or other
Persons.
(f) Tax Sharing Agreements. Neither GPP nor an Affiliate is
a party to any agreement relating to, or has any potential liability under or
with respect to, any tax allocation, tax sharing or tax indemnification
agreement or similar arrangement. Neither GPP
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nor any Affiliate has any liability for taxes of any kind of any Person (other
than GPP or any Affiliate) under any contract or under Treasury Regulations
Section 1.1502-6 (or any similar provision of Law) as a transferee or successor
or otherwise.
(g) Excess Parachute Payments. Neither GPP nor an Affiliate
is bound by any contract, agreement, plan, arrangement or understanding that
could result, on account of the Merger, separately or in the aggregate, in any
payment (nor have any payments been made) that would not be deductible by reason
of Section 280G of the Code or applicable Law of the United Kingdom.
(h) Consolidated Group. Neither GPP nor an Affiliate is or
has been a member of an affiliated group (within the meaning of Section 1504(a)
of the Code) filing a consolidated federal income tax return, or any similar
group defined under a similar provision of applicable state, local or foreign
Law filing a consolidated, combined or unitary income tax return, except for a
group the common parent of which is GPP.
(i) Tax Rulings. Neither GPP nor an Affiliate has applied
for any tax ruling, entered into a closing agreement with any tax authority,
filed a consent under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by GPP or an Affiliate.
(j) Real Estate Holding Company. Neither GPP nor an
Affiliate has been a United States real property holding corporation with the
meaning of Section 897(c)(2) of the Code.
(k) Tax Exempt Property; etc. None of the assets of GPP or
an Affiliate are treated as "tax-exempt use property" within the meaning of
Section 168(h) of the Code or secure any debt the interest of which is exempt
from tax under Section 103 of the Code. Neither GPP nor an Affiliate has been
the "distributing corporation" (within the meaning of Section 355(c)(2) of the
Code) with respect to a transaction described in Section 355 of the Code.
Neither GPP nor an Affiliate have participated in an international boycott as
defined in Section 999 of the Code. Neither GPP nor an Affiliate has agreed, nor
are any of them required, to make any adjustment under Section 481(a) of the
Code or similar provision of any tax law by reason of change in accounting
method or otherwise. GPP and the Affiliates are in compliance with the terms and
condition of any applicable tax exemption, tax agreement or tax order to which
they may be subject and the consummation of the Merger will not have an adverse
impact on such compliance.
(l) Stamp Duties. All documents to which GPP or an Affiliate
was a party as a purchaser, lessee, assignee or other transferee and which are
in the possession or under the control of GPP on its Affiliates or to the
production of which GPP and its Affiliates are entitled which are necessary to
establish the title of GPP or its Affiliates to any asset and which, in the
United Kingdom or elsewhere, attract either stamp duty or require to be stamped
with a particular stamp denoting that no duty is chargeable or that the document
has been produced to the appropriate authority, have been properly stamped; and
no such documents which are outside the United Kingdom would attract stamp duty
if they were brought into the United Kingdom.
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(m) U.K. Taxation.
(i) Except as set forth in the Disclosure Schedule, GPP and
its Affiliates have paid all United Kingdom National Insurance and Graduated
Pension Contributions for which they are liable and have maintained proper books
and records relating thereto.
(ii) Neither GPP nor any of its Affiliates has been party to
any transaction, scheme or arrangement such that Section 30 of the United
Kingdom Taxation of Chargeable Gains Xxx 0000 (value shifting) has or, to the
Knowledge of GPP, may or will have effect in relation to the disposal of an
asset by GPP or its Affiliates.
(iii) Neither GPP nor its Affiliates has, since February 24,
2001, done or omitted to do or agreed to do, or permitted to be done, any act as
a result of which there may be made a balancing charge under the United Kingdom
Capital Allowances Act 1990 or a withdrawal of first year allowances or recovery
of excess relief within Section 46 or Section 00 Xxxxxxx Xxxxxxxxxx Xxx 0000.
(iv) Neither GPP nor its Affiliates have incurred
expenditure on the provision of machinery or plant for leasing (the meaning of
which is, for this purpose, as extended by Section 50 of the Capital Allowances
Act 1990).
(v) Neither GPP nor its Affiliates have made any election
under Section 37 Capital Allowances Act 1990 (short life assets) nor are they
taken to have made such an election under subsection (8)(c) thereof.
(vi) Neither GPP nor its Affiliates have been subject to any
inquiry by any tax authority in relation to the price at which goods or services
are sold or provided to any connected party.
(vii) Neither GPP nor its Affiliates has, since April 1,
2000, acquired any asset from any other Person (including another member of the
GPP Group) which was, at the time of such acquisition, a member of the same
group of companies for United Kingdom tax purposes as GPP and/or the Affiliates.
(n) U.K. VAT.
(i) LLC is a registered and taxable person for the purposes
of the United Kingdom's Value Added Tax Xxx 0000 and it neither is nor has ever
been treated as a member of a group for the purposes of Section 43 Value Added
Tax Xxx 0000. Neither GPP or any other Affiliate is required to be so
registered.
(ii) GPP and the Affiliates: (A) have each complied with and
observed in all material respects the terms of the Value Added Tax Xxx 0000 and
Section 10 of the Finance Xxx 0000 and all regulations made or notices issued
thereunder and has maintained
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and obtained correct and up-to-date records, invoices and other records (as the
case may be) appropriate or requisite for the purposes thereof; and (B) are not
in arrears with any payments or returns or notifications under such legislation,
regulations or notices or liable to any abnormal or no-routing payment or any
forfeiture or penalty or interest or surcharge provisions contained therein.
(iii) Neither GPP nor an Affiliate is nor has agreed to
become, an agent, manager or factor (for the purposes of Section 47 of the Value
Added Tax Act 1994) of any Person who is not resident in the United Kingdom.
(iv) Neither GPP nor its Affiliates holds any interest in
any buildings or land in respect of which any of them or any other Person has
made an election to waive the exemption to value added tax in accordance with
the provisions of paragraph 2 of Schedule 10 to the Value Added Tax Xxx 0000,
nor is GPP or an Affiliate contractually committed (contingently or otherwise)
to receive any supply in respect of which such an election has been made.
4.9 Absence of Certain Changes. Except as set forth in the
Disclosure Schedule, since February 24, 2001, there has been no Material Adverse
Effect; and since February 24, 2001 through the date of this Agreement, neither
GPP nor an Affiliate has:
(a) declared or paid or set aside the payment of any
dividend or any distribution in respect of its capital stock or directly or
indirectly redeemed, purchased or otherwise acquired any such stock;
(b) been a party to any transaction or entered into any
material contract outside the ordinary course of business, except for the
transactions contemplated by this Agreement;
(c) issued any shares of capital stock or securities
convertible into any capital stock;
(d) incurred any Indebtedness;
(e) sold, assigned, transferred or leased any material
asset, except in the ordinary course of business;
(f) granted or made, or promised to grant or make, any bonus
or wage or salary increase to any member of senior management or any increase in
any Existing Plan;
(g) suffered any material damage, destruction or loss,
whether or not covered by insurance;
(h) made any change in any accounting method or policy; or
(i) amended its charter documents.
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4.10 Existing Plans.
(a) Existing Plans. The Disclosure Schedule contains a
complete and accurate list of all Existing Plans. Except for the Existing Plans,
neither GPP nor an Affiliate maintains or is bound by any Employee Benefit Plan.
All of the Existing Plans are in compliance (or have been brought into
compliance) in all material respects with all applicable Laws including ERISA
and the Code. All of the Existing Plans which are intended to meet the
requirements of Section 401(a) of the Code have been determined by the Internal
Revenue Service to be "qualified" within the meaning of the Code, and there are
no facts which would adversely affect the qualified status of any of the
Existing Plans. Neither GPP nor an Affiliate has an announced plan or legally
binding commitment to create any additional Employee Benefit Plan or to amend or
modify any Existing Plan.
(b) ERISA. There is no accumulated funding deficiency,
within the meaning of ERISA or the Code, in connection with the Existing Plans
or any other benefit plan sponsored by GPP or any affiliate of GPP, as
determined under Sections 414(b), (c), (m) or (o) of the Code (herein referred
to as an "ERISA Affiliate"), and no reportable event, as defined in ERISA, has
occurred in connection with the Existing Plans. The Existing Plans have not,
nor, to the Knowledge of GPP, has any trustee or administrator of the Existing
Plans, engaged in any non-exempt prohibited transaction as defined in Section
406 or 407 of ERISA or Section 4975 of the Code that could result in any
material liability to GPP, and no event or omission has occurred in connection
with any Existing Plan which could have a Material Adverse Effect. Neither GPP
nor any ERISA Affiliate is contributing to, nor has GPP or any ERISA Affiliate
ever contributed to or been obligated to contribute to, any multi-employer plan,
as defined in ERISA.
(c) Terminated Plans. The Disclosure Schedule describes any
Employee Benefit Plan subject to ERISA that has been terminated and the status
of such Plan, the distribution or retention of monies with respect to such Plan,
and any further obligations of such Plan or GPP in connection therewith. Any
past Employee Benefit Plan subject to ERISA that has been terminated was done so
in material compliance with all applicable Laws.
(d) Existing Plans. With respect to each Employee Benefit
Plan:
(i) Any Existing Plan that is intended to qualify under
Section 401(a) of the Code meets in all material respects the requirements for
qualification under Section 401(a) of the Code and the regulations thereunder,
and GPP has provided Xxxxxx with a copy of the most recent favorable
determination letter issued by the Internal Revenue Service concerning the
Plan's qualification. Each such Existing Plan has been administered in all
material respects in accordance with its terms and, to the Knowledge of GPP, no
matter exists which would adversely affect the qualified tax-exempt status of
such Existing Plan and any related trust.
(ii) With respect to each Existing Plan: (A) all payment due
from GPP or an Affiliate have been made and all amounts accrued to date as
liabilities by GPP or an Affiliate which have not been paid have been properly
recorded as liabilities on the books of
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GPP or such Affiliate; (B) all reports and information relating to each such
Existing Plan required to be filed with any governmental entity have been
accurately and timely filed; (C) all reports and information relating to each
such Existing Plan required to be disclosed or provided to participants or their
beneficiaries have been timely disclosed or provided; (D) each trust related to
any Existing Plan which is a voluntary employee beneficiary association pursuant
to Section 501(c)(9) of the Code has received a favorable determination letter
from the Internal Revenue Service with respect to its tax-exempt status, and
nothing has occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; (E) no event has occurred or
circumstance exists that could result in a material increase in premium costs of
any Existing Plan that is insured or a material increase in benefit costs of any
Existing Plan that is self-insured; and (F) to the Knowledge of GPP, no
fiduciary of an Existing Plan has committed a breach of any responsibility or
obligation imposed upon fiduciaries under Title I of ERISA with respect to such
Existing Plan.
(iii) There has been delivered or made available to Xxxxxx,
with respect to each Existing Plan the following: a copy of the annual report
(if required under ERISA) with respect to each such Existing Plan for the last
three years (including all schedules and attachments); a copy of the summary
plan description, together with each summary of material modifications, required
under ERISA with respect to such Existing Plan; all material employee
communications relating to such Existing Plan; a true and complete copy of such
Existing Plan; all trust agreements, insurance contracts, accounts or other
documents which establish the funding vehicle for any Existing Plan and the
latest financial statements thereof; any investment management agreements,
administrative services contracts, or other agreements and documents relating to
the ongoing administration and investment of any Existing Plan.
(iv) With respect to each such Existing Plan for which an
annual report has been filed and delivered to Xxxxxx, no material adverse change
has occurred with respect to the matters covered by the latest such annual
report since the date thereof.
(v) There are no actions, suits, proceedings, investigations
or hearings pending with respect to any Existing Plan or, to the Knowledge of
GPP, any claims (other than claims for benefits arising in the ordinary course
of an Existing Plan) threatened against or with respect to any Existing Plan or
any fiduciary or assets thereof, and there are no facts which could reasonably
give rise to any such actions, suits, proceedings, investigations, hearings or
claims.
(vi) The consummation of the Merger will not: (A) entitle
any current or former employee of GPP or an Affiliate to severance pay,
unemployment compensation or other payment; or (B) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or former employee.
(vii) No Existing Plan provides benefits, including without
limitation, death or medical benefit (whether or not insured) beyond retirement
or other termination of service other than: (A) coverage mandated by applicable
Law; (B) death or retirement benefits under any Existing Plan that is an
employee benefit pension plan; or (C)
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46
deferred compensation benefits that are accrued as liabilities on the books of
GPP or an Affiliate or disability benefits under any employee welfare benefit
plan.
(e) U.K. Pensions.
(i) GPP is not providing and has not at any time provided or
promised to provide ex gratia pensions or other benefits in respect of any
person.
(ii) The Disclosed Scheme is a money purchase scheme as
defined in section 181(1) of the Xxxxxxx Xxxxxx Xxx 0000 and all contributions
due to date have been paid.
(iii) The Disclosed Scheme is approved as a personal pension
scheme (within the meaning of Chapter IV of Part XIV of the Income and
Corporation Taxes Act 1988) and, to the Knowledge of GPP, there is not any
reason why such approval will or may cease.
(iv) No company or employer other than LLC participates or
has participated in the Disclosed Scheme.
(v) No payment of assets from the Disclosed Scheme has at
any time been made to GPP or any current or previous participating employer in
the Disclosed Scheme.
(vi) For purposes hereof, "Disclosed Scheme" means the
Generac Group Personal Pension Plan insured by the Standard Life Assurance
Company.
4.11 Compliance with Law.
(a) Operations. The present and past operation of the
business of GPP and the Affiliates is and has been in material compliance with
all Existing Permits and Laws. To the Knowledge of GPP, neither GPP nor an
Affiliate is currently the subject of an inspection or inquiry regarding
violations or alleged violations of any Law by any foreign, federal, state,
local or other governmental agency.
(b) Events. To the Knowledge of GPP, no event has occurred
or circumstance exists that (with or without notice or lapse of time): (i) is
reasonably likely to constitute or result in a violation by GPP or an Affiliate
of, or a failure on the part of GPP or an Affiliate to comply with, any material
Existing Permit or Law; or (ii) is reasonably likely to give rise to any
obligation on the part of GPP or an Affiliate to undertake, or to bear all or
any portion of the cost of, any material remedial action of any nature.
(c) Existing Permits. The Disclosure Schedule contains a
complete and accurate list of each Existing Permit. Each material Existing
Permit is valid and in full force and effect, and such material Existing Permits
collectively constitute all of the permits, licenses, approvals, qualifications,
permissions or authorizations necessary to permit GPP and the Affiliates to
lawfully conduct and operate its business in the manner currently conducted and
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47
to permit GPP and the Affiliates to own and use their respective assets in the
manner in which they currently own and use such assets.
(d) Notice of Official Action. Neither GPP nor any Affiliate
has in relation to the U.K. Business received any process, notice or
communication, by or on behalf of the Office of Fair Trading, the Secretary of
State for Trade and Industry, the Competition Commission, the European
Commission or any other authority of any country having jurisdiction in
anti-trust matters, in relation to any aspect of the U.K. Business or any
agreement or arrangement to which GPP or any Affiliate is or was a party, and,
to the Knowledge of GPP, neither GPP nor any Affiliate is likely to receive any
such process, notice or communication.
4.12 Litigation. Except for the Existing Litigation: (a) there
is no litigation, suit, arbitration, citation, action, proceeding or
governmental investigation or claim of any kind pending or, to the Knowledge of
GPP, proposed or threatened, against or relating to GPP or an Affiliate, nor, to
the Knowledge of GPP, is there any reasonable basis for any such action which is
reasonably likely to be successful on the merits; (b) to the Knowledge of GPP,
there is no inquiry pending or threatened against GPP by any foreign, federal,
state, local or other governmental agency or regulatory authority; and (c) as of
the date of this Agreement, there is no action, suit or proceeding pending or,
to the Knowledge of GPP, proposed or threatened, against GPP or an Affiliate by
any Person which questions the legality, validity or propriety of the
transactions contemplated by this Agreement. Neither GPP nor an Affiliate is
subject to any order or ruling of any governmental entity which materially
effects the operation to the business of GPP or an Affiliate.
4.13 Existing Contracts. The Disclosure Schedule contains a
complete and accurate list of, and GPP has delivered or made available to Xxxxxx
true and complete copies of, the Existing Contracts. The Existing Contracts are
the only Contracts to which GPP or an Affiliate is a party or by which GPP or an
Affiliate is bound under which GPP or such Affiliate has a remaining performance
obligation (excluding those Contracts which may be cancelled by GPP or an
Affiliate, as the case may be, at its option without any penalty and on no more
than thirty (30) days' notice) and which:
(a) involve the performance of services or delivery of goods
or materials by GPP or an Affiliate of an amount or value in excess of $50,000
in any 12-month period;
(b) involve the performance of services or delivery of goods
or materials to GPP or an Affiliate of an amount or value in excess of $50,000
in any 12-month period;
(c) was not entered into in the ordinary course of business
and involves expenditures or receipts of GPP or an Affiliate in excess of
$50,000 in any 12-month period;
(d) is a lease, rental or occupancy agreement, license,
installment or conditional sale agreement, or other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property
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48
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $50,000 and with terms of less than one
year);
(e) except for "shrink-wrap" software licenses and
agreements obtained in the ordinary course of business with current or former
employees, consultants, or contractors regarding the nondisclosure of any
Intangible Assets, is a Contract with respect to material Intangible Assets;
(f) is a joint venture, partnership or other similar
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by GPP or an Affiliate with any other Person;
(g) contains covenants that purport to restrict the business
activity of GPP or an Affiliate or limit the freedom of GPP or an Affiliate to
engage in any line of business or to compete with any Person or otherwise
restricts the right of GPP or an Affiliate to use or disclose any information in
its possession;
(h) provides for payments to or by any Person based on
sales, purchases, or profits, other than direct payments for goods;
(i) is a power of attorney that is currently effective and
outstanding;
(j) was entered into other than in the ordinary course of
business and contains or provides for an express undertaking by GPP or any
Affiliate to be responsible for consequential damages;
(k) is a Contract for capital expenditures in excess of
$100,000;
(l) is a warranty, guaranty or other similar undertaking
with respect to contractual performance extended by GPP or an Affiliate other
than in the ordinary course of business;
(m) is a union labor, trade union, staff association or
similar contract relating to the representation of employees of GPP or an
Affiliate;
(n) is a management, consulting, personal service, agency or
other similar contract or contracts providing for the rendition of services and
which: (i) is in writing; or (ii) provides for any commission, bonus, profit
sharing, incentive, retirement, consulting or additional compensation; or (iii)
contains any termination or severance pay obligations or liabilities;
(o) is a material agreement for the storage, transportation,
treatment or disposal of any hazardous waste or hazardous byproduct;
(p) other than Existing Plans, is an agreement with any
director, officer, employee or shareholder of GPP or an Affiliate;
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49
(q) is an agreement with any dealer, distributor, sales
representative or manufacturer's representative for any of the products of GPP
or an Affiliate;
(r) is any other agreement which: (A) involves an amount in
excess of $50,000 (per annum in the case of multi-year agreements); or (B) is
not in the ordinary course of business;
(s) is an agreement to borrow, a note or other evidence of
any Indebtedness of GPP or an Affiliate;
(t) is a material agreement with any material vendor or
supplier to GPP or an Affiliate; or
(u) is any other or agreement that is material, either in
amount or significance, to the ongoing operation of GPP or an Affiliate.
4.14 Performance of Contracts. Each material Existing Contract
is in full force and effect and is valid and is enforceable against GPP or the
appropriate Affiliate, and to the Knowledge of GPP, against the other party
thereto, in accordance with its terms. Except as set forth on the Disclosure
Schedule:
(a) GPP and the Affiliates are in compliance with all
applicable terms and requirements of each material Existing Contract in all
material respects;
(b) each other Person that has or had any obligation or
liability under any material Existing Contract is, to the Knowledge of GPP, in
compliance with all applicable terms and requirements of such material Existing
Contract;
(c) to the Knowledge of GPP, no event has occurred or
circumstance exists that (with or without notice or lapse of time) is reasonably
likely to contravene, conflict with, or result in a violation or breach of, or
give GPP, an Affiliate or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any material Existing Contract;
(d) neither GPP nor an Affiliate has given to or received
from any other Person any written notice or has obtained Knowledge of any other
communication (whether oral or written) regarding any actual or alleged
violation or breach of, or default under, any material Existing Contract; and
(e) as of the date of this Agreement, there are no
renegotiations of any significant amounts paid or payable to or by GPP or an
Affiliate under current or completed material Contracts with any Person other
than in the ordinary course of business and, to the Knowledge of GPP, no such
Person has made written demand for such renegotiation.
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4.15 Existing Insurance Policies.
(a) Deliveries. The Disclosure Schedule contains a complete
and accurate list of all Existing Insurance Policies. GPP has delivered to
Xxxxxx true and complete copies of the Existing Insurance Policies, all pending
applications by GPP for an insurance policy and any statement by the auditor of
the GPP Group's financial statements with regard to the adequacy of the
insurance coverage provided by the Existing Insurance Policies.
(b) Cancellation. As of the date of this Agreement, neither
GPP nor an Affiliate has received: (i) any refusal of coverage or notice that a
defense will only be afforded with a reservation of rights; or (ii) except for
those policies which GPP or an Affiliate chose not to renew, any notice of
cancellation or any other indication that any insurance policy is no longer in
full force and effect or will not be renewed or that the issuer of any such
policy is not willing or able to perform its obligations thereunder.
4.16 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, Liens, investigations proceedings or notices of
noncompliance or violation (written or oral) by any Person alleging potential
liability (including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on or resulting from: (A) the presence, or
release into the environment, of any Environmental Hazardous Materials at any
location, whether or not owned by GPP or an Affiliate; or (B) to the Knowledge
of GPP, circumstances forming the basis of any violation or alleged violation,
of any applicable Environmental Law; or (C) any and all claims by any Person
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Environmental Release of any
Environmental Hazardous Materials.
(ii) "Environmental Hazardous Materials" shall mean: (A) any
petroleum or petroleum products, radioactive materials, asbestos in any form,
urea formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs)
and radon gas; and (B) any chemicals, materials or substances which are defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any Environmental Law; and (C) any other chemical, material, substance or
waste, exposure to which is prohibited, limited or regulated by any governmental
authority because of its impact on human health or the environment.
(iii) "Environmental Laws" shall mean all Laws relating to
pollution or protection of human health or the environment (including, without
limitation,
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ambient air, surface water, ground water, drinking water, wildlife, plants, land
surface or subsurface strata), including, without limitation, Laws relating to
Environmental Releases or threatened Environmental Releases of Environmental
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Environmental Hazardous Materials.
(iv) "Environmental Permits" shall mean all environmental,
health and safety permits and governmental authorizations.
(v) "Environmental Release" shall mean any release, spill,
emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, surface water or groundwater.
(b) Compliance. Except as described on the Disclosure
Schedule, GPP and the Affiliates: (i) are in substantial compliance with all
applicable Environmental Laws; and (ii) have not received any communication
(written or oral) that alleges that GPP or an Affiliate is not or was not in
substantial compliance with applicable Environmental Laws.
(c) Environmental Permits. Except as described on the
Disclosure Schedule, GPP and the Affiliates have obtained all Environmental
Permits necessary for its operations, and all such permits are in good standing
and GPP and the Affiliates are in substantial compliance with all terms and
conditions of such Environmental Permits.
(d) Environmental Claims. Except as described on the
Disclosure Schedule, there is no Environmental Claim pending or, to the
Knowledge of GPP, threatened, against GPP or an Affiliate, or to the Knowledge
of GPP, against any Person whose liability for any Environmental Claim GPP or an
Affiliate has retained or assumed either contractually or by operation of Law,
or against any real or personal property or operation which GPP or an Affiliate
owns, leases or operates, nor, to the Knowledge of GPP, is there any reasonable
basis for any such Environmental Claim.
(e) Environmental Releases. Except as described on the
Disclosure Schedule, there have been no Environmental Releases of any
Environmental Hazardous Material by GPP or an Affiliate or any employee or agent
of GPP or Affiliate, or to the Knowledge of GPP, by any Person on real property
owned, used, leased or operated by GPP or an Affiliate which in each case would
result in a liability of GPP or such Affiliate.
(f) CERCLA. Except as described on the Disclosure Schedule,
none of the Real Property is currently listed on the National Priorities List or
the Comprehensive Environmental Response, Compensation and Liability Information
System, both promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or on any
comparable state list, and neither GPP nor an Affiliate has received any written
notice from any Person under or relating to CERCLA or any comparable state or
local Law.
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(g) Off Site Locations. Except as described on the
Disclosure Schedule, to the Knowledge of GPP, no off-site location at which GPP
or an Affiliate has disposed or arranged for the disposal of any waste is listed
on the National Priorities List or on any comparable state list and neither GPP
nor an Affiliate has received any written notice from any Person with respect to
any off-site location, of potential or actual liability or a written request for
information from any Person under or relating to CERCLA or any comparable state
or local Law.
(h) Environmental Hazardous Materials. Except as described
on the Disclosure Schedule, there is not and has not been any Environmental
Hazardous Materials used, generated, treated, stored, transported, disposed of,
handled or otherwise existing on, under or about the Real Property, except for
quantities of any such Environmental Hazardous Materials stored or otherwise
held on, under or about the Real Property in substantial compliance with all
Environmental Laws and intended to be used in the operation of the business of
GPP or an Affiliate.
(i) Tanks. Except as described on the Disclosure Schedule,
there is not now, and to the Knowledge of GPP, has not been in the past any
underground or above-ground storage tank or pipeline on the Real Property, and
to the Knowledge of GPP, there has been no Environmental Release from or rupture
of any such tank or pipeline, including, without limitation, any Environmental
Release from or in connection with the filling or emptying of such tank.
(j) Scope. Notwithstanding the generality of any other
representations and warranties in this Agreement, the representations and
warranties in this Section 4.16 shall be deemed the only representations and
warranties in this Agreement with respect to matters relating to Environmental
Laws or to Environmental Hazardous Materials.
4.17 Labor Matters.
(a) Proprietary Rights. Except as set forth on the
Disclosure Schedule, to GPP's Knowledge, no employee of GPP or an Affiliate is a
party to any confidentiality, noncompetition, or proprietary rights agreement,
between such employee or GPP or an Affiliate on the one hand and any other
Person on the other hand. Except as disclosed on the Disclosure Schedule, to the
Knowledge of GPP, no Person listed in Section 1.47 hereof intends to terminate
employment with GPP or such Affiliate prior to the Effective Time of Merger.
(b) Strikes; etc. Except as set forth on the Disclosure
Schedule, there has not been, there is not presently pending or existing, and,
to the Knowledge of GPP, there is not threatened: (i) any strike, lockout,
slowdown, picketing, work stoppage or other general labor dispute; (ii) any
material charge, grievance, proceeding, complaint or other claim against or
affecting GPP or an Affiliate relating to the alleged violation of any Law
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, the Equal Opportunities Commission,
the Commission for Racial Equity or any comparable governmental body,
organizational activity, or other labor or employment dispute
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against or affecting GPP or an Affiliate; or (iii) any application for
certification of a collective bargaining agent.
(c) Events. To the Knowledge of GPP, no event has occurred
in the past twelve months or circumstance currently exists that is reasonably
likely to provide the basis for any work stoppage or other general labor
dispute. To the Knowledge of GPP, there have been no union organizing events in
the past twelve months. There is no lockout of any employees of GPP or an
Affiliate by GPP or such Affiliate pending, and no such action is currently
contemplated by GPP or an Affiliate.
(d) Claims. There are no pending or, to the Knowledge of
GPP, threatened claims (whether under Law, under any employee agreement or
otherwise) by a present or former employee (temporary or permanent) of GPP or an
Affiliate on account of or for: (i) overtime pay, other than overtime pay for
the current payroll period; (ii) wages or salaries, other than wages or salaries
for the current payroll period; (iii) vacations, sick leave, time off or pay in
lieu of vacation, sick leave or time off, other than vacation, sick leave or
time off (or pay in lieu thereof) earned in the twelve-month period immediately
preceding the date of this Agreement; or (iv) any other matter relating to such
person's employment at GPP or the Affiliate.
(e) Unemployment Compensation. To the Knowledge of GPP and
the Affiliates have made all required payments to its unemployment compensation
reserve accounts with the appropriate governmental departments and such accounts
have positive balances.
4.18 Brokers. Except for fees payable to X.X. Xxxxxx
Securities Inc. or any of its affiliates, which shall be the sole responsibility
of the Shareholders, neither any member of the GPP Group nor any Shareholder has
incurred any brokers', finders' or any similar fee in connection with the
transactions contemplated by this Agreement.
4.19 Disclosure. To the Knowledge of GPP, Xxxxxx has been
furnished with complete and accurate copies (however delivered, whether in paper
form, on computer disk or otherwise) or originals of all documents and/or
information requested by Xxxxxx. To the Knowledge of GPP, no statement of fact
by GPP contained in this Agreement, the Disclosure Schedule (including any
supplement thereto) or any document to be furnished pursuant to this Agreement
omits or will omit to state a material fact necessary in order to make the
statements herein or therein contained, in the light of the circumstances under
which they were made (including all other matters disclosed), not misleading.
Notwithstanding anything that could be construed to the contrary in this
Agreement, GPP makes no representation or warranty regarding any financial
projections provided by it to Xxxxxx.
4.20 Intangible Assets.
(a) Disclosure Schedule. The Disclosure Schedule contains a
complete and accurate list and brief description or other identification of all
United States and foreign patents, patent applications, registered trademarks,
trademark applications, registered service marks, service xxxx applications,
registered copyrights, copyright applications and
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Internet domain names owned by GPP or an Affiliate, and all material licenses
pursuant to which GPP or an Affiliate authorizes the use of any of the foregoing
by another Person or pursuant to which GPP or an Affiliate is authorized to use
any of the foregoing owned by another Person.
(b) Ownership. GPP or an Affiliate owns or has the right to
use Intangible Assets necessary to conduct their respective business as now
conducted.
(c) Validity; Infringement. To the Knowledge of GPP, none of
the material registrations or applications included in the Intangible Assets is
invalid or unenforceable and there are no claims, demands or proceedings pending
or threatened by any Person contesting or challenging GPP's or an Affiliate's
right to use any of the Intangible Assets. There are no patents, trademarks,
trade names, copyrights, software, trade secrets or other proprietary
information owned by a Person other than GPP or an Affiliate which GPP or an
Affiliate is using without license to do so.
4.21 Product Matters. The Disclosure Schedule describes: (a)
any obligation or liability of GPP or an Affiliate in excess of $10,000 which is
based upon any express or implied warranty relating to any product produced,
sold or shipped by GPP or an Affiliate; (b) to the Knowledge of GPP, any product
recall or any other material obligation or liability of GPP or an Affiliate
which is based upon death, disease or injury to Person or property relating to
any product produced, sold or shipped by GPP or an Affiliate; and (iii) any
exclusivity or protected arrangements applicable to products produced, sold or
shipped by GPP or an Affiliate.
4.22 Customers; Suppliers; Certifications.
(a) Customers. The Disclosure Schedule sets forth a list of
the top ten (10) customers of the GPP Group, taken as a whole, by dollar volume
of sales, for the last two completed fiscal years.
(b) Suppliers. The Disclosure Schedule sets forth a list of
the top twenty (20) suppliers of the GPP Group, taken as a whole, by dollar
volume of purchases, for the last completed fiscal year.
(c) Certifications. The Disclosure Schedule contains a
description of each material third-party quality or other certification required
by Law. Except as disclosed on the Disclosure Schedule, GPP and the Affiliates
are in material compliance with all such certifications.
4.23 Relationships with Related Parties. Except as set forth
on the Disclosure Schedule, no Shareholder and no director, officer or manager
of GPP or an Affiliate has any interest in any property (whether real, personal,
or mixed and whether tangible or intangible), used by GPP or an Affiliates. No
Shareholder and no director, officer or manager of GPP or an Affiliate owns (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that: (a) has ongoing material business dealings or
a material financial interest in ongoing transactions with GPP or an Affiliate;
or (b) is engaged in competition with GPP or an Affiliate with respect to any
line of the products or services of GPP or an Affiliate (a
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"Competing Business") in any market presently served by GPP or an Affiliate
except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth on the Disclosure Schedule, no
Shareholder or any director, officer or manager of GPP or an Affiliate is a
party to any Contract with, or has any claim or right against, GPP or an
Affiliate, other than in such Person's capacity as a director, officer or
employee and to the extent any such Person has appraisal rights under the DGCL
as a result of the transactions described in this Agreement.
4.24 Real Property.
(a) Real Property. The parcels included in the Real
Property: (i) constitute all real property and improvements owned, leased or
used by GPP or an Affiliate; (ii) to the Knowledge of GPP, are not in possession
of any adverse possessors; (iii) are not subject to any leases or tenancies of
any kind (except for any Existing Contract); (iv) have access to and from a
public road or street and, to the Knowledge of GPP, there is no pending or
threatened restriction or denial of such access; (v) are used in a manner which
is materially consistent with and permitted by applicable zoning ordinances and
other Laws without special use approvals or permits; (vi) are, and have been
since the date of possession thereof by GPP or an Affiliate, in the peaceful
possession of GPP or such Affiliate; (vii) are served in all material respects
by all water, sewer, electrical, telephone, drainage and other utilities
required for normal operations of the businesses of GPP as presently conducted;
(viii) are not located in a flood plain, wetland or similar restricted area such
that it would hinder the use of the Real Property in the operation of GPP's or
an Affiliate's business as presently conducted; and (ix) require no material
work or improvements to bring them into compliance with any applicable Law.
(b) Notices. To the Knowledge of GPP, there are no: (i)
planned or contemplated public improvements which may result in special
assessments against the Real Property or which may adversely affect the
availability of utility service to the Real Property; or (ii) increases or
contemplated increases in the assessed value of the Real Property which would
increase the estimated real estate taxes therefor.
(c) Options. Neither GPP nor any Affiliate has the option or
right to purchase any real estate and no other Person has an option or right to
purchase any Real Property owned by GPP or an Affiliate.
(d) Fire Certificate. A fire certificate has been issued in
respect of the U.K. Property where requisite and there are no material
conditions attaching thereto or any recommendations or requirements of the local
fire authority that have not been implemented.
(e) Outgoings. The U.K. Property is not subject to the
payment of any outgoings other than non-domestic or water rates (and in the case
of leaseholds, sums reserved by the relevant lease) and all material outgoings
have been duly paid to date, and none is in dispute.
(f) Planning. With respect to the U.K. Property:
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(i) No planning permission has been given subject to
materially onerous conditions or on a temporary or personal basis and no
permission is suspended or remains unimplemented in whole or in part and no
planning application has been submitted which awaits determination.
(ii) The U.K. Property is not subject to or affected by any
agreement under section 106 of the Town and Country Xxxxxxxx Xxx 0000, section
33 of the Local Government (Miscellaneous Provisions) Xxx 0000 or any
legislation of a similar nature, nor is the U.K. Property the subject of a
notice of entry and no proposals have been published for its compulsory
acquisition.
(iii) There is no material breach of condition notice,
planning contravention notice, stop notice or enforcement notice or injunction
under section 187(B) of the Town and Country Planning Xxx 0000 affecting the
U.K. Property.
4.25 Data Protection.
(a) GPP has made all necessary notifications under Data
Protection Xxx 0000 in relation to the U.K. Business in respect of all personal
data processed by it or has the benefit of an existing subsidiary registration
under the Data Protection Act 1984 in respect of such processing.
(b) Neither GPP nor any Affiliate has in relation to the
U.K. Business received an Enforcement Notice under either the Data Protection
Xxx 0000 or 1998, or any draft of such a notice, nor any other communication
from the Data Protection Commissioner or from any other person indicating any
breach or alleged breach of the Data Protection Act 1984 or 1998 and to the
Knowledge of GPP there are no circumstances which are likely to give rise to any
such notice, or letter being served or made.
(c) No individual has been awarded compensation from GPP or
any Affiliate in relation to the U.K. Business under the Data Protection Acts
1984 or 1998, no such claim is outstanding and to the Knowledge of GPP there are
no circumstances which are likely to give rise to any claim for compensation
being made.
(d) GPP and the Affiliates have in relation to the U.K.
Business either complied in all material respects with requests under the Data
Protection Acts 1984 and 1998 from data subjects for access or changes to or
deletions of personal data or has validly refused such requests on the basis of
an exemption under the Data Protection Acts 1984 or 1998 and no such requests
are outstanding.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INDEMNIFYING SHAREHOLDER
The Indemnifying Shareholder hereby represents and warrants to
Xxxxxx that:
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5.1 Organization; Business. The Indemnifying Shareholder is a
limited partnership duly and validly organized and existing and in good standing
under the Laws of the State of Delaware. The general partner of the Indemnifying
Shareholder is Beacon Focus Value Fund Investors, LLC.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by the Indemnifying Shareholder and all of the
documents and instruments required by this Agreement to be executed and
delivered by the Indemnifying Shareholder are within the partnership power of
the Indemnifying Shareholder and have been duly authorized by all necessary
action by the Indemnifying Shareholder. This Agreement is, and the other
documents and instruments required by this Agreement to be executed and
delivered by the Indemnifying Shareholder will be, when executed and delivered
by the Indemnifying Shareholder, the valid and binding obligations of the
Indemnifying Shareholder, enforceable against the Indemnifying Shareholder in
accordance with their respective terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws Relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement by the Indemnifying Shareholder do not and will
not conflict with or violate any Law, the charter documents of the Indemnifying
Shareholder or any contract or agreement to which the Indemnifying Shareholder
is a party or by which the Indemnifying Shareholder is bound.
5.4 Ownership. The Indemnifying Shareholder owns good and
marketable title to the number of shares of Common Stock as set forth in the
Disclosure Schedule, and will transfer such number of shares of Common Stock as
of the Closing Date free and clear of any Liens. Except as set forth in the
Disclosure Schedule, the Indemnifying Shareholder has not granted any proxy or
other stock power with respect to, or entered into any type of voting agreement
or other stockholders agreement relating to, the shares of GPP capital stock or
any Warrant owned by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx hereby represents and warrants to GPP that:
6.1 Organization; Business. Xxxxxx is a corporation duly and
validly organized and existing in active status under the Laws of the State of
Wisconsin. Acquisition is a corporation duly and validly organized and existing
in good standing under the Laws of the State of Delaware.
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6.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by each of Xxxxxx and Acquisition and all of the
documents and instruments required by this Agreement to be executed and
delivered by Xxxxxx and Acquisition, as the case may be, are within the
corporate power of Xxxxxx and Acquisition, respectively, and have been duly
authorized by all necessary corporate action by Xxxxxx and Acquisition, as the
case may be. This Agreement is, and the other documents and instruments required
by this Agreement to be executed and delivered by each of Xxxxxx and Acquisition
will be, when executed and delivered by Xxxxxx and Acquisition, as the case may
be, the valid and binding obligations of Xxxxxx and Acquisition, as the case may
be, enforceable against Xxxxxx and Acquisition in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
6.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement by Xxxxxx and Acquisition do not and will not
conflict with or violate any Law, the Articles of Incorporation or Bylaws of
Xxxxxx, the Certificate of Incorporation or Bylaws of Acquisition or any
contract or agreement to which Xxxxxx or Acquisition is a party or by which
Xxxxxx or Acquisition is bound.
6.4 Brokers. Except for fees payable to Xxxxxxx, Xxxxx & Co.,
which shall be the sole responsibility of Xxxxxx, Xxxxxx has not incurred any
brokers', finders' or any similar fee in connection with the transactions
contemplated by this Agreement.
6.5 Consents and Approvals. Except as disclosed on Schedule
6.5, no consent or approval from any Person or any governmental or regulatory
authority is required in connection with the execution, delivery and performance
of this Agreement by each of Xxxxxx and Acquisition.
6.6 Financing. The letter and related attachments (including
any terms sheets) delivered to GPP, or other information provided to GPP, prior
to the date hereof regarding Xxxxxx'x ability to obtain financing sufficient to
consummate the transactions to occur at the Closing as described in this
Agreement are true and correct copies of such documents. Xxxxxx is not aware of
any fact or circumstance that makes it reasonably likely that it will not obtain
such financing or alternative financing in a similar amount.
6.7 Litigation. There is no litigation, suit, arbitration,
action, proceeding or governmental investigation or claim of any kind pending
or, to the knowledge of Xxxxxx, proposed or threatened against Xxxxxx which
questions the legality, validity or propriety of the transactions contemplated
by this Agreement.
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ARTICLE VII
CONDUCT OF BUSINESS BY GPP PENDING THE MERGER
From and after the date of this Agreement and until the
Effective Time of Merger, GPP shall, and shall cause the Affiliates to:
7.1 Conduct Business in the Ordinary Course. Conduct their
businesses in the ordinary course and substantially in the same manner as
heretofore, and manage working capital in the ordinary course of business.
7.2 Use of Assets. Use, operate, maintain and repair all of
their material assets and properties in the ordinary course consistent with past
practices.
7.3 No Default. Not do any act or omit to do any act that will
cause a breach of any of the material Existing Contracts.
7.4 Existing Insurance Policies. Maintain all of the Existing
Insurance Policies in full force and effect, except to the extent any
non-maintenance thereof would be in the ordinary course of business.
7.5 Employment Matters. Not: (a) except as described in the
Disclosure Schedule or in the ordinary course of business consistent with past
practice, grant any increase in the rate of pay of any of the employees of GPP
or an Affiliate; (b) institute or amend any Employee Benefit Plan; (c) enter
into or modify any written employment arrangement with any Person; or (d) take
any action to establish any "stay bonus" plan or arrangement or any new
severance or termination pay program.
7.6 Contracts and Commitments. Not enter into any material
contract or commitment or engage in any material transaction not in the usual
and ordinary course of business and consistent with its normal practices and not
sell or dispose of any material capital asset. The purchase of Real Property,
the grant of an exclusive license under any of GPP's or an Affiliate's
Intangible Assets and the execution of any brand licensing agreement shall be
deemed to be material events not in the ordinary course of business.
7.7 Preservation of Relationships . Use its reasonable
commercial efforts to preserve its business organization intact, to retain the
services of its present officers and key employees and to preserve the goodwill
of suppliers, customers, creditors and others having material business
relationships with GPP or an Affiliate.
7.8 Compliance with Laws. Comply in all material respects with
all applicable Laws.
7.9 Taxes. Timely (taking into account any extensions that may
properly be requested) and properly file all federal, state, local and foreign
tax returns which are required to be filed, and pay or make provision for the
payment of all taxes owed by it.
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7.10 Indebtedness. Not create, incur or assume any
Indebtedness, other than in connection with borrowings under existing revolving
credit facilities in the ordinary course of business.
7.11 Amendments. Not amend its charter documents.
7.12 Issuance of Stock or Membership Interests. Other than
upon the exercise of Options and Warrants outstanding on the date hereof, not
issue any additional shares of stock or membership interests of any class or
grant any options, warrants or rights to subscribe for or acquire any additional
shares of stock or membership interests of any class.
7.13 Dividends; Redemption. Not: (a) declare or pay any
dividend or make any capital or surplus distributions of any kind; or (b)
directly or indirectly redeem, purchase or otherwise acquire any of its capital
stock; or (c) recapitalize or reclassify any of its capital stock or liquidate
in whole or in part.
7.14 No Dispositions or Acquisitions. Not: (a) sell, lease,
license, encumber or otherwise dispose of, or agree to sell, lease, license,
encumber or otherwise dispose of, any of its material assets except in the
ordinary course of business consistent with past practice; or (b) acquire, or
publicly propose to acquire or agree to acquire, by merger or consolidation
with, or by purchase or otherwise, an equity interest in, or all or any portion
of the assets of, any Person.
7.15 Capital Expenditures. Not make unplanned capital
expenditures in excess of $200,000 in the aggregate for GPP and the Affiliates.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF XXXXXX AND ACQUISITION
Each and every obligation of Xxxxxx and Acquisition to be
performed on the Closing Date shall be subject to the satisfaction prior to or
at the Closing of the following conditions precedent:
8.1 Compliance with Agreement. GPP and the Indemnifying
Shareholder shall have performed and complied: (a) in all respects with all of
their respective obligations under Sections 2.6(b), 3.5 and 3.10 of this
Agreement which are to be performed or complied with by them prior to or on the
Closing Date; and (b) in all material respects with all of their other
obligations under this Agreement which are to be performed or complied with by
them prior to or on the Closing Date.
8.2 No Injunction or Restraints; Illegality; Litigation.
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(a) No temporary restraining order, preliminary or permanent
injunction or other order by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger (an
"Injunction") shall be in effect. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any governmental authority which makes the
consummation of the Merger illegal.
(b) No suit, action or other proceeding that is reasonably
likely to be successful on the merits shall be pending before any court in which
the relief requested is to restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement.
8.3 Representations and Warranties of GPP and the Indemnifying
Shareholder. The representations and warranties made by GPP in Sections 4.1, 4.2
and 4.3 of this Agreement and the representations and warranties made by the
Indemnifying Shareholder in Sections 5.2 and 5.4 of this Agreement shall be true
and correct in all respects when made and as of the Closing Date (unless such
representations or warranties relate to a specific earlier date, in which case,
such representations and warranties shall be true and correct in all respects as
of such earlier date) with the same force and effect as though said
representations and warranties had been made at such times; and all of the other
representations and warranties made by GPP in Article IV and by the Indemnifying
Shareholder in Article V of this Agreement shall be true and correct in all
material respects when made and as of the Closing Date (unless such
representations or warranties relate to a specific earlier date, in which case,
such representations and warranties shall be true and correct in all material
respects as of such earlier date) with the same force and effect as though said
representations and warranties had been made at such times. The parties agree
that: (a) any failure of a representation or warranty to be true and correct
solely as a result of actions taken by GPP or an Affiliate in compliance with
their obligations pursuant to Article VII will not result in the condition set
forth in this Section 8.3 being unsatisfied; and (b) for purposes of the
condition set forth in this Section 8.3, a representation or warranty will be
deemed to have changed in a material respect as a result of a Disclosure
Schedule Change only if the Disclosure Schedule Change reflects a material
substantive change, regardless of whether the quantity of items listed on the
relevant Disclosure Schedule has materially increased or decreased.
8.4 No Material Adverse Effect. During the period from the
date of this Agreement to the Closing Date, there shall not have occurred, and
there shall not exist on the Closing Date, a Material Adverse Effect.
8.5 HSR Act Waiting Period and Foreign Competition Filings.
All applicable waiting periods related to the HSR Act shall have expired. All
necessary filings shall have been made and applicable waiting periods shall have
expired, lapsed or been terminated under applicable foreign competition Laws,
and all authorizations, consents and approvals thereunder that are required to
consummate the transactions set forth in this Agreement shall have been
obtained.
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8.6 Consents and Approvals. All material consents, approvals
and waivers that are required to effect the transactions contemplated by this
Agreement shall have been received and, if obtained by GPP, executed
counterparts thereof (if available) shall have been delivered to Xxxxxx at or
prior to Closing.
8.7 Shareholder Approval. The Merger shall have been approved
by the requisite vote of the shareholders of GPP and the number of Dissenting
Shares shall not exceed 5% of the number of issued and outstanding shares of
Common Stock.
8.8 Certificate of Merger. At the Closing, the Certificate of
Merger shall have been filed with the Delaware Secretary of State.
8.9 Closing Deliveries. At the Closing, GPP shall deliver to
Xxxxxx the following documents, in each case duly executed or otherwise in
proper form:
(a) the GPP Closing Certificate;
(b) the GPP Counsel Opinion;
(c) certified copies of the resolutions of the Board of
Directors and the shareholders of GPP, authorizing and approving this Agreement
and the consummation of the transactions contemplated by this Agreement;
(d) the Escrow Agreement and Paying Agent Agreement;
(e) an affidavit of GPP and any Affiliate owning real
property stating that such Person is not a "foreign person", as defined in
Section 1445(f)(3) of the Code;
(f) a copy of the Certificate or Articles of Incorporation
of GPP, GPPD and GPPW, as the case may be, and a copy of the Certificate of
Organization of LLC certified by the appropriate jurisdiction of incorporation;
and a copy of the Bylaws of GPP, GPPD and GPPW and of the Operating Agreement of
LLC certified by the secretary or other appropriate officer of GPP and each
Affiliate, respectively;
(g) incumbency certificates relating to each person
executing any document executed and delivered to Xxxxxx by GPP or an Affiliate
pursuant to the terms hereof;
(h) resignations of each director of each Affiliate;
(i) a certificate of the Chief Financial Officer of GPP, in
form and substance reasonably satisfactory to Xxxxxx, certifying that: (A) the
Existing Indebtedness, excluding revolving credit loans, is less than
$194,000,000;
(j) good standing certificates (or their equivalent) for GPP
and each Affiliate; and
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(k) such other documents, instruments or writings reasonably
required to be delivered to Xxxxxx at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as Xxxxxx may
reasonably request.
8.10 [Intentionally Omitted.]
8.11 Financing. No material adverse change shall have occurred
in the credit markets or overall financing environment.
8.12 Shareholders and Option Agreements. Any agreement between
some or all of the Shareholders relating to the ownership of the capital stock
of GPP or the management or operation of GPP or an Affiliate shall have been
terminated without obligation by GPP and evidence of such termination shall have
been delivered to Xxxxxx. GPP shall have delivered to Xxxxxx true and correct
copies of the agreements with Option holders described in Section 2.4(c).
8.13 Securities Law Compliance. Xxxxxx shall have reasonably
concluded, based on the advice of its counsel and questionnaires to be provided
by the Shareholders, that its offer and sale to each Shareholder of such
Shareholder's Pro-Rata Portion of the Earnout payment described in Section 2.7
does not require registration or qualification under applicable securities Laws
and all actions required by such Laws with respect thereto shall have been
taken.
8.14 Title Policy. At Closing, Xxxxxx shall have received a
title policy for each parcel of Real Property in the United States owned by GPP
or an Affiliate which is in an amount required by Xxxxxx or its lenders,
insuring that title to such Real Property is in accordance with this Agreement
and which includes such endorsements and affirmative coverages as Xxxxxx or its
lenders reasonably require.
8.15 Employment Contract. The LLC shall have entered into an
employment contract with Xx. Xxxxx Xxxxx Xxxxxxx on terms consistent with the
LLC's current engagement of Xx. Xxxxxxx and reasonably acceptable to Xxxxxx.
8.16 Environmental and Branch Registration Matters. GPP shall
have:
(a) retained a consultant to assist it in bringing its
United Kingdom facility into compliance with applicable Environmental Laws,
subject to the reasonable approval of Xxxxxx as to the selection of the
consultant and the scope of work to be taken by the consultant, which compliance
issues are identified in that certain report described in Section 1.67(b);
(b) retained a consultant to assist it in bringing its
German service center into compliance with applicable Environmental Laws,
subject to the reasonable approval of Xxxxxx as to the selection of the
consultant and the scope of work to be taken by the consultant, in connection
with such service center's current petrol handling and disposal practices;
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(c) taken all steps necessary to obtain a storm water permit
for its Jefferson, Wisconsin facility; and
(d) registered LLC with the appropriate Registrar of
Companies pursuant to the U.K. Companies Act.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF GPP
Each and every obligation of GPP to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions precedent:
9.1 Compliance with Agreement. Xxxxxx and Acquisition shall
have performed and complied in all material respects with all of their
obligations under this Agreement which are to be performed or complied with by
them prior to or on the Closing Date.
9.2 No Injunction or Restraints; Illegality; Litigation.
(a) No Injunction shall be in effect. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, by any governmental authority which
makes the consummation of the Merger illegal.
(b) No suit, action or other proceeding that is reasonably
likely to be successful on the merits shall be pending before any court in which
the relief requested is to restrain, enjoin or prohibit the consummation of the
transactions contemplated by this Agreement.
9.3 Representations and Warranties of Xxxxxx. The
representations and warranties made by Xxxxxx in Section 6.2 of this Agreement
shall be true and correct in all respects when made and as of the Closing Date
(unless such representations or warranties relate to a specific earlier date, in
which case, such representations and warranties shall be true and correct in all
respects as of such earlier date) with the same force and effect as though said
representations and warranties had been made at such times; and all of the other
representations and warranties made by Xxxxxx in Article VI of this Agreement
shall be true and correct in all material respects when made and as of the
Closing Date (unless such representations or warranties relate to a specific
earlier date, in which case, such representations and warranties shall be true
and correct in all respects as of such earlier date) with the same force and
effect as though said representations and warranties had been made at such
times.
9.4 Consents and Approvals. All material consents, approvals
and waivers that are required to effect the transactions contemplated by this
Agreement shall have been received unless the failure to obtain any such
consent, approval or waiver could only result in a claim for money damages and
Xxxxxx shall have agreed to forego obtaining such consent,
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approval or waiver and shall have also agreed to indemnify the Shareholders for
Losses incurred by the Shareholders in respect of the failure to obtain such
consent, approval or waiver.
9.5 HSR Act Waiting Period and Foreign Competition Filings.
All applicable waiting periods related to the HSR Act shall have expired and all
required filings and other actions pursuant to foreign competition laws shall
have been made. All necessary filings shall have been made and applicable
waiting periods shall have expired, lapsed or been terminated under applicable
foreign competition Laws, and all authorizations, consents and approvals
thereunder that are required to consummate the transactions set forth in this
Agreement shall have been obtained.
9.6 Shareholder Approval. The Merger shall have been approved
by the requisite vote or consent of the shareholders of GPP.
9.7 Certificate of Merger. At the Closing, the Certificate of
Merger shall have been filed with the Delaware Secretary of State.
9.8 Estimated Cash Amount. Xxxxxx shall have made the payments
required by Section 2.5(a) of this Agreement.
9.9 Deliveries. At the Closing, Xxxxxx and Acquisition shall
deliver to GPP the following documents, in each case duly executed or otherwise
in proper form:
(a) the consents, approvals and waivers required by
Section 9.4 hereof which Xxxxxx was required to obtain;
(b) the Xxxxxx Closing Certificate;
(c) the Xxxxxx Counsel Opinion;
(d) certified copies of the resolutions of the Board of
Directors of Xxxxxx and of the Board of Directors and shareholder of
Acquisition, authorizing and approving this Agreement and the consummation of
the transactions contemplated by this Agreement;
(e) the Escrow Agreement and Paying Agent Agreement;
(f) a copy of the Certificate or Articles of Incorporation
of each of Xxxxxx and Acquisition certified by the appropriate jurisdiction of
incorporation and a copy of the Bylaws of each of Xxxxxx and Acquisition
certified by the secretary or other appropriate officer of Xxxxxx and
Acquisition, as the case may be;
(g) incumbency certificates relating to each person
executing any document executed and delivered by Xxxxxx or Acquisition pursuant
to the terms hereof;
(h) good standing certificates (or their equivalent) for
Xxxxxx and Acquisition; and
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(i) such other documents, instruments or writings reasonably
required to be delivered to GPP at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as GPP may
reasonably request.
ARTICLE X
INDEMNITIES
10.1 Indemnity by Shareholders . To induce Xxxxxx and
Acquisition to enter into this Agreement and to consummate the Merger, GPP has
agreed, and by approving this Agreement the Shareholders shall have agreed that,
subject to the provisions of this Section 10.1 and the other Sections of this
Article X, from and after the Closing Date the Shareholders shall indemnify and
hold Xxxxxx harmless from and against, and agree to promptly defend Xxxxxx from
and reimburse Xxxxxx for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
reasonable attorneys' fees and other reasonable legal costs and expenses,
including without limitation, those incurred in connection with any suit, action
or other proceeding, but excluding lost profits and any punitive or
consequential damages other than punitive damages incurred with respect to a
third party claim and any losses that have been reflected in a reduction of the
Cash Amount) ("Losses") which Xxxxxx, Acquisition, GPP or an Affiliate may at
any time suffer or incur, or become subject to, as a result of or in connection
with:
(a) any breach of any of the representations and warranties
made by GPP in Article IV of this Agreement;
(b) any breach of any of the representations and warranties
made by the Indemnifying Shareholder in Article V of this Agreement;
(c) any failure by GPP to carry out, perform, satisfy or
discharge: (i) any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement; or (ii) any of the covenants, agreements,
undertakings, liabilities or obligations which are required to be performed,
satisfied or discharged prior to the Effective Time of Merger under any of the
other documents and materials required to be executed and delivered by GPP
pursuant to this Agreement;
(d) any failure by the Indemnifying Shareholder to carry
out, perform, satisfy and discharge: (i) any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement; or (ii) any of
the covenants, agreements, undertakings, liabilities or obligations which are
required to be performed, satisfied or discharged prior to Effective Time of
Merger under any of the other documents and materials required to be executed
and delivered by the Indemnifying Shareholder pursuant to this Agreement;
(e) the Special Indemnity Matters (but only as to Losses not
covered by an appropriate reserve therefor on the Closing Balance Sheet); and
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(f) any suit, action or other proceeding brought by any
Person arising out of, or in any way related to, any of the matters referred to
in Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d) or 10.1(e) of this Agreement.
10.2 Indemnity by Xxxxxx . Subject to the provisions of this
Section 10.2 and the other Sections of this Article X, from and after the
Closing Date Xxxxxx shall indemnify and hold the Shareholders harmless from and
against, and agrees to promptly defend the Shareholders from and reimburse the
Shareholders for, any and all Losses which the Shareholders may at any time
suffer or incur, or become subject to, as a result of or in connection with:
(a) any breach of any of the representations and warranties
made by Xxxxxx in Article VI of this Agreement;
(b) any failure by Xxxxxx or Acquisition, or both, to carry
out, perform satisfy and discharge: (i) any of their covenants, agreements,
undertakings, liabilities or obligations under this Agreement; or (ii) any of
their covenants, agreements, undertakings, liabilities or obligations which are
required to be performed, satisfied or discharged prior to Effective Time of
Merger under any of the other documents and materials required to be executed
and delivered by Xxxxxx or Acquisition, or both, pursuant to this Agreement;
(c) subject to matters for which the Shareholders are
responsible as described in Subject 3.12(d), the Notes; and
(d) any suit, action or other proceeding brought by any
Person arising out of, or in any way related to, any of the matters referred to
in Sections 10.2(a), 10.2(b) or 10.2(c) of this Agreement.
10.3 Provisions Regarding Indemnities .
(a) Insurance Recoveries. The amounts for which an
indemnifying party shall be liable under Sections 10.1 and 10.2 of this
Agreement shall be net of any insurance proceeds actually received by the
indemnified party (or GPP or any Affiliate, if Xxxxxx is the indemnified party)
in connection with the facts giving rise to the right of indemnification.
(b) Termination of Rights of the Shareholders. Other than
with respect to the representations and warranties of Xxxxxx contained in
Sections 6.2 and 6.4, which shall survive indefinitely, the right of the
Shareholders to receive indemnity provided by Section 10.2(a) of this Agreement
shall, as to any matter which has not been described in a notice delivered to
Xxxxxx pursuant to Section 10.4(a) or Section 10.4(c) of this Agreement prior to
such time, expire on the date which is eighteen (18) months after the Effective
Time of Merger.
(c) Termination of Rights of Xxxxxx. Other than with respect
to the representations and warranties of GPP contained in Sections 4.1, 4.2,
4.3, and 4.18 and the representations and warranties of the Indemnifying
Shareholder contained in Sections 5.2 and
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5.4, which shall survive indefinitely, the representations and warranties of GPP
contained in Sections 4.8, which shall survive until the expiration of the
applicable statute of limitations plus 60 days, and the representations and
warranties of GPP contained in Section 4.16, which shall survive for a period of
five (5) years from the Effective Time of Merger, the right of Xxxxxx to receive
indemnity provided by Section 10.1(a) and Section 10.1(b) of this Agreement
shall, as to any matter which has not been described in a notice delivered to
the Representative pursuant to Section 10.4(a) or Section 10.4(c) of this
Agreement prior to such time, expire on the date which is eighteen (18) months
after the Effective Time of Merger.
(d) Rights on Termination. The termination of the rights of
an indemnified party to receive indemnity contained in Sections 10.3(b) and
10.3(c) of this Agreement shall not affect that Person's right to prosecute to
conclusion any claim made by that Person in accordance with this Agreement prior
to the time that the relevant right of indemnity terminates.
(e) Limitations on Liability of the Shareholders. The
liability of the Shareholders under Section 10.1 of this Agreement shall be
without deduction or limitation, except that the liability of the Shareholders
under Section 10.1(a) and 10.1(f) (to the extent liability thereunder is related
to matters covered by Section 10.1(a)) of this Agreement shall:
(i) be recoverable only if and to the extent that the
cumulative Losses suffered by Xxxxxx exceeds One Million and 00/100 Dollars
($1,000,000);
(ii) be limited in the aggregate to Twenty-Five Million and
00/100 Dollars ($25,000,000) (the "Cap"); and
(iii) be limited such that Xxxxxx shall not be entitled to
more than one recovery for any single Loss even though such Loss may have
resulted from the breach or inaccuracy of more than one of the representations
and warranties made by GPP or the Indemnifying Shareholder in or pursuant to
this Agreement;
provided, however, that Losses resulting from a breach of the representations
and warranties of GPP contained in Sections 4.1, 4.2, 4.3, 4.8 and 4.18 and of
the Indemnifying Shareholder contained in Sections 5.2 and 5.4 shall not be
subject to (i) and (ii) above; provided, further, that Losses resulting from any
Special Indemnity Matter other than those described in clauses (e) and (f) in
the definition thereof shall be subject to the Cap; and provided further, that
Losses resulting from (i) a breach of the representations and warranties of GPP
contained in Section 4.8 or (ii) any Special Indemnity Matter described in
clauses (i), (j) or (k) of the definition thereof shall be recoverable only if
and to the extent that the cumulative Losses suffered by Xxxxxx exceed the
amount of any reserves for tax liabilities shown on the Closing Balance Sheet.
(f) Limitations on Xxxxxx'x Liability. The liability of
Xxxxxx under Section 10.2 of this Agreement shall be without deduction or
limitation, except that the liability of Xxxxxx under Section 10.2(a) and
10.2(d) (to the extent liability thereunder is related to matters covered by
Sections 10.2(a)) of this Agreement shall:
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(i) be recoverable only if and to the extent that the
cumulative Losses suffered by the Shareholders exceeds One Million and 00/100
Dollars ($1,000,000);
(ii) be limited in the aggregate to Twenty-Five Million and
00/100 Dollars ($25,000,000); and
(iii) be limited such that the Shareholders shall not be
entitled to more than one recovery for any single Loss even though such Loss may
have resulted from the breach or inaccuracy of more than one of the
representations and warranties made by Xxxxxx or Acquisition in or pursuant to
this Agreement;
provided, however, that Losses resulting from a breach of the representations
and warranties of Xxxxxx contained in Sections 6.2 and 6.4 shall not be subject
to (i) and (ii) above.
(g) Payment by Shareholders.
(i) The Shareholders' indemnification obligations under this
Article X shall be satisfied from the escrow fund maintained by the Escrow Agent
pursuant to the Escrow Agreement and each Shareholder's entitlement to such
escrow fund shall be reduced by such Shareholder's Pro-Rata Portion of such
Loss. After any available escrow fund has been fully used to satisfy Xxxxxx'x
indemnification claims under this Article X or if the balance of the escrow fund
has otherwise been fully depleted, Xxxxxx shall have the right to either set off
any such Loss against payment of the Earnout or recover the Loss from the
Shareholders, who shall then have the right to be reimbursed from the Earnout
payment available for distribution to the Shareholders, if any, for any amount
so paid before such Earnout payment is distributed to the Shareholders pursuant
to Section 2.7(b)(z) or (c). Thereafter, or in the event Xxxxxx chooses to
recover such Loss from the Earnout and no Earnout is payable pursuant to the
provisions of Section 2.7 of this Agreement, the Shareholders shall be
responsible for all Losses recoverable under this Article X.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Indemnifying Shareholder shall be solely responsible for any
indemnification claim asserted by Xxxxxx pursuant to Section 10.1(b) or Section
10.1(d) above.
(iii) Other than with respect to a claim for fraud,
following the Closing Date the indemnification provisions contained in this
Article X constitute the sole and exclusive remedy for breach of any
representation or warranty made in this Agreement or otherwise with respect to
any claim arising out of GPP's or any Affiliate's operations, business or
properties on or prior to the Closing Date, other than any claim relating to a
breach of any of GPP's pre-Closing obligations pursuant to this Agreement.
(h) Nature of Obligation. The Shareholders' obligations
under this Article X shall be joint and several as to the Shareholders, except
that Xxxxxx shall not be entitled to make any claim of indemnification hereunder
against any Shareholder (other than the Indemnifying Shareholder) in excess of
such Shareholder's Pro-Rata Portion of such claim; provided however that nothing
in this Section 10.3(h) shall in any way limit the Indemnifying
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Shareholder's rights to contribution from the other Shareholders for any claims
made in accordance with this Agreement which the Indemnifying Shareholder has
satisfied and which are over and above the Indemnifying Shareholder's Pro-Rata
Portion.
10.4 Indemnification Procedure.
(a) Notice. If an indemnified party shall claim to have
suffered a Loss for which indemnification is available under Section 10.1 or
10.2, as the case may be, the indemnified party shall notify the indemnifying
party in writing of such claim, which notice shall describe the nature of such
claim, the facts and circumstances that give rise to such claim and the amount
of such claim if reasonably ascertainable at the time such claim is made. In the
case of a claim by Xxxxxx, a copy of such written notice shall also be provided
by Xxxxxx to the Escrow Agent if the Escrow Agreement is still in effect. In the
event that within forty-five (45) days after the receipt by the indemnifying
party of such a written notice from the indemnified party, the indemnified party
shall not have received from the indemnifying party a written objection to such
claim, such claim shall be conclusively presumed and considered to have been
assented to and approved by the indemnifying party following receipt by the
indemnifying party (and, in the case of a claim by Xxxxxx, the Escrow Agent) of
a written notice from the indemnified party to such effect.
(b) Resolution. If within the forty-five (45) day period
described in paragraph (a) above the indemnified party (and, in the case of
claim by Xxxxxx, the Escrow Agent) shall have received from the indemnifying
party a notice setting forth the indemnifying party's objections to such claim
and the indemnifying party's reasons for such objection, then the parties shall
follow the procedures set forth in Article XI below with respect to the
resolution of such matter.
(c) Third-Party Claims.
(i) Any indemnified party seeking indemnification pursuant
to this Article X in respect of any third-party claim shall give the
indemnifying party from whom indemnification with respect to such claim is
sought (A) prompt (but in any event no later than 45 days after such indemnified
party has received notice of such third party claim) written notice of such
third-party claim and (B) copies of all documents and information provided by
the third party to the indemnified party in connection with such claim. The
failure of the indemnified party to so notify or provide copies to the
indemnifying party shall not relieve the indemnifying party from any liability
to the indemnified party for any liability hereunder except to the extent that
such failure shall have prejudiced the defense of such third-party claim.
(ii) The indemnifying party shall have the right to
participate in the defense of such claim and at its option to assume the defense
thereof using counsel reasonably acceptable to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim, the indemnified party may continue to
participate in the defense of such claim, but, except as set forth in subsection
(iii) below, the indemnifying party shall not be liable to the indemnified party
under this Article X for any legal or other expenses subsequently incurred by
the indemnified party in connection with
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the defense of such claim, other than reasonable costs of investigation. If,
following its assumption of the defense of a claim pursuant to this Section
10.4(c), the indemnifying party believes that the claim is not indemnifiable
pursuant to Section 10.1 or Section 10.2, the indemnifying party shall promptly
tender back to the indemnified party the defense of such claim. If the
indemnifying party fails to assume or, if assumed, tenders back the defense of a
claim pursuant to this Section 10.4(c) and thereafter concludes that it wishes
to defend the claim, it shall be entitled to do so upon notice to the
indemnified party of its decision; provided, however, that any assumption of
defense pursuant to this sentence shall constitute an admission by the
indemnifying party that the claim is indemnifiable pursuant to Section 10.1 or
Section 10.2.
(iii) Notwithstanding the foregoing, if: (A) the employment
thereof is authorized by the indemnifying party in writing; (B) the indemnified
party shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or in addition to those
available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for the indemnified party to employ such counsel; or (C)
the indemnifying party has failed to assume defense of such claim within
forty-five (45) days after it receives written notice of such claim or to employ
counsel reasonably satisfactory to the indemnified party; the indemnified party
may notify the indemnifying party in writing that it elects to employ separate
counsel (which counsel shall be reasonably acceptable to the indemnifying party)
at the expense of the indemnifying party and the indemnifying party shall not
have the right to assume the defense of such claim, except as provided for by
the last sentence of Section 10.4(c)(ii). The indemnifying party shall not, in
connection with one claim or substantially similar claims in the same
jurisdiction arising out of the same or substantially similar facts, be liable
for the reasonable fees and expenses of more than one firm of attorneys, which
firm shall be designated in writing by the indemnified party. Nothing contained
in this Section 10.4(c) shall in any way restrict the indemnified party's
ability to defend a claim and, if such claim is otherwise indemnifiable pursuant
to the provisions of this Article X, to recover all costs associated with such
defense while the indemnifying party is considering whether to assume the
defense of a claim tendered to it.
(iv) Each indemnifying party and indemnified party shall use
commercially reasonable efforts to cooperate with the other in the defense of
such claim. The indemnifying party shall not be liable for the settlement of any
claim effected without its written consent, which consent shall not be
unreasonably withheld. No such claim shall be settled by the indemnifying party
without the prior written consent of the indemnified party. If a firm, written,
bona fide offer is made by the third party to settle or resolve any third party
claim and the indemnifying party proposes to accept such settlement and the
indemnified party refuses to consent to such settlement, then: (A) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for all further defense of such claim; (B) the maximum
liability of the indemnifying party relating to such claim shall be the amount
of the proposed settlement if the amount thereafter recovered from the
indemnified party is greater than the amount of the proposed settlement; and (C)
the indemnified party shall pay all attorneys' fees and legal costs and expenses
incurred after the rejection of such settlement, but if the amount thereafter
recovered by the third party from the indemnified party is less than the amount
of the proposed settlement, the indemnified party shall also be entitled to
reimbursement for such fees
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and costs up to a maximum equal to the difference between the amount recovered
by such third party and the amount of the proposed settlement.
ARTICLE XI
DISPUTE RESOLUTION MECHANISMS
11.1 Dispute . As used in this Agreement, "Dispute" shall: (a)
mean any post-closing dispute or disagreement between Xxxxxx and the
Representative concerning the interpretation of this Agreement, the validity of
this Agreement, any breach or alleged breach by any party under this Agreement
or any other matter relating in any way to this Agreement; and (b) exclude any
dispute or disagreement between Xxxxxx and the Representative concerning the
calculation of the Cash Amount or the Estimated Cash Amount, which shall be
resolved pursuant to the provisions of Section 2.6 of this Agreement;
11.2 Process . If a Dispute arises, the parties shall follow
the procedures specified in Sections 11.3, 11.4 and 11.5 of this Agreement.
11.3 Negotiations . The parties shall promptly attempt to
resolve any Dispute by negotiations between Xxxxxx and the Representative.
Either Xxxxxx or the Representative may give the other party written notice of
any Dispute not resolved in the normal course of business. Xxxxxx and the
Representative shall meet at a mutually acceptable time and place within ten
(10) calendar days after delivery of such notice, and thereafter as often as
they reasonably deem necessary, to exchange relevant information and to attempt
to resolve the Dispute. If the Dispute has not been resolved by these Persons
within thirty (30) calendar days of the disputing party's notice, or if the
parties fail to meet within such ten (10) calendar days, either Xxxxxx or the
Representative may initiate mediation as provided in Section 11.4 of this
Agreement. If a negotiator intends to be accompanied at a meeting by legal
counsel, the other negotiator shall be given at least three (3) business days'
notice of such intention and may also be accompanied by legal counsel.
11.4 Mediation . If the Dispute is not resolved by
negotiations pursuant to Section 11.3 of this Agreement, Xxxxxx and the
Representative shall attempt in good faith to resolve any such Dispute by
nonbinding mediation. Either Xxxxxx or the Representative may initiate a
nonbinding mediation proceeding by a request in writing to the other party (the
"Request"), and both parties will then be obligated to engage in a mediation.
The proceeding will be conducted in Milwaukee, Wisconsin in accordance with the
then current Center for Public Resources ("CPR") Model Procedure for Mediation
of Business Disputes, with the following exceptions:
(a) if the parties have not agreed within thirty (30)
calendar days of the Request on the selection of a mediator willing to serve,
CPR, upon the request of either Xxxxxx or the Representative, shall appoint a
member of the CPR Panels of Neutrals as the mediator; and
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(b) efforts to reach a settlement will continue until the
conclusion of the proceedings, which shall be deemed to occur upon the earliest
of the date that: (i) a written settlement is reached; or (ii) the mediator
concludes and informs the parties in writing that further efforts would not be
useful; or (iii) Xxxxxx and the Representative agree in writing that an impasse
has been reached; or (iv) is sixty (60) calendar days after the Request and none
of the events specified in Sections 11.4(b)(i), (ii) or (iii) have occurred. No
party may withdraw before the conclusion of the proceeding.
11.5 Submission to Adjudication . If a Dispute is not resolved
by negotiation pursuant to Section 11.3 of this Agreement or by mediation
pursuant to Section 11.4 of this Agreement within 100 calendar days after
initiation of the negotiation process pursuant to Section 11.3 of this
Agreement, such Dispute and any other claims arising out of or relating to this
Agreement may be heard, adjudicated and determined in an action or proceeding
filed in any state or federal court which has jurisdiction over the parties.
11.6 General .
(a) Provisional Remedies. At any time during the procedures
specified in Sections 11.3 and 11.4 of this Agreement, a party may seek a
preliminary injunction or other provisional judicial relief if in its judgment
such action is necessary to avoid irreparable damage or to preserve the status
quo. Despite such action, the parties will continue to participate in good faith
in the procedures specified in this Article XI of this Agreement.
(b) Tolling Statutes of Limitations. All applicable statutes
of limitation and defenses based upon the passage of time shall be tolled while
the procedures specified in this Article XI of this Agreement are pending. The
parties will take such action, if any, as is required to effectuate such
tolling.
(c) Performance to Continue. Each party is required to
continue to perform its obligations under this Agreement pending final
resolution of any Dispute.
(d) Extension of Deadlines. All deadlines specified in this
Article XI of this Agreement may be extended by mutual agreement between Xxxxxx
and the Representative.
(e) Enforcement. The parties regard the obligations in this
Article XI of this Agreement to constitute an essential provision of this
Agreement and one that is legally binding on them. In case of a violation of the
obligations in this Article XI of this Agreement by either Xxxxxx or the
Representative, the other party may bring an action to seek enforcement of such
obligations in any court of Law having jurisdiction over the parties.
(f) Costs. The parties shall pay: (i) their own costs, fees,
and expenses incurred in connection with the application of the provisions of
this Article XI of this Agreement; and (ii) fifty percent (50%) of the fees and
expenses of CPR and the mediator in connection with the application of the
provisions of Section 11.4 of this Agreement.
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(g) Replacement. If CPR is no longer in business or is
unable or refuses or declines to act or to continue to act under this Article XI
of this Agreement for any reason, then the functions specified in this Article
XI of this Agreement to be performed by CPR shall be performed by another Person
engaged in a business equivalent to that conducted by CPR as is agreed to by
Xxxxxx and the Representative (the "Replacement"). If Xxxxxx and the
Representative cannot agree on the identity of the Replacement within ten (10)
calendar days after a Request, the Replacement shall be selected by the Chief
Judge of the United States District Court for the Eastern District of Wisconsin
upon application. If a Replacement is selected by either means, this Article XI
shall be deemed appropriately amended to refer to such Replacement.
ARTICLE XII
TERMINATION; MISCELLANEOUS
12.1 Termination.
(a) This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the
Closing, as follows:
(i) by mutual written agreement of Xxxxxx and GPP;
(ii) by Xxxxxx if GPP or the Indemnifying Shareholder have
materially breached any of their covenants contained in this Agreement and have
not cured the breach within thirty (30) days following notice thereof by Xxxxxx;
(iii) by GPP if Xxxxxx has materially breached any of its
covenants contained in this Agreement and has not cured the breach within thirty
(30) days following notice thereof given by GPP; and
(iv) by Xxxxxx or GPP if the Closing has not occurred on or
before June 30, 2001.
(b) After the Closing, this Agreement may be terminated by
the mutual agreement of Xxxxxx and the Representative.
12.2 Rights Surviving Termination; Waiver. If this Agreement
is terminated pursuant to Section 12.1(a) of this Agreement, all further
obligations of the parties under or pursuant to this Agreement shall terminate
other than the obligations of the parties contained in Sections 3.6, 12.2, 12.5,
12.12 (but only as to other surviving rights and obligations) and 12.17 of this
Agreement, which shall survive any such termination, and each party shall be
entitled to such remedies as may be available to it in law or equity with
respect to a breach by any other party of this Agreement, including without
limitation the remedies described in Section 12.12, prior to such termination.
If any of the conditions set forth in Article VIII of this Agreement have not
been satisfied, Xxxxxx may nevertheless elect to proceed with the consummation
of the
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transactions contemplated by this Agreement and if any of the conditions set
forth in Article IX of this Agreement have not been satisfied, GPP may
nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement.
12.3 Survival of Representations and Warranties. All
representations and warranties of the parties contained in this Agreement or
made pursuant to this Agreement shall survive the Closing Date and the Effective
Time of Merger and the consummation of the transactions contemplated by this
Agreement and shall terminate and be of no further force and effect following
the date which is eighteen (18) months after the Effective Time of Merger, other
than with respect to the representations and warranties of Xxxxxx contained in
Sections 6.2 and 6.4, of GPP contained in Sections 4.1, 4.2, 4.3, and 4.18 and
of the Indemnifying Shareholder contained in Sections 5.2 and 5.4, which shall
survive indefinitely, with respect to the representations and warranties of GPP
contained in Section 4.8, which shall survive until the expiration of the
applicable statute of limitations plus 60 days, and with respect to the
representations and warranties of GPP contained in Section 4.16, which shall
survive for a period of five (5) years from the Effective Time of Merger. The
termination of the representations and warranties contained in the immediately
preceding sentence shall not affect a party's right to prosecute to conclusion
any claim made by such party prior to such time.
12.4 Entire Agreement; Amendment. This Agreement and the
documents referred to in this Agreement and required to be delivered pursuant to
this Agreement constitute the entire agreement among the parties pertaining to
the subject matter of this Agreement supersede: (a) the Letter of Intent dated
as of March 1, 2001 by and among Xxxxxx, GPP and the Indemnifying Shareholder;
and (b) all other prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or written. There are
no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement, except as specifically set
forth in this Agreement. No amendment, supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
parties; provided that following the Closing the signature of the Representative
shall be required in lieu of the signature of GPP. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
12.5 Expenses. Whether or not the transactions contemplated by
this Agreement are consummated and subject to any sharing arrangements
specifically set forth in this Agreement, each of the parties to this Agreement
shall pay the fees and expenses of its respective counsel, accountants, brokers,
consultants, investment bankers and other experts incident to the negotiation
and preparation of this Agreement and consummation of the transactions
contemplated by this Agreement. For purposes hereof, all such fees and expenses
of GPP and the Affiliates shall be Transaction Costs to the extent such fees and
expenses have been incurred but have not been paid as of the Effective Time of
Merger.
12.6 Governing Law. This Agreement shall be construed and
interpreted according to the internal Laws of the State of Wisconsin without
regard to the conflicts of Laws
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76
principles thereof, except for Sections 2.1, 2.2, 2.3 and 2.4 hereof, which
shall be construed and interpreted according to the Laws of the State of
Delaware.
12.7 Assignment. This Agreement shall not be assigned by any
party except: (a) with the prior written consent of the other parties; or (b) by
Xxxxxx, to one or more direct or indirect wholly owned Subsidiaries of Xxxxxx or
(in connection with or following the Closing) to any lender to Xxxxxx as
security for Indebtedness of Xxxxxx, provided that Xxxxxx shall remain liable
for the performance of its obligations under this Agreement.
12.8 Notices. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
If to GPP: Generac Portable Products, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Fax No: 000-000-0000
with a copy (which shall not X.X. Xxxxxx Partners
constitute notice to GPP) to: 1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Fax No: 000-000-0000
If to Indemnifying Shareholder X.X. Xxxxxx Partners
or the Representative: 0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Fax No: 000-000-0000
with a copy (which shall not Xxxxxxx Xxxxxxx & Xxxxxxxx
constitute notice to the 000 Xxxxxxxxx Xxxxxx
Indemnifying Shareholder) to: Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax No: 000-000-0000
If to Briggs: Xxxxxx & Xxxxxxxx Corporation
Attention: Xxxx X. Xxxxxx
00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: 000-000-0000
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with a copy (which shall not Xxxxxxx & Xxxxx LLP
constitute notice to Briggs), Attention: Xxxxxxx X. Xxxxx
prior to Closing, to: 000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: 000-000-0000
with a copy (which shall not Xxxxxx & Xxxxxxxx Corporation
constitute notice to Briggs), Attention: Xxxxxx Xxxxx
following the Closing, to: 00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: 000-000-0000
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this paragraph, such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this paragraph, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Delivery
to the Representative shall constitute delivery to all Shareholders, including
the Indemnifying Shareholder. Any Person may change its address for the purposes
of this Agreement by giving notice thereof in accordance with this Section.
12.9 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The Table
of Contents and Article and Section headings in this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
12.10 Interpretation. Unless the context requires otherwise:
(a) all words used in this Agreement in the singular number shall extend to and
include the plural; (b) all words in the plural number shall extend to and
include the singular; (c) all words in any gender shall extend to and include
all genders; (d) use of the word "include" or "including" shall be deemed to
mean "including without limitation;" and (e) reference herein to "Sections,"
"Articles," "Exhibits," or the "Disclosure Schedule" shall refer to the
Sections, Articles, Exhibits and Disclosure Schedule included in or attached to
this Agreement.
12.11 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, shall not be affected thereby unless
such invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
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78
12.12 Specific Performance. The parties agree that the assets
and business of GPP and the Affiliates as going concerns constitute unique
property and that in the event of a breach of this Agreement by any party, money
damages may be inadequate and the non-breaching party may have no adequate
remedy at law. Accordingly, the parties agree that such non-breaching party
shall have the right, in addition to any other rights and remedies existing in
their favor at law or in equity, to enforce their rights and the other party's
obligations hereunder not only by an action or actions for damages but also by
an action or actions for specific performance, injunctive and/or other equitable
relief (without posting of bond or other security).
12.13 No Reliance. Except for the parties to this Agreement
and except for the persons referred to in Section 3.15 and any assignees
permitted by Section 12.7 of this Agreement: (a) no Person is entitled to rely
on any of the representations, warranties and agreements of the parties
contained in this Agreement; and (b) the parties assume no liability to any
Person because of any reliance on the representations, warranties and agreements
of the parties contained in this Agreement.
12.14 Exhibits and Disclosure Schedule. If a document or
matter is disclosed in the Disclosure Schedule, it shall be deemed to be
disclosed for purposes of all Sections of this Agreement which refer to the
Disclosure Schedule without the necessity of specific repetition or
cross-reference so long as its relevance to such Section is obvious. All
capitalized terms used in any Exhibit to this Agreement or in the Disclosure
Schedule shall have the definitions specified in this Agreement.
12.15 No Strict Construction. The language used in this
Agreement will be deemed to be the language jointly chosen by the parties to
express their mutual intent.
12.16 Third Party Beneficiaries . This Agreement is for the
sole benefit of the parties to this Agreement and nothing expressed or implied
in this Agreement shall give or be construed to give any Person, other than the
parties, any legal or equitable rights hereunder.
12.17 Waiver of Jury Trial . The parties hereby irrevocably
waive any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated by this
Agreement.
12.18 Certain Indemnification Matters. Notwithstanding
anything to the contrary in this Agreement, no stockholder of GPP who is a party
to the Stockholders Agreement dated as of July 9, 1998 among GPP, the
Indemnifying Shareholder and other stockholders of GPP, other than the
Indemnifying Shareholder, shall be required by this Agreement to make any
payment pursuant to Sections 2.6(h)(i), 3.12(c), 3.13 or 3.14 or this Article X
to the extent Section 8 of such Stockholders Agreement has been invoked and any
such payment hereunder is inconsistent with Section 8 of such Stockholders
Agreement. The foregoing sentence, however, shall not be applicable to a
stockholder of GPP if such stockholder consents to the making of payments
pursuant to Sections 2.6(h)(i), 3.12(c), 3.13 or 3.14 or this Article X.
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79
IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
XXXXXX & XXXXXXXX CORPORATION
By:/s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, President
GPP MERGER CORPORATION
By:/s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, President
GENERAC PORTABLE PRODUCTS, INC.
By:/s/ Xxxxxxxx X. Xxxxxx, Xx.
---------------------------------------
Xxxxxxxx X. Xxxxxx, Xx., President
and Chief Executive Officer
THE BEACON GROUP III -- FOCUS VALUE FUND, L.P.
By: BEACON FOCUS VALUE FUND
INVESTORS, LLC, General Partner
By:/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx
Managing Director
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Acknowledged by the Representative:
THE BEACON GROUP III -- FOCUS VALUE FUND, L.P.
By: BEACON FOCUS VALUE FUND
INVESTORS, LLC, General Partner
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Title: Managing Director
----------------------------------------
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81
EXHIBIT 1
XXXXXX CLOSING CERTIFICATE
I, ___________________________, hereby certify that:
1. I am the duly elected, qualified and acting ____________ of Xxxxxx &
Xxxxxxxx Corporation, a Wisconsin corporation ("Xxxxxx").
2. I am familiar with the terms of the Agreement and Plan of Merger
dated as of March ___, 2001 by and among Briggs, GPP Merger Corporation, a
Delaware corporation and wholly owned subsidiary of Briggs ("Acquisition"),
Generac Portable Products, Inc., a Delaware corporation, and The Beacon Group
III-Focus Value Fund, L.P., a Delaware limited partnership (the "Merger
Agreement").
3. The representations and warranties made by Xxxxxx in Section 6.2 of
the Merger Agreement are true and correct in all respects on the date hereof
(unless such representations and warranties relate to a specific earlier date,
in which case such representations and warranties remain true and correct in all
respects as of such earlier date) with the same force and effect as though said
representations and warranties had been made on the date hereof; and all of the
other representations and warranties made by Xxxxxx in Article VI of the Merger
Agreement are true and correct in all material respects on the date hereof
(unless such representations and warranties relate to a specific earlier date,
in which case such representations and warranties remain true and correct in all
material respects as of such earlier date) with the same force and effect as
though said representations and warranties had been made on the date hereof.
4. Xxxxxx and Acquisition have performed and complied in all material
respects with all of their respective obligations under the Merger Agreement
which are to be performed or complied with by them prior to or on the date
hereof.
IN WITNESS WHEREOF, I have executed this Closing Certificate in my
official capacity as of this ___ day of __________, 2001.
XXXXXX & XXXXXXXX CORPORATION
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
82
EXHIBIT 2
FORM OF BRIGGS COUNSEL OPINION
____________, 2001
Generac Portable Products, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to Xxxxxx & Xxxxxxxx Corporation, a Wisconsin
corporation ("Xxxxxx"), and to GPP Merger Corporation, a Delaware corporation
and wholly owned subsidiary of Xxxxxx ("Acquisition"), in connection with the
negotiation, preparation, execution and delivery of an Agreement and Plan of
Merger dated as of March ___, 2001 (the "Agreement") by and among Briggs,
Acquisition, Generac Portable Products, Inc., a Delaware Corporation ("GPP"),
and The Beacon Group III-Focus Value Fund, L.P. Among other things, the
Agreement provides for the merger of Acquisition with and into GPP. We are
furnishing this opinion at the request of Xxxxxx and Acquisition pursuant to
Section 9.9(c) of the Agreement. Capitalized terms not otherwise defined herein
have the meanings assigned to them in the Agreement.
In rendering the opinions expressed in this opinion letter, we have
examined the Agreement together with the other documents and agreements being
executed and delivered by Xxxxxx or Acquisition pursuant to the Agreement, as
well as such other corporate records, certificates, instruments and other
documents of Xxxxxx and Acquisition, and such questions and matters of Law, as
we have considered necessary and appropriate for purposes of such opinions. In
giving the various opinions set forth below, we have, with respect to factual
matters, relied on certificates and similar documents furnished by public
officials and by officers of Xxxxxx and Acquisition, and on the representations
and warranties of Xxxxxx made in the Agreement.
We have assumed that: (i) all certificates or comparable documents of
public officials examined by us are accurate; (ii) each document submitted to us
as an original is authentic and complete; (iii) each document submitted to us as
a certified or photostatic copy conforms to an authentic original; (iv) each
party (other than Xxxxxx and Acquisition) to the Agreement and to the other
documents required thereby has duly and validly executed and delivered the
Agreement and such other documents to which it is a party; (v) all signatures
(other than the signatures on behalf of Xxxxxx and Acquisition) on documents
reviewed by us are genuine; (vi) each person executing the Agreement and the
other documents required thereby on behalf of a party (other than on behalf of
Xxxxxx and Acquisition) is authorized to do so; (vii) the obligations of each
party (other than Xxxxxx or Acquisition) under the Agreement and the other
documents required thereby are such party's legal, valid and binding
obligations, enforceable in accordance with the terms of the Agreement and such
other documents; (viii) the Agreement accurately describes and
83
Generac Portable Products, Inc.
_________________________, 2001
Page 2
contains the mutual understanding of the parties; and (ix) there are no oral or
written statements or agreements that purport to modify, amend or vary any of
the terms of the Agreement and such other documents.
Based upon the foregoing, and subject to the qualifications,
assumptions and limitations set forth herein, it is our opinion that:
1. Xxxxxx is a corporation validly existing and in active status
(meaning it has filed its annual report for the most recently completed report
year and has not filed articles of dissolution) under the Law of the State of
Wisconsin, and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to conduct its business as, to the best of
our knowledge, it is now conducting such business. Acquisition is a corporation
validly existing and in good standing under the Law of the State of Delaware and
has the requisite corporate power and authority to own, lease and operate its
assets and properties and to conduct its business as, to the best of our
knowledge, it is now conducting such business.
2. Each of Xxxxxx and Acquisition has the necessary corporate power and
authority to enter into, execute and deliver the Agreement and the documents
required thereby to which each is a party, to perform its respective obligations
thereunder and to consummate the transactions contemplated thereby.
3. The execution and delivery by each of Xxxxxx and Acquisition of the
Agreement and the documents required thereby to which Xxxxxx or Acquisition is a
party, and the consummation by Xxxxxx and Acquisition of the transactions
contemplated thereby, have been duly authorized by all necessary corporate
action on the part of Xxxxxx and Acquisition, as the case may be.
4. The Agreement and the documents required thereby to which Xxxxxx or
Acquisition is a party have been duly executed and delivered by Xxxxxx or
Acquisition, as the case may be, and constitute legal, valid and binding
obligations of Xxxxxx and Acquisition, as the case may be, enforceable against
each of them in accordance with their respective terms.
5. The execution and delivery of the Agreement by Xxxxxx and
Acquisition and the documents required thereby to which Xxxxxx or Acquisition is
a party do not, and the performance of the Agreement by Xxxxxx and Acquisition
will not, conflict with or violate: (a) the Articles of Incorporation or Bylaws
of Xxxxxx; (b) the Certificate of Incorporation or Bylaws of Acquisition; or (c)
to our knowledge any applicable Law.
The opinion as to enforceability of the Agreement and the other
documents required thereby is subject to the limitations set forth in the
General Qualifications stated in the Legal
84
Generac Portable Products, Inc.
_________________________, 2001
Page 3
Opinion Accord of the ABA Section of Business Law (1991), which Qualifications
are attached hereto as Schedule 1.
We are attorneys licensed to practice law in the State of Wisconsin.
The opinions expressed herein are specifically limited to the present internal
laws of the State of Wisconsin, the federal laws of the United States, and the
Delaware General Corporation Law (each, a "Law" and collectively, the "Laws").
The opinions expressed herein are given as of the date of this letter
and are intended to apply only to those facts and circumstances that exist as of
the date hereof. We assume no obligation or responsibility to update or
supplement this opinion to reflect any facts or circumstances occurring after
the date hereof that would alter the opinions contained herein.
Statements made herein to "our knowledge" or with respect to matters
"known to us" are based solely on information actually known to those attorneys
currently practicing with this firm and engaged in the representation of Xxxxxx
and Acquisition in connection with the transactions contemplated by the
Agreement. Except as otherwise expressly indicated, we have not undertaken any
independent investigation of factual matters.
The opinions set forth above are delivered to you in connection with
the transactions described in the Agreement. This opinion letter is rendered
solely for your information and assistance in connection with the Closing under
the Agreement as of the date hereof, and may not be quoted in whole or in part
or otherwise referred to, nor filed with or furnished to or relied upon by any
governmental agency or person or entity or for any other purpose without our
prior written consent.
Very truly yours,
[DRAFT]
XXXXXXX & XXXXX LLP
85
SCHEDULE 1
QUALIFICATIONS
1. The General Qualifications. "General Qualifications" means the
Bankruptcy and Insolvency Exception, the Equitable Principles Limitation and any
Other Common Qualifications that apply to the particular opinion in question. If
the General Qualifications are to apply to an opinion in addition to the
Remedies Opinion, the Opinion Letter must specifically state that they apply to
that opinion.
2. Bankruptcy and Insolvency Exception. An opinion to which this
exception applies is subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally. This exception includes:
(a) the Federal Bankruptcy Code and thus comprehends, among
others, matters of turn-over, automatic stay, avoiding powers,
fraudulent transfer, preference, discharge, conversion of a
non-recourse obligation into a recourse claim, limitations on
ipso facto and anti-assignment clauses and the coverage of
pre-petition security agreements applicable to property
acquired after the petition is filed;
(b) all other Federal and state bankruptcy, insolvency,
reorganization, receivership, moratorium, arrangement and
assignment for the benefit of creditors laws that affect the
rights and remedies of creditors generally (not just creditors
of specific types of debtors);
(c) all other Federal bankruptcy, insolvency, reorganization,
receivership, moratorium, arrangement and assignment for the
benefit of creditors laws that have reference to or affect
generally only creditors of specific types of debtors and
state laws of like character affecting generally only
creditors of financial institutions and insurance companies;
(d) state fraudulent transfer and conveyance laws; and
(e) judicially developed doctrines relevant to any of the
foregoing laws, such as substantive consolidation of entities.
3. Equitable Principles Limitation. An opinion to which this limitation
applies is subject to the effect of general principles of equity, whether
applied by a court of law or equity. This limitation includes principles:
86
(a) governing the availability of specific performance, injunctive
relief or other equitable remedies, which generally place the
award of such remedies, subject to certain guidelines, in the
discretion of the court to which application for such relief
is made;
(b) affording equitable defenses (e.g., waiver, laches and
estoppel) against a party seeking enforcement;
(c) requiring good faith and fair dealing in the performance and
enforcement of a contract by the party seeking its
enforcement;
(d) requiring reasonableness in the performance and enforcement of
an agreement by the party seeking enforcement of the contract;
(e) requiring consideration of the materiality of (i) the Client's
breach and (ii) the consequences of the breach to the party
seeking enforcement;
(f) requiring consideration of the impracticability or
impossibility of performances at the time of attempted
enforcement; and
(g) affording defenses based upon the unconscionability of the
enforcing party's conduct after the parties have entered into
the contract.
4. Other Common Qualifications. To the extent the applicable law of the
relevant jurisdiction applies any of the following rules to one or more of the
provisions of a contract covered by an opinion expressed in this opinion letter,
that opinion is subject to the effect of generally applicable rules of law that:
(a) limit or affect the enforcement of provisions of a contract
that purport to require waiver of the obligations of good
faith, fair dealing, diligence and reasonableness;
(b) provide that forum selection clauses in contracts are not
necessarily binding on the court(s) in the forum selected;
(c) limit the availability of a remedy under certain circumstances
where another remedy has been elected;
(d) limit the right of a credit to use force or cause a breach of
the peace in enforcing rights;
(e) relate to the sale or disposition of collateral or the
requirements of a commercially reasonable sale;
87
(f) limit the enforceability of provisions releasing, exculpating
or exempting a party from, or requiring indemnification of a
party for, liability for its own action or inaction, to the
extent the action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful conduct;
(g) may, where less than all of a contract may be unenforceable,
limit the enforceability of the balance of the contract to
circumstances in which the unenforceable portion is not an
essential part of the agreed exchange;
(h) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees
and other costs;
(i) may, in the absence of a waiver or consent, discharge a
guarantor to the extent that: (i) action by a creditor impairs
the value of collateral securing guaranteed debt to the
detriment of the guarantor, or (ii) guaranteed debt is
materially modified; and
(j) may permit a party who has materially failed to render or
offer performance required by the contract to cure that
failure unless: (i) permitting a cure would unreasonably
hinder the aggrieved party from making substitute arrangements
for performance, or (ii) it is important in the circumstances
to the aggrieved party that performance occur by the date
stated in the contract.
88
EXHIBIT 3
CERTIFICATE OF MERGER
OF
GPP MERGER CORPORATION
INTO
GENERAC PORTABLE PRODUCTS, INC.
The undersigned corporation, pursuant to Section 251 of the Delaware
General Corporation Law, for the purpose of merging GPP Merger Corporation, a
Delaware corporation ("GPP"), into Generac Portable Products, Inc., a Delaware
corporation (the "Surviving Corporation"), which is the surviving corporation in
such merger, (together hereinafter the "Constituent Corporations") hereby
certifies the following:
1. An Agreement and Plan of Merger by and between GPP and the Surviving
Corporation has been approved, adopted, certified, executed and acknowledged by
each of the Constituent Corporations in accordance with Section 251 of the
Delaware General Corporation Law. The Agreement and Plan of Merger was adopted
by a majority of the holders of all of the outstanding stock of each of the
Constituent Corporations entitled to vote, in accordance with the provisions of
Section 228 of the Delaware General Corporation Law.
2. The name of the Surviving Corporation is Generac Portable Products,
Inc., and it shall be governed by the laws of the State of Delaware. The
Certificate of Incorporation of the Surviving Corporation shall not be affected
by the Merger.
3. The executed Agreement and Plan of Merger is on file at the
principal place of business of the Surviving Corporation, Xxx Xxxxxxx Xxx,
Xxxxxxxxx, XX 00000.
4. A copy of the Agreement and Plan of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of either
of the Constituent Corporations.
5. The effective date and time of the merger shall be the time of
receipt of this Certificate of Merger by the Delaware Secretary of State.
89
IN WITNESS WHEREOF, the Surviving Corporation has caused this
Certificate of Merger to be executed as of the ____ day of __________, 2001.
GENERAC PORTABLE PRODUCTS, INC.,
a Delaware corporation
By: _____________________________
__________________, President
2
90
EXHIBIT 4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of
____________, 2001, by and among Xxxxxx & Xxxxxxxx Corporation, a Wisconsin
corporation ("Xxxxxx"), The Beacon Group III-Focus Value Fund, L.P., in its
capacity as the representative of the Shareholders (as defined in the Merger
Agreement) (the "Representative" and, in its individual capacity, the
"Indemnifying Shareholder"), and ___________________________ (the "Escrow
Agent").
RECITALS
X. Xxxxxx, GPP Merger Corporation, Generac Portable Products, Inc., a
Delaware corporation ("GPP"), and the Indemnifying Shareholder are parties to an
Agreement and Plan of Merger dated ______________, 2001 ("Merger Agreement").
B. Pursuant to the Merger Agreement, the parties have agreed to enter
into this Agreement in connection with which Xxxxxx shall deposit
__________________ Dollars ($__________) (the "Escrow Principal") with the
Escrow Agent.
C. The parties desire that the Escrow Funds (as defined below) shall
remain in escrow to secure certain continuing obligations of the Shareholders
under Sections 2.6, 3.12, 3.13, and 3.14 and Article X of the Merger Agreement
on the terms set forth herein; and
D. The parties desire that the Escrow Agent serve as escrow agent on
the terms and conditions provided in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants of the parties
set forth in this Agreement and the Merger Agreement, Xxxxxx, the
Representative, the Indemnifying Shareholder and the Escrow Agent hereby agree
as follows:
1. Appointment of the Escrow Agent. Xxxxxx and the Representative, on
behalf of the Shareholders, hereby appoint the Escrow Agent as their agent and
custodian to hold, invest and disburse the Escrow Principal and earnings thereon
("Escrow Interest") in accordance with the terms of this Agreement. The Escrow
Principal and Escrow Interest is herein referred to collectively as the "Escrow
Funds."
2. Delivery of the Escrow Principal to the Escrow Agent. Pursuant to
Section 2.5(a)(ii) of the Merger Agreement, Xxxxxx has deposited the Escrow
Principal with the Escrow Agent and the Escrow Agent acknowledges receipt of
such funds. The Escrow Agent shall hold the Escrow Principal and all Escrow
Interest on behalf of the parties under the terms of this Agreement and shall
distribute the Escrow Principal and Escrow Interest in accordance with Section 5
hereof.
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3. Investment of Escrow Funds. The Escrow Agent may invest and reinvest
all cash funds from time to time comprising the Escrow Funds in (i) bonds or
other obligations issued or guaranteed by the government of the United States of
America and not having maturities of greater than thirty (30) days; or (ii)
demand or time deposits in, or certificates of deposit of, a bank or trust
company incorporated under the laws of the United States of America, any state
thereof or the District of Columbia having a net worth in excess of $500
million, and having maturities not greater than thirty (30) days; or (iii) the
_________________ money market fund or (iv) such other investments as Xxxxxx and
the Representative shall approve in writing. In the absence of any direction,
the Escrow Agent shall invest the Escrow Funds in accordance with Subsection
(iii) above.
4. Delivery of Escrow Funds by Escrow Agent. The Escrow Agent shall
hold the Escrow Funds until instructed or otherwise required to deliver the same
or any portion thereof in accordance with Section 5 hereof.
5. Distributions. The Escrow Agent shall disburse the Escrow Funds only
pursuant to and in accordance with the following procedure:
(a) Xxxxxx may at any time and on more than one occasion give
written notice to the Representative and the Escrow Agent that Xxxxxx is
asserting one or more claims for payment under Sections 2.6, 3.12, 3.13, 3.14
and Article X of the Merger Agreement (a "Notice of Claim"). If known, Xxxxxx
shall include the dollar amount of such claims in the Notice of Claim. If the
amount of such claims are not known at the time of the delivery of the Notice of
Claim, Xxxxxx shall notify the Representative and the Escrow Agent of the amount
of such claims when they are known.
(b) If the Escrow Agent and Xxxxxx shall not have received from
the Representative prior to the thirtieth (30th) calendar day following the date
of delivery of any Notice of Claim, a written notice from the Representative of
the type contemplated by Section 5(c) of this Agreement, on the thirty-first
(31st) day or, if not a business day, on the next succeeding business day, the
Escrow Agent shall withdraw from the Escrow Funds and pay to Xxxxxx by certified
check or wire transfer of immediately available funds to an account designated
by Xxxxxx an amount equal to the lesser of (i) the aggregate of the claims
asserted in the Notice of Claim or (ii) the balance in the Escrow Funds on the
date of payment; provided, that in the event the amount of such claims are not
then known, such payment shall be made to Xxxxxx if within thirty (30) calendar
days after Xxxxxx notifies the Representative and the Escrow Agent of the amount
of such claim, Xxxxxx and the Escrow Agent shall not have received from the
Representative a written notice of the type contemplated by Section 5(c) of this
Agreement to the effect that the Representative disputes the amount of one or
more of the claims in the Notice of Claims. Any claim set forth in a Notice of
Claim that is not specifically disputed in a written notice from the
Representative of the type contemplated by Section 5(c) of this Agreement shall
be paid by the Escrow Agent in accordance with the preceding sentences even
though a notice of dispute might have been received by the Escrow Agent with
respect to other claims set forth in Xxxxxx'x Notice of Claim.
(c) The Representative may deliver to the Escrow Agent and Xxxxxx,
prior to the thirtieth (30th) calendar day following the date of delivery of the
above Notice of
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92
Claim, a written notice to the effect that the Representative disputes the fact
or amount of any one or more of the claims asserted in Xxxxxx'x Notice of Claim.
If such notice of dispute from the Representative is delivered to the Escrow
Agent and Xxxxxx within such time period, then the Escrow Agent shall refrain
from making any disbursement from the Escrow Funds of the amount or amounts
specifically disputed in the notice of dispute from the Representative until
directed to do so by: (i) a written authorization signed by the Representative
and Xxxxxx describing the resolution of the matter by such parties, which
authorization shall set forth the amount of the Escrow Funds to be distributed
to Xxxxxx, or (ii) a certified copy of a final judgment of a court of competent
jurisdiction, provided, however, that a certified copy of a final judgment shall
serve as a valid determination only if the time for appeal has expired and no
appeal has been perfected or all appeals have been exhausted or no right of
appeal exists. Any distribution of Escrow Funds to Xxxxxx in accordance with
this Section 5(c) shall be made by certified check or wire transfer of
immediately available funds to an account designated by Xxxxxx.
(d) On September 30, 2002 (the "Termination Date") all Escrow
Funds in excess of that which the Escrow Agent is or may be required to pay in
respect of claims asserted in any Notice of Claim which has not theretofore been
paid or otherwise resolved, shall be distributed in accordance with instructions
delivered to the Escrow Agent by the Representative; provided, that in the event
a Notice of Claim has been asserted and the amount of such claim is not known,
no Escrow Funds shall be released except in accordance with the following
sentence. Any Escrow Funds which are not distributed in accordance with the
preceding sentence shall be retained by the Escrow Agent until such time as any
and all such claims of Xxxxxx which have not been paid or otherwise resolved on
or prior to the Termination Date shall have been paid or otherwise resolved in
accordance with this Section 5, at which time all of the remaining Escrow Funds
then held by the Escrow Agent shall be distributed in accordance with
instructions delivered to the Escrow Agent by the Representative.
(e) No release of Escrow Funds hereunder shall limit Xxxxxx'x
right to seek payment from the Shareholders, which shall only be limited in the
manner set forth in the Merger Agreement.
6. Duties of the Escrow Agent. The Escrow Agent hereby accepts its
obligations under this Agreement, and represents that it has the legal power and
authority to enter into this Agreement and perform its obligations hereunder.
The Escrow Agent further agrees that all Escrow Funds held by the Escrow Agent
hereunder shall be segregated from all other property held by the Escrow Agent
and shall be identified as being held in connection with this Agreement.
Segregation may be accomplished by appropriate identification on the books and
records of the Escrow Agent. The Escrow Agent agrees that its documents and
records with respect to the transactions contemplated hereby will be available
for examination by authorized representatives of Xxxxxx and by the
Representative.
7. Conditions to Responsibilities of Escrow Agent. Acceptance by the
Escrow Agent of its duties under this Agreement is subject to the following
terms and conditions, which all parties to this Agreement hereby agree shall
define the rights, duties and immunities of the Escrow Agent:
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(a) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement, and the Escrow
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement. [EXCEPT FOR THE
SERVICES IT [WILL/MAY] RENDER AS THE PAYING AGENT,] the Escrow Agent shall not
have any duty or responsibility for or with respect to the Merger Agreement or
any related undertaking and shall in no way be bound or obligated by the terms
thereof.
(b) The Escrow Agent shall not be responsible for any failure or
inability of Xxxxxx, GPP, the Representative or a Shareholder to comply with any
of the provisions of any other agreement to which they may be parties.
(c) Xxxxxx and the Indemnifying Shareholder shall, jointly and
severally, reimburse and indemnify the Escrow Agent for, and hold it harmless
against, any loss, liability or expense, including but not limited to attorneys'
fees and disbursements arising out of or in connection with its acceptance of,
or the performance of its duties and obligations under, this Agreement or its
defending against any claim or liability arising out of or relating to this
Agreement, other than claims, losses, expenses or liabilities established to
have arisen out of the negligence or willful misconduct of the Escrow Agent. Any
claim against the Indemnifying Shareholder under this Section 7(c) shall first
be paid out of the Escrow Interest and to the extent Escrow Interest is not
available therefor the Indemnifying Shareholder shall be responsible for any
additional amounts due; provided that nothing in this sentence shall prevent the
Indemnifying Shareholder from seeking contribution from the other Shareholders
for such amounts.
(d) The Escrow Agent shall be fully protected in acting on and
relying upon any written notice, direction, request, waiver, consent, receipt or
other paper or document which the Escrow Agent in good faith believes to be
genuine and to have been signed or presented by the proper party or parties.
(e) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith or
for any mistake, in fact or law, or for anything else which it may do or refrain
from doing in connection herewith, except for its own negligence or willful
misconduct.
(f) The Escrow Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the provisions
of this Agreement or its duties hereunder, and it shall incur no liability and
shall be fully protected in respect of any action taken, omitted or suffered by
it in good faith in accordance with the advice of such counsel.
(g) In the event of any dispute hereunder, the Escrow Agent shall
have the right (but shall not be obligated) to pay into court the entire balance
of Escrow Funds and thereafter be absolved of any further duty or obligation
hereunder with respect to the Escrow Funds.
8. Compensation. The Escrow Agent shall be paid a fee of $_______ for
its services to be rendered hereunder and shall be reimbursed for all reasonable
out-of-pocket
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94
expenses incurred by it in connection with the performance of its duties
hereunder. Xxxxxx shall be responsible for fifty percent (50%) of such fees and
expenses and the Shareholders shall be responsible for fifty percent (50%) of
such fees and expenses. The Shareholders' portion of such fees and expenses
shall be paid first from the Escrow Interest and to Escrow Interest is not
available therefor the Indemnifying Shareholder shall be responsible for any
additional amounts due hereunder; provided that nothing in this sentence shall
prevent the Indemnifying Shareholder from seeking contribution from the other
Shareholders for such amounts.
9. Resignation of the Escrow Agent; Appointment of Successor. The
Escrow Agent acting at any time hereunder may resign at any time by giving ten
days' prior written notice of resignation to Xxxxxx and the Representative, such
resignation to be effective on the date specified in such notice. In addition,
Xxxxxx and the Representative may jointly cause the removal of the Escrow Agent
at any time upon the giving of ten days' written notice. In either event Xxxxxx
and the Representative shall appoint as successor Escrow Agent a bank or trust
company mutually satisfactory to them by a written instrument delivered to each
of the retiring Escrow Agent and the successor Escrow Agent, and upon such
appointment and its acceptance thereof, the successor Escrow Agent shall succeed
to all the rights and obligations of the retiring Escrow Agent as of the
effective date of resignation or removal as though it had been originally named
herein, the retiring Escrow Agent shall be discharged from all duties and
obligations thereafter arising or accruing hereunder, and the retiring Escrow
Agent shall duly transfer and deliver the Escrow Funds to the successor Escrow
Agent. After any retiring Escrow Agent's resignation or removal hereunder, the
provisions of this Agreement shall continue to apply as to any actions taken,
omitted or suffered by it while it was the Escrow Agent hereunder.
10. Amendment. This Agreement may be amended or terminated only by a
written agreement signed by each of the Escrow Agent, Xxxxxx and the
Representative.
11. Notices. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
If to Briggs: Xxxxxx & Xxxxxxxx Corporation
Attn: Xxxx X. Xxxxxx
00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
With a copy to: Xxxxxxx & Xxxxx LLP
Attn: Xxxxxxx X. Xxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
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And to: Xxxxxx & Xxxxxxxx Corporation
Attn: Xxxxxx Xxxxx
00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
If to the Representative: The Beacon Group III-Focus Value
Funds, L.P.
Attn: Xxxx Xxxxxxxxx
X.X. Xxxxxx Partners
1221 Avenue of the Xxxxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
Atttn: Xxxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
If to the Escrow Agent: __________________________
__________________________
__________________________
__________________________
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Delivery to the Representative shall constitute delivery to all
Shareholders. Any person may change its address for the purposes of this
agreement by giving notice thereof in accordance with this Section.
12. Governing Law. This Agreement is being delivered and is intended to
be performed in the State of Wisconsin and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Wisconsin.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, written and oral. This
Agreement may not be assigned by any party except: (a) with the prior written
consent of the other parties; or (b) by Xxxxxx to one or more direct or indirect
wholly owned subsidiaries of Xxxxxx or to any lender to Xxxxxx, in each case
consistent with the assignment provisions of the Merger Agreement and provided
Xxxxxx has similarly assigned its rights and obligations pursuant to the Merger
Agreement to such
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96
subsidiary or lender, and provided further in each case that Xxxxxx shall remain
liable for the performance of its obligations under this Agreement.
14. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
15. Counterparts. This agreement may be executed in several
counterparts, each of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXX & XXXXXXXX CORPORATION
By:_________________________________
Title:______________________________
THE BEACON GROUP III-FOCUS VALUE
FUND, L.P., as the Representative
By: BEACON FOCUS VALUE FUND
INVESTORS, LLC
General Partner
By: ________________________________
Xxxx Xxxxxxxxx
Title: _____________________________
[ESCROW AGENT]
By:_________________________________
Title:______________________________
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98
EXHIBIT 5
GPP CLOSING CERTIFICATE
I, _________________________, hereby certify that:
1. I am the duly elected, qualified and acting ______________ of
Generac Portable Products, Inc., a Delaware corporation ("GPP").
2. I am familiar with the terms of the Agreement and Plan of Merger
dated as of March ___, 2001 by and among Xxxxxx & Xxxxxxxx Corporation, a
Wisconsin corporation, GPP Merger Corporation, a Delaware corporation, GPP and
The Beacon Group III-Focus Value Fund, L.P., a Delaware limited partnership (the
"Merger Agreement").
3. Except for matters which would cause a representation or warranty to
not be true and correct solely as a result of actions taken by GPP or an
Affiliate in compliance with their obligations pursuant to Article VII of the
Merger Agreement and recognizing that for purposes of the condition set forth in
Section 8.3 to the Merger Agreement, a representation or warranty will be deemed
to have changed in a material respect as a result of a Disclosure Schedule
Change only if the Disclosure Schedule Change reflects a material substantive
change, regardless of whether the quantity of items listed on the relevant
Disclosure Schedule has materially increased or decreased: (a) the
representations and warranties made by GPP in Section 4.1, Section 4.2 and
Section 4.3 of the Merger Agreement are true and correct in all respects on the
date hereof without regard to any Disclosure Schedule Change (unless such
representations and warranties relate to a specific earlier date, in which case
such representations and warranties remain true and correct in all respects as
of such earlier date) with the same force and effect as though said
representations and warranties had been made on the date hereof; and (b) all of
the other representations and warranties made by GPP in Article IV of the Merger
Agreement are true and correct in all material respects on the date hereof
without regard to any Disclosure Schedule Change (unless such representations
and warranties relate to a specific earlier date, in which case such
representations and warranties remain true and correct in all material respects
as of such earlier date) with the same force and effect as though said
representations and warranties had been made on the date hereof.
4. GPP has performed and complied: (a) in all respects with all of its
obligations under Section 2.6(b), Section 3.5 and Section 3.10 of the Merger
Agreement which are to be performed or complied with by it prior to or on the
date hereof; and (b) in all material respects with all of its obligations under
the Merger Agreement which are to be performed or complied with by it prior to
or on the date hereof.
IN WITNESS WHEREOF, I have executed this Closing Certificate in my
official capacity as of this ___ day of _______, 2001.
GENERAC PORTABLE PRODUCTS, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
99
INDEMNIFYING SHAREHOLDER CLOSING CERTIFICATE
I, _________________________, hereby certify that:
1. I am the duly elected, qualified and acting _____________ of
______________________, the General Partner of The Beacon Group III - Focus
Value Fund, L.P., a Delaware limited partnership (the "Indemnifying
Shareholder").
2. I am familiar with the terms of the Agreement and Plan of Merger
dated as of March ___, 2001 by and among Xxxxxx & Xxxxxxxx Corporation, a
Wisconsin corporation, GPP Merger Corporation, a Delaware corporation, Generac
Portable Products, Inc., a Delaware corporation, and the Indemnifying
Shareholder (the "Merger Agreement").
3. The representations and warranties made by the Indemnifying
Shareholder in Section 5.2 and Section 5.4 of the Merger Agreement are true and
correct in all respects on the date hereof without regard to any Disclosure
Schedule Change (unless such representations and warranties relate to a specific
earlier date, in which case such representations and warranties remain true and
correct in all respects as of such earlier date) with the same force and effect
as though said representations and warranties had been made on the date hereof;
and all of the other representations and warranties made by the Indemnifying
Shareholder in Article V of the Merger Agreement are true and correct in all
material respects on the date hereof without regard to any Disclosure Schedule
Change (unless such representations and warranties relate to a specific earlier
date, in which case such representations and warranties remain true and correct
in all material respects as of such earlier date) with the same force and effect
as though said representations and warranties had been made on the date hereof.
4. The Indemnifying Shareholder has performed and complied: (a) in all
respects with all of its obligations under Section 3.5 and Section 3.10 of the
Merger Agreement which are to be performed or complied with by it prior to or on
the date hereof; and (b) in all material respects with all of its obligations
under the Merger Agreement which are to be performed or complied with by it
prior to or on the date hereof.
IN WITNESS WHEREOF, I have executed this Closing Certificate in my
official capacity as of this ___ day of _______, 2001.
THE BEACON GROUP III - FOCUS VALUE
FUND, L.P.
By: ______________________________________
General Partner
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
100
EXHIBIT 6
FORM OF GPP COUNSEL OPINION
The following opinions shall be reflected in the GPP Counsel Opinion in
substantially the form provided below and subject to reasonable qualifications,
assumptions and limitations set forth therein:
1. GPP is a corporation validly existing and in good standing under the
law of the State of Delaware. GPPD is a corporation validly existing and in good
standing under the law of the State of Delaware. GPPW is a corporation validly
existing and in active status (meaning it has filed its annual report for the
most recently completed report year and has not filed articles of dissolution)
under the law of the State of Wisconsin. LLC is a limited liability company
validly existing and in good standing under the law of the State of Delaware.
The Indemnifying Shareholder is a limited partnership validly existing and in
good standing under the law of the State of Delaware.
2. GPP and each Affiliate have the requisite corporate or limited
liability company power and authority to own, lease and operate their respective
assets and properties and to conduct their respective businesses as, to our
knowledge, they now conduct such businesses.
3. Each of GPP and the Indemnifying Shareholder has the necessary
corporate or partnership power and authority to enter into, execute and deliver
the Agreement and the documents required thereby to which each is a party, to
perform its respective obligations thereunder and to consummate the transactions
contemplated thereby.
4. The execution and delivery by each of GPP and the Indemnifying
Shareholder of the Agreement and the documents required thereby to which GPP or
the Indemnifying Shareholder is a party and the consummation by GPP and the
Indemnifying Shareholder of the transactions contemplated thereby, have been
duly authorized by all necessary corporate or partnership action on the part of
GPP and the Indemnifying Shareholder, as the case may be.
5. The Agreement and the documents required thereby to which GPP or the
Indemnifying Shareholder is a party have been duly executed and delivered by GPP
or the Indemnifying Shareholder, as the case may be, and constitute legal, valid
and binding obligations of GPP and the Indemnifying Shareholder, as the case may
be, enforceable against each of them in accordance with their respective terms.
6. The execution and delivery of the Agreement by GPP and the
Indemnifying Shareholder and the documents required thereby to which GPP or the
Indemnifying Shareholder is a party do not, and the performance of the Agreement
by GPP and the Indemnifying Shareholder will not, conflict with or violate: (a)
the Certificate of Incorporation or Bylaws of GPP; (b) the _________________ or
Limited Partnership Agreement of the Indemnifying Shareholder; (c) to our
knowledge, the law of the State of New York, the federal law of the United
States and the Delaware General Corporation Law; or (d) any Contract listed on
SCHEDULE 1 attached hereto.
101
7. SCHEDULE 2 attached hereto sets forth the entire authorized capital
stock of GPP, GPPD and GPPW, and the entire authorized membership interests of
LLC. To our knowledge, based solely upon a review of the corporate records of
GPP made available to us, there are no outstanding subscriptions, warrants,
options or other rights to acquire from GPP any of its capital stock, except as
set forth in the Agreement and the Disclosure Schedule.
8. The outstanding shares of GPP's, GPPD's and GPPW's common stock and
the outstanding membership interests of LLC as shown on SCHEDULE 2 attached
hereto have been duly authorized and validly issued and are fully paid and
non-assessable except as set forth in Section 180.0622(2)(b) of the Wisconsin
Statutes.
102
SCHEDULE 1
[CONTRACTS 1, 2, 3, 4, 5 (IF GOVERNED BY NY LAW), 6, 7, AND 8 OF SCHEDULE II OF
DISCLOSURE SCHEDULE]
103
EXHIBIT 7
PAYING AGENT AGREEMENT
THIS PAYING AGENT AGREEMENT (this "Agreement") is made as of
____________, 2001, by and among Xxxxxx & Xxxxxxxx Corporation, a Wisconsin
corporation ("Briggs"), Generac Portable Products, Inc., a Delaware corporation
("GPP"), The Beacon Group III - Focus Value Fund, L.P. (in its capacity as
representative of the Shareholders (as defined in the Merger Agreement), the
"Representative," and in its individual capacity, the "Indemnifying
Shareholder"), and ________________________, a __________________, in its
capacity as paying agent hereunder (in such capacity, the "Paying Agent").
RECITALS
X. Xxxxxx, GPP Merger Corporation ("Acquisition"), GPP and the
Indemnifying Shareholder are parties to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of March ____, 2001.
B. The Merger Agreement contemplates and provides for the merger of
Acquisition with and into GPP pursuant to which all of the outstanding shares of
and warrants to purchase GPP's Common Stock will be converted into the right to
receive cash and all of the issued and outstanding shares of Acquisition's
common stock will be converted into shares of GPP's common stock.
C. The Merger Agreement further contemplates and provides for the
distribution of certain funds by the Paying Agent to the Shareholders of GPP and
to the former holders of GPP stock options (the "Option Holders"). The parties
wish to establish by means of this Agreement a procedure to provide for the
orderly payment of such funds to the Shareholders and the Option Holders.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and intending to be legally bound, the parties
hereto agree as follows:
1. Delivery of Funds.
(a) Xxxxxx herewith deposits with the Paying Agent
_____________________ Dollars ($_______) and the Paying Agent hereby
acknowledges the receipt of such sum (the "Merger Deposit"). The Merger Deposit
and all interest earned thereon is referred to as the "Merger Fund". The Paying
Agent accepts the Merger Fund and agrees to hold the same in a separate and
segregated account (the "Merger Account"), to invest and reinvest the Merger
Fund, and to disburse the same in accordance with the terms of this Agreement.
(b) Xxxxxx shall deposit the Earnout (as defined in the Merger
Agreement), if any and less any Offsets (as defined in the Merger Agreement),
with the Paying Agent in accordance with Section 2.7(b) of the Merger Agreement
(the "Earnout Deposit"). The Earnout Deposit and all interest earned thereon is
referred to as the "Earnout Fund". The Paying Agent shall accept the Earnout
Fund and agrees to hold the same in a separate and segregated account
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(the "Earnout Account"), to invest the Earnout Fund, and to disburse the same in
accordance with the terms of this Agreement.
(c) Xxxxxx shall deposit the aggregate Option Payments (as defined in
the Merger Agreement), if any, with the Paying Agent in accordance with Section
2.7(b) of the Merger Agreement (the "Option Deposit"). The Option Deposit and
all interest earned thereon is referred to as the "Option Fund". The Paying
Agent shall accept the Option Fund and agrees to hold the same in a separate and
segregated account (the "Option Account"), to invest the Option Fund, and to
disburse the same in accordance with the terms of this Agreement.
(d) The Merger Fund, the Earnout Fund and the Option Fund are referred
to collectively herein as the "Funds."
2. Investment. The Paying Agent may invest and reinvest all cash funds
from time to time comprising the Funds in (i) demand deposits in any bank or
trust company incorporated under the laws of the United States of America, any
state thereof or the District of Columbia having a net worth in excess of $500
million; (ii) the _________________ money market fund; or (iii) such other
investments as GPP and the Representative shall approve in writing. In the
absence of any direction, the Paying Agent shall invest the Funds in accordance
with Subsection (i) above.
3. Merger Payment Statements. Schedule A attached hereto sets forth a
complete list of the Shareholders and the portion of the Merger Deposit payable
to each Shareholder. Upon receipt of a properly executed Merger Payment
Statement (in the form of Schedule B attached hereto) from any Shareholder
following the date hereof, the Paying Agent shall make payment to such
Shareholder in accordance with the provisions of such Merger Payment Statement
and Section 4 below.
4. Disbursements.
(a) The amounts in the Merger Account from time to time shall be
released and disbursed by the Paying Agent in the manner and under the
circumstances hereinafter specified:
(i) At any time following receipt of the Merger Deposit, the Paying
Agent shall pay or cause to be paid to each Shareholder from whom it has
received a properly executed Merger Payment Statement the portion of the Merger
Deposit payable to such Shareholder as set forth in Schedule A.
(ii) In no event shall the Paying Agent disburse any amount of the
Merger Deposit allocable to a Shareholder until it receives from such
Shareholder a Merger Payment Statement duly signed and otherwise in proper form.
(iii) Any payment to be made to a Shareholder by the Paying Agent
out of the Merger Fund shall be made as instructed by such Shareholder in such
Shareholder's Merger Payment Statement.
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(iv) At any time after one year from the date hereof, Xxxxxx, by
notice to the Paying Agent, may require the Paying Agent to pay the remaining
portion of the Merger Fund to GPP as provided in Section 2.5(c) of the Merger
Agreement.
(b) The amounts in the Earnout Account from time to time shall be
released and disbursed by the Paying Agent in the manner and under the
circumstances hereinafter specified:
(i) Following calculation of the Earnout, the Representative shall
deliver to the Paying Agent a notice (the "Earnout Notice") which sets forth the
name of each Shareholder and the portion of the Earnout Deposit payable to each
Shareholder. Following receipt of the Earnout Notice and the Earnout Deposit,
and provided the Paying Agent has received a properly executed Merger Payment
Statement from a Shareholder, the Paying Agent shall disburse to such
Shareholder the amount set forth in the Earnout Notice.
(ii) Any payment to be made to a Shareholder by the Paying Agent
out of the Earnout Fund shall be made as instructed by such Shareholder in such
Shareholder's Merger Payment Statement.
(iii) At any time after one year from the date of receipt of the
Earnout Deposit by the Paying Agent, Xxxxxx, by notice to the Paying Agent, may
require the Paying Agent to pay the remaining portion of the Earnout Fund to GPP
as provided in Section 2.5(c) of the Merger Agreement.
(c) The amounts in the Option Account shall be released and disbursed
by the Paying Agent in the manner and under the circumstances set forth herein.
Following the calculation of the aggregate Option Payments, the Representative
shall deliver to the Paying Agent a notice (the "Option Notice") which sets
forth the name and address of each Option Holder and the portion of the Option
Deposit payable to each Option Holder. Following receipt of the Option Deposit,
the Paying Agent shall disburse to such Shareholder the amount set forth in the
Option Notice.
5. Accounting. Within a reasonable time after delivery of the remainder of
the Merger Fund in accordance with Section 4(a) hereof, delivery of the
remainder of the Earnout Fund in accordance with Section 4(b) hereof, and
disbursement of the Option Fund in accordance with Section 4(c) hereof, the
Paying Agent shall deliver to Xxxxxx and the Representative an accounting which
shall consist of a statement of all receipts of and disbursements made from the
Merger Account, the Earnout Account or the Option Account, as the case may be.
Unless Xxxxxx or the Representative shall object to such accounting within
thirty (30) days after the date of the delivery of such accounting to it, the
Paying Agent shall be discharged forever and absolutely from any and all
liabilities and obligations whatsoever to Xxxxxx, GPP or the Representative
arising by virtue of this Agreement or the relevant Fund and in no event
whatsoever shall the Paying Agent be required otherwise to account for, or give
evidence of the fact, amount or propriety of, any disbursements made by it,
except as provided in this Section 5, unless the Paying Agent shall have acted
with negligence or willful misconduct. Any such objection to such accounting
must be in writing and must be delivered or sent to the Paying Agent by
registered or certified mail.
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6. Tax Information. The Paying Agent shall be responsible for the
preparation of any required tax reports related to the Merger Account, the
Earnout Account and the Option Account, and shall provide any necessary tax
information to the parties.
7. Conditions to Responsibilities of Paying Agent. Acceptance by the
Paying Agent of its duties under this Agreement is subject to the following
terms and conditions, which all parties to this Agreement hereby agree shall
define the rights, duties and immunities of the Paying Agent:
(a) The duties and obligations of the Paying Agent shall be
determined solely by the express provisions of this Agreement, and the Paying
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement. [EXCEPT FOR THE
SERVICES IT [WILL/MAY] RENDER AS ESCROW AGENT,] the Paying Agent shall not have
any duty or responsibility for or with respect to the Merger Agreement or any
related undertaking and shall in no way be bound or obligated by the terms
thereof.
(b) The Paying Agent shall not be responsible for any failure or
inability of Xxxxxx, GPP, the Representative or a Shareholder to comply with any
of the provisions of any other agreement to which they may be parties.
(c) Xxxxxx and the Shareholders shall, jointly and severally,
reimburse and indemnify the Paying Agent for, and hold it harmless against, any
loss, liability or expense, including but not limited to attorneys' fees and
disbursements, arising out of or in connection with its acceptance of, or the
performance of its duties and obligations under, this Agreement or its defending
against any claim or liability arising out of or relating to this Agreement,
other than claims, loss, expenses or liabilities established to have arisen out
of the negligence or willful misconduct of the Paying Agent. Any claim made
against the Shareholders under this Section 7(c) shall first be paid from any
earnings on the escrow account established pursuant to the Merger Agreement and
to the extent funds are not available thereunder the Indemnifying Shareholder
shall be responsible for any additional amounts due hereunder; provided that
nothing in this sentence shall prevent the Indemnifying Shareholder from seeking
contribution from the other Shareholders for such amounts.
(d) The Paying Agent shall be fully protected in acting on and
relying upon any written notice, direction, request, waiver, consent, receipt or
other paper or document which the Paying Agent in good faith believes to be
genuine and to have been signed or presented by the proper party or parties.
(e) The Paying Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith or
for any mistake, in fact or law, or for anything else which it may do or refrain
from doing in connection herewith, except for its own negligence or willful
misconduct.
(f) The Paying Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the provisions
of this agreement or its duties hereunder, and it shall incur no liability and
shall be fully protected in respect of any action
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taken, omitted or suffered by it in good faith in accordance with the advice of
such counsel.
(g) In the event of any dispute hereunder, the Paying Agent shall
have the right (but shall not be obligated) to pay into court the entire Merger
Fund, Earnout Fund or Option Fund and thereafter be absolved of any further duty
or obligation hereunder with respect to such Fund.
8. Compensation. The Paying Agent shall be paid the sum of $_______ for
its services to be rendered hereunder and shall be reimbursed for all reasonable
out-of-pocket expenses incurred by it in connection with the performance of its
duties hereunder. Xxxxxx shall be responsible for fifty percent (50%) of such
fees and expenses and the Shareholders shall be responsible for fifty percent
(50%) of such fees and expenses. The Shareholders' portion of such fees and
expenses shall be paid first from any earnings on the escrow account established
pursuant to the Merger Agreement and to the extent funds are not available
thereunder the Indemnifying Shareholder shall be responsible for any additional
amounts due hereunder; provided that nothing in this sentence shall prevent the
Indemnifying Shareholder from seeking contribution from the other Shareholders
for such amounts.
9. Resignation of Paying Agent; Appointment of Successor. The Paying
Agent acting at any time hereunder may resign at any time by giving ten days'
prior written notice of resignation to Xxxxxx and the Representative, such
resignation to be effective on the date specified in such notice. In addition,
Xxxxxx and the Representative may jointly cause the removal of the Paying Agent
at any time upon the giving of ten days' written notice. In either event Xxxxxx
and the Representative shall appoint as successor Paying Agent a bank or trust
company mutually satisfactory to them by a written instrument delivered to each
of the retiring Paying Agent and the successor Paying Agent, and upon such
appointment and its acceptance thereof, the successor Paying Agent shall succeed
to all the rights and obligations of the retiring Paying Agent as of the
effective date of resignation or removal as though it had been originally named
herein, the retiring Paying Agent shall be discharged from all duties and
obligations thereafter arising or accruing hereunder, and the retiring Paying
Agent shall duly transfer and deliver to the successor Paying Agent the Merger
Account, the Earnout Account, the Option Account and any other property then
held by the retiring Paying Agent hereunder. After any retiring Paying Agent's
resignation or removal hereunder, the provisions of this Agreement shall
continue to apply as to any actions taken, omitted or suffered by it while it
was the Paying Agent hereunder.
10. Amendment. This Agreement may be amended or terminated only by a
written agreement signed by each of the Paying Agent, Xxxxxx, GPP and the
Representative.
11. Notices. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
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If to Briggs or GPP: Xxxxxx & Xxxxxxxx Corporation
Attn: Xxxx X. Xxxxxx
00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
With a copy to: Xxxxxxx & Xxxxx LLP
Attn: Xxxxxxx X. Xxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
And to: Xxxxxx & Xxxxxxxx Corporation
Attn: Xxxxxx Xxxxx
00000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
If to the Representative: The Beacon Group III-Focus Value Fund,
L.P.
Attn: Xxxx Xxxxxxxxx
X.X. Xxxxxx Partners
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
If to the Paying Agent: ______________________________________
______________________________________
______________________________________
______________________________________
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Delivery to the Representative shall constitute delivery to all
Shareholders. Any person may change its address for the purposes of this
agreement by giving notice thereof in accordance with this Section.
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12. Governing Law. This Agreement is being delivered and is intended to
be performed in the State of Wisconsin and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Wisconsin.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, written and oral. This
Agreement may not be assigned by any party except: (a) with the prior written
consent of the other parties; or (b) by Xxxxxx to one or more direct or indirect
wholly owned subsidiaries of Xxxxxx or to any lender to Xxxxxx, in each case
consistent with the assignment provisions of the Merger Agreement and provided
Xxxxxx has similarly assigned its rights and obligations pursuant to the Merger
Agreement to such subsidiary or lender, and provided further in each case that
Xxxxxx shall remain liable for the performance of its obligations under this
Agreement.
14. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
15. Counterparts. This agreement may be executed in several
counterparts, each of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.
XXXXXX & XXXXXXXX CORPORATION
By:__________________________________
Title:_______________________________
GENERAC PORTABLE PRODUCTS,
INC.
By:__________________________________
Title:_______________________________
THE BEACON GROUP III-FOCUS VALUE FUND,
the Indemnifying Shareholder and as the
Representative
By: BEACON FOCUS VALUE FUND
INVESTORS, LLC, General Partner
By: ________________________________
Xxxx Xxxxxxxxx
Title:_______________________________
[PAYING AGENT]
By:__________________________________
Title:_______________________________
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EXHIBIT 8
CRITERIA FOR OBSOLETE INVENTORY
Obsolete Inventory shall be determined based upon the following procedures:
For production parts:
1. A listing of Inventory by part number showing on-hand
quantities will be generated as of the Effective Time of
Merger.
2. GPP will track quantity usage by part number for the period
from the Effective Time of Merger to June 30, 2002. This
quantity usage will be subtracted from the on-hand quantity
indicated in 1. above.
a. To the extent the difference between the on-hand
quantity and quantity usage is zero or negative, the
part will be deemed not to be obsolete.
b. To the extent the difference between the on-hand
quantity and quantity usage is a positive number,
expected usage for the following ten months, as
indicated in GPP's MRP system, will be subtracted
from the on-hand quantity. GPP will only include
reasonable requirements in its MRP system. To the
extent that this difference remains positive, the
difference will be deemed to be obsolete Inventory.
c. The quantity of obsolete Inventory will be costed
using the same cost per unit as used in costing the
Inventory as of the Effective Time of Merger, less
the net realizable value of such Inventory.
For service parts
1. A listing of Inventory by part number showing on-hand
quantities will be generated as of the Effective Time of
Merger.
2. GPP will track quantity sold by part number for the period
from the Effective Time of Merger to June 30, 2002. This
quantity sold will be subtracted from the on-hand quantity
indicated in 1. above.
a. To the extent the difference between the on-hand
quantity less the quantity sold is zero or negative,
the part will be deemed not to be obsolete.
b. To the extent the difference between the on-hand
quantity less the quantity sold is a positive number,
a calculation of years sales on-hand will be made and
evaluated in connection with historical on-hand
quantities in GPP and Xxxxxx service operations.
Inventory quantities in excess of historical service
part requirements will be deemed to be obsolete.
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c. Any Inventory deemed to be obsolete Inventory will be
costed using the same cost per unit as used in
costing the Inventory as of the Effective Time of
Merger, less the net realizable value of such
Inventory.
General
The costed obsolete Inventory calculated pursuant to the above procedure for
production and service parts will be compared to Inventory obsolescence reserves
recorded at the Effective Time of Merger.
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