EXHIBIT 99.1
EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXX PLASTICS CORPORATION
XXXXX PLASTICS ACQUISITION CORPORATION VI
XXXX GROUP, INC.,
THE SELLERS LISTED ON THE SIGNATURE PAGES HERETO,
AND
FREMONT ACQUISITION COMPANY, L.L.C.
AS SELLERS' REPRESENTATIVE
DATED AS OF
MAY 5, 2005
AS AMENDED AND RESTATED ON
MAY 31, 2005
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175591.06-Palo Alto Server 1A - MSW
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER......................................................1
Section 1.1 The Merger..................................................1
Section 1.2 Effective Time..............................................2
Section 1.3 Certificate of Incorporation and Bylaws.....................2
Section 1.4 Directors and Officers of the Surviving Corporation.........2
Section 1.5 Effects of the Merger.......................................2
Section 1.6 Subsequent Actions..........................................3
Section 1.7 Stock Options...............................................3
ARTICLE II THE CLOSING; PAYMENT FOR SHARES................................3
Section 2.1 The Closing.................................................3
Section 2.2 Delivery of and Payment for Shares..........................4
Section 2.3 Lost Certificates...........................................4
Section 2.4 Stock Transfer Books........................................4
Section 2.5 Dissenting Shares...........................................5
Section 2.6 Demands for Appraisal.......................................5
Section 2.7 Estimated Closing Statement.................................5
Section 2.8 Closing Adjustments.........................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS.8
Section 3.1 Organization; Qualification of Company......................9
Section 3.2 Authorization...............................................9
Section 3.3 Execution; Validity of Agreement............................9
Section 3.4 Capitalization..............................................9
Section 3.5 Consents and Approvals; No Violations.......................10
Section 3.6 Subsidiaries................................................10
Section 3.7 Financial Statements........................................11
Section 3.8 Company Indebtedness........................................11
Section 3.9 Absence of Certain Changes..................................11
Section 3.10Title to Properties; Encumbrances...........................11
Section 3.11Owned Real Property.........................................12
Section 3.12Leases......................................................12
Section 3.13Contracts and Commitments...................................12
Section 3.14Customers and Suppliers.....................................14
Section 3.15Insurance...................................................14
Section 3.16Litigation..................................................14
Section 3.17Environmental Matters.......................................15
Section 3.18Compliance with Laws........................................15
Section 3.19Employee Benefit Plans......................................15
Section 3.20Tax Matters.................................................16
Section 3.21Intellectual Property.......................................18
Section 3.22Labor Matters...............................................19
Section 3.23Bank Accounts...............................................20
Section 3.24Brokers or Finders..........................................20
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Section 3.25No Other Representations....................................20
Section 3.26Representations and Warranties of the Sellers...............20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB............21
Section 4.1 Organization................................................21
Section 4.2 Authorization; Validity of Agreement........................21
Section 4.3 Consents and Approvals; No Violations.......................22
Section 4.4 Financing...................................................22
Section 4.5 Litigation..................................................23
Section 4.6 Due Diligence...............................................23
Section 4.7 Brokers or Finders..........................................24
ARTICLE V COVENANTS.......................................................24
Section 5.1 Interim Operations of the Company...........................24
Section 5.2 Access; Confidentiality.....................................26
Section 5.3 Efforts and Actions to Cause Merger to Occur................27
Section 5.4 Publicity...................................................29
Section 5.5 Employees; Employee Benefits................................29
Section 5.6 Intercompany Arrangements...................................30
Section 5.7 Maintenance of Books and Records............................31
Section 5.8 Directors' and Officers' Insurance and Indemnification......31
Section 5.9 Notice of Action by Written Consent.........................33
Section 5.10Expenses....................................................33
Section 5.11FIRPTA Certificate..........................................33
Section 5.12Tax Audits..................................................34
Section 5.13Appointment of Sellers' Representative......................34
Section 5.14Debt Financing..............................................35
Section 5.15Assistance with Financing...................................36
Section 5.16Post-Closing Cooperation; Confidentiality...................36
Section 5.17Covenant of Certain Individual Sellers and the Company......37
ARTICLE VI CONDITIONS.....................................................37
Section 6.1 Conditions to Each Party's Obligation to Effect
the Closing.................................................37
Section 6.2 Conditions to Obligations of Purchaser and Sub to Effect the
Closing.................................................................38
Section 6.3 Conditions to Obligation of the Company and the Sellers to Effect
the Closing.............................................................39
ARTICLE VII TERMINATION...................................................39
Section 7.1 Termination.................................................39
Section 7.2 Effect of Termination.......................................40
ARTICLE VIII SURVIVAL; INDEMNIFICATION....................................40
Section 8.1 Survival....................................................40
Section 8.2 Indemnification.............................................40
Section 8.3 Limitations on Indemnification..............................42
Section 8.4 Escrow; Sole and Exclusive Remedy...........................43
Section 8.5 Contribution for Section 5.17 Losses........................44
ARTICLE IX DEFINITIONS AND INTERPRETATION.................................44
Section 9.1 Definitions.................................................44
Section 9.2 Interpretation..............................................56
ARTICLE X MISCELLANEOUS...................................................57
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Section 10.1Amendment and Modification..................................57
Section 10.2Notices.....................................................57
Section 10.3Counterparts................................................58
Section 10.4Entire Agreement; No Third Party Beneficiaries..............59
Section 10.5Severability................................................59
Section 10.6Governing Law...............................................59
Section 10.7Venue.......................................................59
Section 10.8Waiver of Jury Trial........................................59
Section 10.9Time of Essence.............................................60
Section 10.10Extension; Waiver..........................................60
Section 10.11Assignment.................................................60
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175591.06-Palo Alto Server 1A - MSW
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement"), dated as of May 31, 2005, by and among Xxxxx Plastics Corporation
("Purchaser"), a Delaware corporation, Xxxxx Plastics Acquisition Corporation
VI ("Sub"), a Delaware corporation, Xxxx Group, Inc. (the "Company"), a
Delaware corporation, the Sellers listed on the signature pages hereto, and
Fremont Acquisition Company, L.L.C., a Delaware limited liability company, as
Sellers' Representative, amends and restates in its entirety that certain
Agreement and Plan of Merger (the "Agreement and Plan of Merger"), dated as of
May 5, 2005, by and among Purchaser, Sub, the Company, the Sellers listed on
the signature pages hereto, and Fremont Acquisition Company, L.L.C., as
Sellers' Representative. Upon execution of this Agreement, the Agreement and
Plan of Merger shall be deemed amended and restated, and this Agreement shall
supercede the original terms thereof as stated herein. All references to the
"date hereof," "date of this Agreement" and other, similar references shall be
deemed to refer to May 5, 2005. Certain capitalized terms used in this
Agreement have the meanings assigned to them in Article IX.
WHEREAS, the Board of Directors of each of Purchaser, Sub and the
Company has approved, and deems it advisable and in the best interests of its
stockholders to consummate the acquisition of the Company by Purchaser, which
acquisition is to be effected by the merger of Sub with and into the Company,
with the Company being the surviving entity, upon the terms and subject to the
conditions set forth herein.
WHEREAS, Purchaser, Sub, the Company, the Sellers listed on the
signature pages hereto, and Fremont Acquisition Company, L.L.C., as Sellers'
Representative are parties to the Agreement and Plan of Merger.
WHEREAS, the parties now wish to amend and restate the Agreement
and Plan of Merger and enter this Agreement in its stead.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree that the
Agreement and Plan of Merger is hereby amended and restated in its entirety to
read as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger
. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Sub shall be merged with and into
the Company at the Effective Time with the separate corporate existence of Sub
ceasing and the Company continuing as the surviving corporation (the "Merger").
The surviving corporation of the Merger shall be herein referred to as the
"Surviving Corporation". The Surviving Corporation shall become a direct
wholly-owned subsidiary of Purchaser and shall succeed to and assume all the
rights and obligations of Sub and the Company in accordance with the DGCL.
Section 1.2 Effective Time
. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, the parties shall file a certificate of merger
(the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, or at such later time as Purchaser and the Company shall agree and
specify in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time").
Section 1.3 Certificate of Incorporation and Bylaws.
(a)The Certificate of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
therein or by applicable Law, except that the name of Sub shall be amended
therein to read "Xxxx Group, Inc.".
(b)The Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided therein or by applicable Law.
Section 1.4 Directors and Officers of the Surviving Corporation.
(a)The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
(b)The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 1.5 Effects of the Merger.
(a)At and after the Effective Time, the Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Sub shall be vested in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
(b)As of the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any Shares or Preferred Shares
or any shares of capital stock of Purchaser or Sub:
(i)each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly
issued, fully paid and non-assessable share of common stock of the
Surviving Corporation;
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(ii)each Share and each Preferred Share that
is owned by the Company, Purchaser or Sub shall automatically be
canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor;
(iii) each Share issued and outstanding
immediately prior to the Effective Time (other than Shares to be
canceled in accordance with Section 1.5(b)(ii)) shall be converted
into the right to receive the Per Share Merger Consideration; and
(iv)each Preferred Share issued and
outstanding immediately prior to the Effective Time (other than
Preferred Shares to be cancelled in accordance with Section
1.5(b)(ii)) shall be converted into the right to receive the
product of (x) the Per Share Merger Consideration multiplied by (y)
the number of Shares into which such Preferred Share is
convertible, determined as of immediately prior to the Effective
Time.
Section 1.6 Subsequent Actions
. If at any time after the Effective Time any deeds, bills of
sale, assignments, assurances or any other actions or things are reasonably
necessary to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Sub acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
then the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Sub, all such deeds, bills of sale, instruments of conveyance,
assignments and assurances and to take and do, in the name and on behalf of
each such corporation or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title or
interest in, to and under such rights, properties or assets in the Surviving
Corporation.
Section 1.7 Stock Options
. Immediately prior to the Effective Time, each outstanding option
to purchase shares of Company Common Stock ("Options") shall be cancelled in
exchange for the Option Payment made in cash by Purchaser at the Effective Time
to the holders of such Options. The "Option Payment" shall mean an amount
equal to the product of (a) the excess, if any, of (i) the Per Share Merger
Consideration over (ii) the sum of (A) the per share exercise price of such
Options and (B) the Per Share Holdback Amount and (b) the number of Shares
subject to such Options which have not been exercised or otherwise remain
outstanding as of the Closing, whether or not then vested and exercisable. All
amounts payable pursuant to this Section 1.7 shall be subject to any required
withholding of Taxes and shall be paid without interest.
ARTICLE II
THE CLOSING; PAYMENT FOR SHARES
Section 2.1 The Closing
. The closing of the Merger (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP in Palo Alto,
California at 7:00 a.m., Pacific time, two (2) Business Days following the
satisfaction and/or waiver of all conditions to close set forth in Article VI,
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unless another date or place is agreed in writing by each of the parties
hereto.
Section 2.2 Delivery of and Payment for Shares.
(a)As of the Effective Time, (i) each Share and each
Preferred Share issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive the consideration set forth in
Section 1.5 and (ii) all such issued and outstanding Shares and Preferred
Shares shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate which immediately prior to the Effective Time
represented such Shares and Preferred Shares (each, a "Certificate") shall
cease to have any rights with respect thereto, except the right to receive such
portion of the consideration into which such Shares and Preferred Shares have
been converted as a result of the Merger upon surrender of such Certificate in
accordance with this Section 2.2. Simultaneously with the Closing, Purchaser
shall pay (or shall cause Sub to pay) to each Stockholder who delivers to
Purchaser on or before the Closing his, her or its Certificates, together with
a duly executed letter of transmittal substantially in the form of Exhibit A
hereto, the aggregate consideration payable in respect of such issued and
outstanding Shares and Preferred Shares held by such Stockholder, less the Per
Share Holdback Amount associated with such Shares or Preferred Shares and less
applicable withholding taxes, to an account designated by such Stockholder
prior to the Closing by wire transfer in immediately available funds. From and
after the Closing, upon surrender of a Certificate for cancellation to the
Surviving Corporation, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive from the Surviving
Corporation and Purchaser, jointly and severally, in exchange therefor, cash
which such holder has the right to receive pursuant to the provisions of this
Article II after taking into account all such issued and outstanding Shares and
Preferred Shares then held by such holder under all such Certificates so
surrendered.
(b)Simultaneously with the Closing, Purchaser will cause the
Indemnification Holdback Amount to be deposited into the Indemnification Escrow
Account.
(c)Simultaneously with the Closing, Purchaser will cause the
Closing Adjustments Holdback Amount to be deposited into the Closing
Adjustments Holdback Escrow Account.
Section 2.3 Lost Certificates
. If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, Purchaser will issue or will cause
Sub to issue (or, after the Closing Date, will cause the Surviving Corporation
to issue), in exchange for such lost, stolen or destroyed Certificate the cash
which such holder has the right to receive pursuant to the provisions of this
Article II after taking into account all the Shares then held by such holder
under all such Certificates.
Section 2.4 Stock Transfer Books
. The stock transfer books of the Company shall be closed
immediately upon the Effective Time and there shall be no further registration
of transfers of Shares thereafter on the records of the Company.
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Section 2.5 Dissenting Shares
. Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not consented to the Merger in writing and who has complied with
Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into a
right to receive the Per Share Merger Consideration, unless such holder fails
to perfect or withdraws or otherwise loses any such right to appraisal. A
holder of Dissenting Shares shall be entitled to receive payment of the
appraised value of such Shares in accordance with Section 262 of the DGCL,
unless, after the Effective Time such holder fails to perfect or withdraws or
loses any such right to appraisal, in which case such Shares shall be converted
into and represent only the right to receive the Per Share Merger
Consideration, without interest thereon, upon surrender of the Certificate or
Certificates representing such Shares, pursuant to Section 2.2.
Section 2.6 Demands for Appraisal
. The Company shall give Purchaser (i) prompt notice of any
written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company relating to rights of appraisal, and (ii) the opportunity to
participate in the conduct of all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Except with the prior written consent of
Purchaser, the Company shall not voluntarily make any payment with respect to
any demands for appraisal or settle or offer to settle any such demands for
appraisal.
Section 2.7 Estimated Closing Statement
. Not less than two Business Days prior to the scheduled Closing
Date, the Company will deliver to Purchaser a notice (the "Estimated Closing
Statement") indicating its good faith estimate of (a) the Net Working Capital
for the Company as of the Closing ("Estimated Net Working Capital"), minus (b)
Closing Indebtedness, minus (c) Transaction Costs, minus (d) Unused Cap Ex
Amount, plus (e) Closing Cash (taken together, the "Estimated Closing
Amount"), and (f) the Share Number for the Company as of the Closing, along
with a certificate of a duly authorized officer of the Company certifying the
foregoing, setting forth in reasonable detail the basis for such amounts. The
Estimated Net Working Capital shall be determined in accordance with GAAP
applied consistently with the application thereof in the Financial Statements,
subject to accounting principles, methodologies, procedures and classifications
as are set forth in Section 2.7 of the Disclosure Schedule.
Section 2.8 Closing Adjustments.
(a)As soon as practicable, but in no event later than sixty
(60) days following the Closing (the "Final Calculation Date"), Purchaser shall
prepare a calculation of the following amounts as of the Closing with respect
to the Company and the Company Subsidiaries (the "Closing Statement"): the Net
Working Capital (the "Closing Net Working Capital"), Closing Indebtedness,
Transaction Costs, Unused Cap Ex Amount, and Closing Cash (taken together, the
"Closing Amount"). The Closing Net Working Capital shall be determined in
accordance with GAAP applied consistently with the application thereof in the
Financial Statements, subject to accounting principles, methodologies,
procedures and classifications as are set forth in Section 2.7 of the
Disclosure Schedule.
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(b)Purchaser shall deliver a copy of the Closing Statement to
Sellers' Representative promptly after it has been prepared. After receipt of
the Closing Statement, Sellers' Representative shall have thirty (30) days to
review the Closing Statement. Purchaser shall (i) provide Sellers'
Representative and its authorized representatives (including counsel, financial
advisors and auditors) reasonable access during normal business hours to all
relevant work papers, trial balances, employees, internal and external
accountants and auditors, plants, offices, warehouses and other facilities, all
books and records and other financial information to the extent necessary or
useful to complete their review of the Closing Statement, (ii) cause
Purchaser's and its Subsidiaries' officers and advisors (including counsel,
financial advisors and auditors) to furnish Sellers' Representative with such
financial and operating data and other information with respect to the
business, properties and personnel of the Company and its Subsidiaries as
Sellers' Representative may from time to time reasonably request and (iii)
cooperate with Sellers' Representative's reasonable requests with respect to
the review of the Closing Statement. Unless Sellers' Representative delivers
written notice to Purchaser on or before the 30th day after Sellers'
Representative's receipt of the Closing Statement specifying in reasonable
detail the amount, nature and basis of all disputed items, Sellers'
Representative shall be deemed to have accepted the Closing Statement delivered
by Purchaser, which shall be final, binding and conclusive for all purposes
hereunder. If Sellers' Representative notifies Purchaser of an objection to
the calculation of any amounts in the Closing Statement, Purchaser and Sellers'
Representative shall, within thirty (30) days (or such longer period as the
parties may agree in writing) following such notice (the "Resolution Period"),
attempt to resolve their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive.
(c)If, at the conclusion of the Resolution Period, there are
any amounts remaining in dispute, then such amounts remaining in dispute shall
be submitted to Deloitte & Touche LLP or another nationally recognized public
accounting firm agreed to by Sellers' Representative and Purchaser (the
"Neutral Auditors"). Sellers' Representative and Purchaser shall execute, if
requested by the Neutral Auditors, a reasonable engagement letter, including
customary indemnities. The Neutral Auditors shall act as an arbitrator to
determine, based solely on the provisions of this Section 2.8 and the
presentations by Purchaser and Sellers' Representative, and not by independent
review, only those issues still in dispute. Sellers' Representative and the
Purchaser shall use reasonable efforts to cause the Neutral Auditors'
determination to be made within 30 days of the dispute being submitted for
their review. The Neutral Auditors' determination shall be set forth in a
written statement delivered to Purchaser and Sellers' Representative and shall
be final, non-appealable and binding on the parties hereto, absent manifest
error or fraud. A judgment of a court of competent jurisdiction may be entered
upon the Neutral Auditors' determination. The Neutral Auditors shall have
exclusive jurisdiction over, and resort to the Neutral Auditors as provided in
this Section 2.8(c) shall be the only recourse and remedy of the parties
against one another with respect to, any disputes with respect to the
calculation of the Final Closing Amount. The fees, costs and expenses of the
Neutral Auditors shall be borne by Purchaser, on the one hand, and by the
Sellers (pro rata based on their Ownership Percentages), on the other, based
upon the percentage which the portion of the contested amount not awarded to
each party bears to the amount actually contested by such party. The term
"Final Closing Statement" shall mean the definitive Closing Statement agreed to
(or deemed to be agreed to) by Sellers' Representative and Purchaser in
accordance with Section 2.8(b) hereof or resulting from the determinations made
6
by the Neutral Auditors in accordance with this Section 2.8(c) (in addition to
those items theretofore agreed to by Sellers' Representative and Purchaser).
(d)If the Final Closing Amount exceeds the Estimated Closing
Amount, then:
(i)The Sellers shall be entitled to receive an
amount equal to (A)(x) the Final Closing Amount minus (y) the
Estimated Closing Amount, plus interest thereon at the annual rate
of 5% from the Closing Date to the date of payment plus (B) Five
Million, Dollars ($5,000,000) (the "Seller Closing Payment"); and
Purchaser shall be entitled to receive an amount equal to the
difference between Five Million Dollars ($5,000,000) and subsection
(A) above if subsection (A) above is less than Five Million,
Dollars ($5,000,000) (the "Purchaser Remaining Amount").
(ii)The Escrow Agent shall release (A) to the
Sellers, pro rata according to their respective Ownership
Percentages, from the Closing Adjustments Holdback Escrow Account
an amount equal to the Seller Closing Payment, and (B) to Purchaser
from the Closing Adjustments Holdback Escrow Account an amount
equal to Purchaser Remaining Amount.
(iii) To the extent that the amount
released from the Closing Adjustments Holdback Escrow Account is
insufficient to pay the Seller Closing Payment in full, then one
Business Day after the date on which the Final Closing Statement is
determined Purchaser shall pay to the Sellers, pro rata according
to their respective Ownership Percentages, an amount equal to (A)
the Seller Closing Payment minus (B) the amount released or to be
released to the Sellers from the Closing Adjustments Holdback
Escrow Account.
(e)If the Estimated Closing Amount exceeds the Final Closing
Amount, then:
(i)Purchaser shall be entitled to receive an
amount equal to (A)(x) the Estimated Closing Amount minus (y) the
Final Closing Amount, plus interest thereon at the annual rate of
5% from the Closing Date to the date of payment plus (B) Five
Million Dollars ($5,000,000) (the "Purchaser Closing Payment"); and
the Sellers shall be entitled to receive an amount equal to the
difference between Five Million Dollars ($5,000,000) and subsection
(A) above if subsection (A) above is less than Five Million Dollars
($5,000,000) (the "Seller Remaining Amount").
(ii)One Business Day after the date on which
the Final Closing Statement is determined, the Escrow Agent shall
release to (A) Purchaser from the Closing Adjustments Holdback
Escrow Account an amount equal to the Purchaser Closing Payment,
and (B) the Sellers, pro rata according to their respective
7
Ownership Percentages, from the Closing Adjustments Holdback Escrow
Account an amount equal to the Seller Remaining Amount.
(iii) To the extent that the amount
released from the Closing Adjustments Holdback Escrow Account is
insufficient to pay the Purchaser Closing Payment in full, then the
Escrow Agent shall release from the Indemnification Escrow Account
to Purchaser an amount equal to (A) the Purchaser Closing Payment
minus (B) the amount released or to be released to Purchaser from
the Closing Adjustments Holdback Escrow Account. Such payment
shall be charged against the Sellers' interest in the
Indemnification Escrow Account pro rata according to their
respective Ownership Percentages.
(f)If the total amount in the Estimated Closing Statement
equals the total amount in the Final Closing Statement, then the Escrow Agent
shall release (i) Five Million Dollars ($5,000,000) from the Closing
Adjustments Holdback Escrow Account to Purchaser and (ii) Five Million Dollars
($5,000,000) from the Closing Adjustments Holdback Escrow Account to the
Sellers, pro rata according to their respective Ownership Percentages.
(g)All payments made pursuant to this Section 2.8 shall be
made by wire transfer of immediately available funds within five (5) days of
the determination of the Final Closing Statement to accounts previously
designated in writing by Purchaser and the Sellers.
(h)The Closing Adjustments Holdback Escrow Account exists
solely to secure the obligations of the Sellers and Purchaser pursuant to this
Section 2.8 and shall not be subject to any indemnification or other claim
pursuant to Article VIII or any other provision of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
Except as set forth in the Disclosure Schedule prepared and signed
by the Company and delivered to Purchaser simultaneously with the execution
hereof or as disclosed in the Financial Statements, the Company (as to the
representations and warranties set forth in Sections 3.1 through 3.25) and each
Seller (as to the representations and warranties of such Seller set forth in
Section 3.26) represents and warrants to Purchaser and Sub that all of the
statements contained in this Article III are true as of the date of this
Agreement (or, if made as of a specified date, as of such date). For purposes
of the representations and warranties of the Company contained herein,
disclosure in any section of the Disclosure Schedule of any facts or
circumstances shall be deemed to be adequate response and disclosure of such
facts or circumstances with respect to all representations or warranties by the
Company calling for disclosure of such information, whether or not such
disclosure is specifically associated with or purports to respond to one or
more or all of such representations or warranties if it is reasonably apparent
on the face of the Disclosure Schedule that such disclosure is applicable. The
inclusion of any information in any section of the Disclosure Schedule or other
document delivered by the Company pursuant to this Agreement shall not be
deemed to be an admission or evidence of the materiality of such item, nor
8
shall it establish a standard of materiality for any purpose.
Section 3.1 Organization; Qualification of Company
. The Company (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, (b) has
full corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns and (c) is duly
qualified or licensed to do business as a foreign corporation and in good
standing in every jurisdiction in which such qualification is required or, if
the Company is not so qualified in any such jurisdiction, such failure has not
had, and would not reasonably be expected to have, a Company Material Adverse
Effect, and the Company can become so qualified in such jurisdiction without
the occurrence of a Company Material Adverse Effect. The Company has
heretofore furnished to Purchaser complete and correct copies of the
Certificate of Incorporation and Bylaws of the Company as presently in effect.
Section 3.2 Authorization
. The Company has the requisite power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the Transactions have been duly authorized by the Board of Directors of the
Company. Stockholders holding over ninety percent (90%) of the outstanding
Shares and over ninety percent (90%) of the outstanding Preferred Shares have
duly executed an action by written consent adopting the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this Agreement and
approving the Merger, which action by written consent complies with the
provisions of Section 228 of the DGCL and the Certificate of Incorporation and
Bylaws of the Company. No other action, vote or approval of the Company or the
Stockholders is required to authorize the execution and delivery by the Company
of this Agreement or the consummation by it of any of the Transactions.
Section 3.3 Execution; Validity of Agreement
. This Agreement has been duly executed and delivered by the
Company, and, assuming due and valid authorization, execution and delivery
hereof by the other parties hereto, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws of general application
affecting enforcement of creditors' rights generally and (b) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
Section 3.4 Capitalization
. The authorized capital stock of the Company consists of 90,000
Shares. As of the date hereof, (a) 50,000 Shares are authorized of which 6,293
Shares are outstanding and 15 Shares are held in the treasury of the Company,
(b) 40,000 Preferred Shares are authorized of which 34,000 Preferred Shares are
outstanding and (c) a total of 4,239 Shares are issuable pursuant to
outstanding Options. Section 3.4 of the Disclosure Schedule sets forth the
name and holdings of each holder of Shares, Preferred Shares and Options as of
the date hereof. All the outstanding Shares and Preferred Shares are duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
above, as of the date hereof, (x) there are no shares of capital stock of the
Company authorized, issued or outstanding; and (y) there are no existing
9
options, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the
issued or unissued capital stock of the Company or any Company Subsidiary,
obligating the Company or any Company Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock of the
Company or any Company Subsidiary.
Section 3.5 Consents and Approvals; No Violations
. Except as set forth in Section 3.5 of the Disclosure Schedule
and except for the filings, permits, authorizations, consents and approvals as
may be required under, and other applicable requirements of, the HSR Act, none
of the execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will (a) conflict with or result in any
breach of any provision of the Certificate of Incorporation or Bylaws of the
Company, if applicable, (b) require the Company to make any filing with, or to
obtain any permit, authorization, consent or approval from, any Governmental
Entity, (c) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company, any Company Subsidiary or any of
their respective properties or assets may be bound, or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Company, any Company Subsidiary or any of their respective properties or
assets, excluding from the foregoing clauses (b), (c) and (d) such violations,
breaches or defaults which, individually or in the aggregate (x) have not had,
and, would not reasonably be expected to have, a Company Material Adverse
Effect or a material adverse effect on the Company's ability to consummate the
Transactions or (y) would become applicable as a result of the business or
activities in which Purchaser or Sub is or proposes to be engaged or as a
result of any acts or omissions by, or the status of any facts pertaining to,
Purchaser or Sub.
Section 3.6 Subsidiaries
. Section 3.6 of the Disclosure Schedule sets forth the name,
jurisdiction of incorporation and authorized capital stock of each Company
Subsidiary and the jurisdictions in which each Company Subsidiary is qualified
to do business. All of the outstanding capital stock of each Company
Subsidiary is owned directly or indirectly by the Company, free and clear of
all Encumbrances, except as set forth on Section 3.6 of the Disclosure
Schedule, and all material claims or charges of any kind, and is validly
issued, fully paid and nonassessable. Each Company Subsidiary (a) is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation; (b) has full corporate power and authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and (c) is duly qualified or licensed to do business as
a foreign corporation in good standing in every jurisdiction in which such
qualification is required or, if a Company Subsidiary is not so qualified in
any such jurisdiction, such failure has not had, and would not reasonably be
expected to have, a Company Material Adverse Effect and such Company Subsidiary
can become so qualified in such jurisdiction without the occurrence of a
Company Material Adverse Effect.
10
Section 3.7 Financial Statements
. True and complete copies of the Financial Statements are
included in Section 3.7 of the Disclosure Schedule. The Financial Statements
have been prepared from and are in accordance with the books and records of the
Company and the Company Subsidiaries, comply in all material respects with
applicable accounting requirements, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
stated in the notes thereto) and fairly present the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and the Company Subsidiaries as of the times and for the periods
referred to therein (subject, in the case of unaudited statements, to (i)
normally recurring year-end adjustments (regardless of whether such adjustments
were made at the direction of the Company's management or the Company's
auditors) which are not material and (ii) the absence of notes thereto).
Section 3.8 Company Indebtedness.
(a)Section 3.8 of the Disclosure Schedule sets forth the
amount of principal and unpaid interest outstanding under each instrument
evidencing Indebtedness of the Company or any Company Subsidiary.
(b)As of the Closing, and immediately prior to any repayment
of the Closing Indebtedness, neither the Company nor any Company Subsidiary
will have any Indebtedness other than the Closing Indebtedness.
(c)Except as set forth on the Balance Sheet or described in
the notes thereto and except for liabilities and obligations incurred in the
ordinary course of business, since the Balance Sheet Date, neither the Company
nor any Company Subsidiary has incurred any liabilities or obligations material
to the Company and the Company Subsidiaries, taken as a whole, contingent or
otherwise, that would be required to be disclosed, reflected or reserved
against in a consolidated balance sheet of the Company (including the related
notes thereto, where appropriate) prepared in accordance with GAAP.
Section 3.9 Absence of Certain Changes
. Except as (a) disclosed in the Financial Statements or (b)
expressly required by this Agreement, since the Balance Sheet Date, (i) no
event, circumstance or condition has occurred that, individually or in the
aggregate with other events, circumstances and conditions, has resulted in, or
would reasonably be expected to result in, a Company Material Adverse Change
and (ii) neither the Company nor any Company Subsidiary has taken any action
that, if taken after the date hereof, would constitute a violation of Sections
5.1(a) through (n).
Section 3.10 Title to Properties; Encumbrances
. Except for property sold since the Balance Sheet Date in the
ordinary course of business, each of the Company and each Company Subsidiary
has good and valid title to all the properties and assets reflected on the
Balance Sheet or acquired subsequent to the Balance Sheet Date, free and clear
of all Encumbrances, other than Permitted Encumbrances. This Section 3.10 does
not relate to Owned Real Property or leased real property or interests in Owned
Real Property or leased real property, such items being the subject of Sections
11
3.11 and 3.12 hereof, nor does it relate to Intellectual Property, such items
being the subject of Section 3.21 hereof.
Section 3.11 Owned Real Property
. Section 3.11 of the Disclosure Schedule sets forth a complete
list and the location of all Owned Real Property. To the extent in the
Company's possession, (a) true and complete copies of all deeds, title
insurance policies and surveys relating to the Owned Real Property and (b) all
documents evidencing all Encumbrances upon the Owned Real Property have
heretofore been made available to Purchaser. All improvements on the Owned
Real Property are in compliance with current building codes, except for
violations that individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Company Material Adverse Effect. The Company
enjoys good and marketable title of the Owned Real Property, free and clear of
Encumbrances, other than Permitted Encumbrances.
Section 3.12 Leases
. Section 3.12 of the Disclosure Schedule sets forth a complete
list of all Leases. A true and complete copy of each Lease has heretofore been
made available to Purchaser. With respect to the Company or a Company
Subsidiary, as applicable, each Lease is valid, binding and enforceable in
accordance with its terms and is in full force and effect except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement
of creditors' rights generally and (b) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought. There are no
existing defaults by the Company or any Company Subsidiary under any of the
Leases which, individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect; and to the Knowledge of the
Company, there are no existing defaults by the lessor under any of the Leases
which, individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect. With respect to the real
property leased or subleased by the Company or any of the Company Subsidiaries,
the Company or such Company Subsidiary has a good and valid leasehold or
subleasehold estate in such real property, free and clear of all Encumbrances,
other than Permitted Encumbrances.
Section 3.13 Contracts and Commitments.
(a)Section 3.13 of the Disclosure Schedule sets forth, as of
the date hereof, a complete and correct list of every contract, agreement, loan
and license ("Contract") that:
(i)provides for aggregate future payments by
the Company or any Company Subsidiary, or to the Company or any
Company Subsidiary, of more than $500,000 and has an unexpired term
exceeding one (1) year and may not be canceled upon sixty (60)
days' notice without any liability, penalty or premium (excluding
purchase and sale orders entered into or incurred in the ordinary
course of business);
12
(ii)was entered into by the Company or a
Company Subsidiary with a stockholder, Affiliate, officer, director
or significant employee of the Company or any Company Subsidiary,
or with any Affiliate of any of the foregoing;
(iii) is a collective bargaining or similar
agreement;
(iv)involves an agreement with any bank,
finance company or similar organization for Indebtedness of the
Company or any Company Subsidiary;
(v)restricts the Company or any Company
Subsidiary from engaging in any business or activity anywhere in
the world;
(vi)is an individual consulting agreement or
similar contract providing for aggregate annual payments above
$100,000 per year;
(vii) is a power of attorney (other than a
power of attorney given in the ordinary course of business with
respect to routine Tax matters);
(viii) involves any joint venture or
partnership relationship between the Company or any Company
Subsidiary and any other Person;
(ix)is the principal contract (and not an
ancillary or other related agreement) relating to any material
acquisition, divestiture, merger or similar transaction that has
been executed but has not been consummated or that has been
consummated, but contains representations, warranties, covenants,
indemnities or other obligations that are still in effect; or
(x)is a material License (other than any
License to commercially available, off-the-shelf, shrink-wrap,
click-wrap or similar Computer Software) by which the Company or
any Company Subsidiary is granted any rights in, or grants any
rights to, the Company Intellectual Property.
(b)(i) There is not and, to the Knowledge of the Company,
there has not been claimed or alleged by any Person with respect to any
Contract listed in Section 3.13 of the Disclosure Schedule any existing default
or event that, with notice or lapse of time or both, would constitute a default
or event of default on the part of the Company or any Company Subsidiary or, to
the Knowledge of the Company, on the part of any other party thereto, except
such defaults, events of default and other events that, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a
Company Material Adverse Effect, and (ii) no consent, approval, authorization
or waiver from, or notice to, any Governmental Entity or other Person is
required in order to maintain in full force and effect any of the Contracts
listed in Section 3.13 of the Disclosure Schedule, other than (A) such consents
and waivers that have been obtained and are unconditional and in full force and
effect and such notices that have been duly given and (B) such consents,
approvals, authorizations, waivers or notices the failure of which to have or
give, individually or in the aggregate, have not had, and would not reasonably
13
be expected to have, a Company Material Adverse Effect. Complete and correct
copies of all Contracts listed in Section 3.13 of the Disclosure Schedule have
been made available to Purchaser. This Section 3.13(b) does not relate to
leased real property or interests in leased real property, such items being the
subject of Section 3.12 hereof.
Section 3.14 Customers and Suppliers
. Since January 1, 2004, to the Knowledge of the Company, no
Person who supplies resin to the Company or any Company Subsidiary has notified
the Company or any Company Subsidiary in writing that it is terminating its
business relationship with the Company or any Company Subsidiary or reduced or
advised the Company or any Company Subsidiary that it is reducing the supply of
resin available to the Company or any Company Subsidiary. To the Knowledge of
the Company, the Company and the Company Subsidiaries currently maintain
sufficient resin inventory to conduct their businesses as they have been and
are currently conducted in all material respects. To the Knowledge of the
Company, the Company and the Company Subsidiaries have access to sufficient
amounts of resin supply, purchasable at then prevailing market prices,
necessary to conduct their businesses as they have been and currently are
conducted in all material respects. Since January 1, 2004, to the Knowledge of
the Company, no customer who was one of the Company's top 15 Customers
(measured by the Company's net sales on a consolidated basis during the
calendar year 2004) has advised the Company or any Company Subsidiary orally or
in writing that it is (x) terminating its business relationship, or (y) other
than in connection with contract renewal negotiations in the ordinary course of
business, conducting a review of its business relationship with the Company or
any Company Subsidiary with a view to determining whether to terminate its
business relationship or materially reduce its purchases.
Section 3.15 Insurance
. Section 3.15 of the Disclosure Schedule sets forth a true and
complete list and description of all insurance policies in effect as of the
date hereof, providing coverage with respect to the business or assets of the
Company or the Company Subsidiaries. Each of such policies has been issued to
the Company or a Company Subsidiary. Each of such policies is valid and
binding and in full force and effect in all material respects, all premiums due
thereunder have been paid when due (except for any failures to pay any such
premiums that, individually or in the aggregate, would not reasonably be
expected to impair a material amount of insurance coverage), and neither the
Company nor any Company Subsidiary has received any written notice of
cancellation or termination or intent to cancel in respect of any such policy.
Section 3.16 Litigation
. Except as set forth on Section 3.16 of the Disclosure Schedule,
(x) there are no actions, suits, or proceedings by or before any court or
Governmental Entity pending, and (y) to the Knowledge of the Company, there are
no inquiries or investigations pending, or, in the case of (x) and (y) to the
Knowledge of the Company, threatened against or involving the Company or any
Company Subsidiary that, individually or in the aggregate, have had, or would
reasonably be expected to have a Company Material Adverse Effect or that
question or challenge the validity of this Agreement or any action taken or to
be taken by the Company or any Company Subsidiary pursuant to this Agreement or
in connection with the Transactions.
14
Section 3.17 Environmental Matters
. Except as set forth on Section 3.17 of the Disclosure Schedule,
and except as would not reasonably be expected to have a Company Material
Adverse Effect, to the Knowledge of the Company, since January 1, 2003, (a) the
Company and each Company Subsidiary have been in material compliance with all
applicable Environmental Law, (b) neither the Company nor any Company
Subsidiary has received any written notice with respect to the business of, or
any property now or previously owned or leased by, the Company or any Company
Subsidiary from any Governmental Entity or third party that remains outstanding
alleging that the Company or any Company Subsidiary is not in material
compliance with, or has any potentially material liability under, any
Environmental Law, (c) neither the Company nor any Company Subsidiary has
treated, stored, disposed of, arranged for the disposal of, transported, caused
any release of, or exposed any Person to, a regulated hazardous substance, in
violation of Environmental Law or so as to result in potentially material
liability under any Environmental Law, which liability remains unresolved, (d)
the Company has made available to Purchaser all material environmental audits,
reports and assessments relating to the business or property of the Company and
the Company Subsidiaries which are in its possession, and (e) neither the
Company nor any Company Subsidiary has (x) since January 1, 2003, and (y) on or
before January 1, 2003, to the actual (and not constructive or imputed)
knowledge (without review or inquiry) of the Company, designed, manufactured,
sold, marketed, installed or distributed products containing asbestos . This
Section 3.17 constitutes the sole and exclusive representation in this
Agreement relating to environmental matters.
Section 3.18 Compliance with Laws.
(a)Since January 1, 2003, the Company and the Company
Subsidiaries have complied in a timely manner with all Laws that apply to the
business, properties or assets of the Company or any Company Subsidiary, except
for violations that, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Company Material Adverse Effect.
(b)This Section 3.18 does not relate to matters with respect
to Taxes, which are the subject of Section 3.20, Plans, which are the subject
of Section 3.19, environmental matters, which are the subject of Section 3.17,
or employee and labor matters, which are the subject of Section 3.22.
Section 3.19 Employee Benefit Plans.
(a)Section 3.19(a) of the Disclosure Schedule contains a true
and complete list of all Plans. The Company has heretofore made available to
Purchaser a true and complete copy of each written Plan (and a written summary
of each material Plan that is not in writing) and any amendments thereto and
each agreement creating or modifying any related trust or other funding
vehicle.
(b)No liability for failure to comply with Title IV or
Section 302 of ERISA has been incurred by the Company or any ERISA Affiliate of
the Company that has not been satisfied in full.
15
(c)The PBGC has not instituted proceedings to terminate any
Title IV Plan and, to the Knowledge of the Company, no condition exists that
presents a material risk that the PBGC will institute proceedings to terminate
any Title IV Plans.
(d)No Title IV Plan is a "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, nor is any Title IV Plan a plan described in
Section 4063(a) of ERISA.
(e)Each Plan has been operated and administered in all
material respects in accordance with its terms and applicable Law, including
ERISA and the Code, including by reason of improperly classifying service
providers for purposes of participation in any Plan. No Plan is under audit or
investigation by the IRS, the U.S. Department of Labor or the PBGC, and to the
Knowledge of the Company, no such audit or investigation is pending or
threatened.
(f)Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified.
(g)The execution of and performance of the transactions
contemplated in this Agreement will not solely by reason of the terms of any
Plan (i) constitute an event under such Plan that will result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee, (ii) satisfy any single condition under
any "double trigger" provision of such Plan that may lead to any of the events
described in clause (i), or (iii) result in the triggering or imposition of any
restrictions or limitations on the right of the Company or any Company
Subsidiary or Purchaser to amend or terminate such Plan. No payment or
benefit, which will be made by the Company or any Company Subsidiary with
respect to any Employee, will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code in connection
with the Transactions contemplated by this Agreement.
(h)Neither the Company nor any Company Subsidiary may be
subject to liability by reason of being held jointly and severally liable under
Code Sections 412, 4971 or 4980B, or ERISA Sections 302 or 601 through 609, or
Title IV of ERISA solely by reason of the Company or any Company Subsidiary
being an ERISA Affiliate of any Person other than the Company or any Company
Subsidiary.
Section 3.20 Tax Matters.
(a)The Company and each Company Subsidiary has filed (or has
had filed on their behalf) or will file or cause to be filed, all material Tax
Returns required by applicable Law to be filed by any of them prior to or as of
the Closing Date. All such Tax Returns and amendments thereto are or will be
true, complete and correct in all material respects.
(b)The Company and each Company Subsidiary has paid (or has
had paid on their behalf) all material Taxes due with respect to any period
ending prior to or as of the Closing Date and has adequately reserved for all
Taxes that have accrued but are not yet due.
16
(c)There are no liens for Taxes upon any property or assets
of the Company or any Company Subsidiary, except for liens for Taxes not yet
due or for Taxes being contested in good faith for which adequate reserves have
been made.
(d)No federal, state, local or foreign audits, examinations,
investigations or other administrative proceedings (such audits, examinations,
investigations and other administrative proceedings referred to collectively as
"Audits") or court proceedings are presently pending or threatened in writing
with regard to any Taxes or Tax Returns filed by or on behalf of the Company or
any Company Subsidiary, except for those Audits or court proceedings the
adverse resolution of which would not reasonably be expected to have a Company
Material Adverse Effect.
(e)There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any Company
Subsidiary.
(f)The Company and each Company Subsidiary (i) has
complied in all material respects with all
applicable Laws relating to the payment and
withholding of Taxes, including with respect to
payment made to employees or other third parties,
and all applicable Laws relating to information
reporting; (ii) is not and has not been a party to
any Tax sharing agreement; (iii) has never been a
member of an affiliated, combined, consolidated or
unitary Tax group (other than a group of which the
Company was the common parent); (iv) has paid any
deficiencies or assessments asserted by any Tax
Authority; (v) will not be required as a result of
any adjustment under section 481 of the Code, or any
"closing agreement" as described in section 7121 of
the Code (or any similar provision of state, local
or foreign law), to include any item of income in,
or exclude any item of deduction from, any Tax
period ending on or after the Closing Date; and (vi)
has not taken any deduction or received any Tax
benefit arising from participation in a "tax
shelter" as defined for purposes of section 6111(c)
of the Code and has not "participated" in a
"reportable transaction" as defined in Treasury
regulation section 1.6011-4(b) and (c)(3) or
Treasury regulation section 1.6011-4T(a) and (b) (as
promulgated in T.D. 8877).
(g)No Tax Authority in a jurisdiction where the Company or
any Company Subsidiary does not file a Tax Return has made
a claim, assertion or threat in writing that the Company
or any of its Subsidiaries is or may be subject to
material Tax in such jurisdiction.
(h)Section 3.20 of the Disclosure Schedule lists the states
in which the Company and the Company Subsidiaries have
filed income Tax Returns for the Tax years ended December
31, 2001, 2002 and 2003.
(i)Since August 26, 1997, the Company (i) has not undergone
an "ownership change" for purposes of section 382(g)(1) of
the Code, (ii) has not entered into any closing agreements
or any similar agreements with a Tax Authority, and (iii)
has not had issued by a Tax Authority any private letter
rulings.
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Section 3.21 Intellectual Property.
(a)Non-infringement. The conduct of the business of the
Company and the Company Subsidiaries does not interfere with, infringe,
misappropriate or otherwise come into conflict with any Intellectual Property
right of any third party, and no written notice has been received alleging
anything to the contrary (including any claim that the Company must license or
refrain from using any Intellectual Property rights of any third party), except
as, individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Company Material Adverse Effect.
(b)Ownership. All currently subsisting items of Owned
Company Intellectual Property which are issued Patents or pending patent
applications, registrations and applications for U.S. Trademarks, and
registrations and applications for Copyrights are set forth in Section
3.21(b)(i) of the Disclosure Schedule. Each current item of Owned Company
Intellectual Property which are issued Patents or pending patent applications,
registrations or applications for Trademarks, and registrations or applications
for Copyrights are subsisting, in good standing, and in full force and effect,
except with respect to such applications, such applications are in full force
and effect to the extent applicable. The Company or a Company Subsidiary: (i)
owns all right, title, and interest in the Owned Company Intellectual Property,
free and clear of any Encumbrance, license or other restriction, other than
Permitted Encumbrances and licenses granted in the ordinary course of business;
and (ii) owns all right, title and interest in or is licensed the right to
exploit or otherwise possesses legally enforceable rights in, the Company
Intellectual Property, except where the failure to own or license or otherwise
possess, individually or in the aggregate, has not had, and would not be
reasonably expected to have a Company Material Adverse Effect. Except for
agreements requiring consent as set forth in Section 3.5 of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not alter or impair such rights. No Employee or former or current
consultant owns any Intellectual Property developed, created, invented, or
reduced to practice (whether solely or jointly with others) by such individual
in connection with such individual's employment or retention by the Company or
any Company Subsidiary and relating to the business of the Company or any
Company Subsidiary, and all such Intellectual Property, to the extent that it
has not expired, lapsed or been cancelled or abandoned, is included in the
Owned Company Intellectual Property. The Owned Company Intellectual Property
includes all common law rights in or all right, title, and interest in all
Trademarks in (A) all material trade names that the Company or any Company
Subsidiary holds itself to the public as owning, including "Xxxx," "Setco," and
"Tubed Products," and (B) all material product names of products marketed by
the Company or any Company Subsidiary including, without limitation, "Vent
Band," "Tab II," "CR-III," "Friendly and Safe," "ScriptVision," and "TE-III."
(c)Validity. To the Knowledge of the Company, all Owned
Company Intellectual Property is valid and enforceable, and no written notice
has been received alleging anything to the contrary.
(d)Confidentiality. To the Knowledge of the Company, or
except as individually or in the aggregate, has not had, and would not be
likely to have a Company Material Adverse Effect, no Trade Secret of the
18
Company has been disclosed to any third party other than pursuant to written
non-disclosure agreements.
(e)No Third Party Infringers. To the Knowledge of the
Company, no third party has infringed or misappropriated any Owned Company
Intellectual Property or any Company Intellectual Property that has been
exclusively licensed to the Company or any Company Subsidiary, except as has
not had, and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(f)No Restrictions. Except as, individually or in the
aggregate, has not had, and would not be reasonably expected to have, a Company
Material Adverse Effect, there are no settlements, forbearances to xxx,
consents, judgments, orders or other obligations, other than Licenses or
financing liens granted in the ordinary course of business, that do or may:
(i) restrict the Company's or any Company Subsidiary's rights to use any Owned
Company Intellectual Property or, to the Knowledge of the Company, any other
Company Intellectual Property; (ii) restrict the conduct of the business of the
Company or any Company Subsidiary in order to accommodate a third party's
Intellectual Property; or (iii) permit third parties to use any Owned Company
Intellectual Property.
Section 1.2 Labor Matters.
(a)There is no labor strike, dispute, slowdown, stoppage or
lockout actually pending, or to the Knowledge of the Company, threatened
against the Company or any Company Subsidiary.
(b)Neither the Company nor any Company Subsidiary is a party
to or bound by any collective bargaining agreement with any labor organization
applicable to employees of the Company or any Company Subsidiary.
(c)No labor union has been certified by the National Labor
Relations Board as bargaining agent for any of the employees of the Company or
any Company Subsidiary.
(d)Since January 1, 2003, neither the Company nor any Company
Subsidiary has experienced any material work stoppage or other material labor
difficulty.
(e)There is no unfair labor practice charge or complaint
against the Company or any Company Subsidiary pending or, to the Knowledge of
the Company, threatened before the National Labor Relations Board. Neither the
Company nor any Company Subsidiary (i) is involved in, or to the Knowledge of
the Company threatened with, any labor dispute, grievance or litigation
relating to labor matters, including, without limitation, violation of any
federal, state or local labor, safety or employment laws, charges of unfair
labor practices or discrimination complaints that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect; or (ii) to the Knowledge of the Company, has engaged in any
material unfair labor practices within the meaning of the National Labor
Relations Act or the Railway Labor Act.
19
(f)Since January 1, 2003, neither the Company nor any Company
Subsidiary has effectuated a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any Company
Subsidiary, and there has not occurred a "mass layoff" (as defined in the WARN
Act) affecting any site of employment or facility of the Company or any Company
Subsidiary.
Section 3.23 Bank Accounts
. Section 3.23 of the Disclosure Schedule sets forth (a) the names
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company or any Company Subsidiary
maintains safe deposit boxes, checking accounts or other accounts of any nature
the available balance of which customarily exceeds $25,000 and (b) the names of
all Persons authorized to draw thereon, make withdrawals therefrom or have
access thereto.
Section 3.24 Brokers or Finders
. Neither the Company nor any Company Subsidiary, nor any Seller,
nor any of their respective Affiliates has entered into any agreement or
arrangement entitling any agent, broker, investment banker, financial advisor
or other firm or Person to any brokers' or finder's fee or any other commission
or similar fee in connection with any of the Transactions except for Deutsche
Bank Securities Inc., and Sagent Advisors Inc. whose fees and expenses will be
paid by the Company in accordance with the Company's agreement with such firms.
Section 3.25 No Other Representations
. Except for the representations and warranties contained in this
Article III, neither the Company nor any Person acting on behalf of the Company
makes any representation or warranty, express or implied.
Section 3.26 Representations and Warranties of the Sellers.
(a)Each of the Sellers severally (as to such Seller only and
not jointly) represents and warrants to Purchaser that: (i) such Seller has
the requisite power and authority or, with respect to individuals, the
capacity, to execute and deliver this Agreement and to consummate the
Transactions, (ii) the execution, delivery and performance by such Seller of
this Agreement and the consummation of the Transactions have been duly and
validly authorized by all necessary action on the part of such Seller, and
(iii) this Agreement has been duly executed and delivered by such Seller, and,
assuming, due and valid authorization, execution and delivery hereof by the
other parties hereto is a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms except (A) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' right generally and (B) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
(b)None of the execution, delivery or performance of this
Agreement by such Seller, the consummation by such Seller of the Transactions
or compliance by such Seller with any of the provisions hereof will (i)
20
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of such Seller, if
applicable, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity with respect to such Seller, (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which such Seller is a party or by which such
Seller or such Seller's properties or assets may be bound, or (iv) violate any
order writ, injunction, decree, statute, rule or regulation applicable to such
Seller or any of such Seller's properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a material adverse effect on such Seller's ability to
consummate the Transactions.
(c)Such Seller is the record and beneficial owner of the
securities listed opposite such Seller's name on Section 3.4 of the Disclosure
Schedule and has good and marketable title to such securities, free and clear
of all Encumbrances other than Permitted Encumbrances.
(d)Except for the representations and warranties contained in
this Section 3.26, no Seller nor any Person acting on behalf of any Seller
makes any representation or warranty, express or implied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB
Purchaser and Sub jointly and severally represent and warrant to
the Company that:
Section 4.1 Organization
. Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of Purchaser and Sub has all requisite corporate or
other power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority, and governmental approvals,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a material adverse effect on Purchaser's or Sub's ability to
consummate the Transactions.
Section 4.2 Authorization; Validity of Agreement
. Each of Purchaser and Sub has the requisite power and authority
to execute and deliver this Agreement and each of the Related Documents to
which it is, or is specified to be, a party and to consummate the Transactions.
The execution, delivery and performance by Purchaser and Sub of this Agreement
and each such Related Document and the consummation of the Transactions have
been or, in the case of such Related Documents, will be prior to the Closing,
duly authorized by the Board of Directors of Purchaser and the Board of
Directors of Sub, and no other corporate action on the part of Purchaser or Sub
21
is necessary to authorize the execution and delivery by Purchaser and Sub of
this Agreement and such Related Documents or the consummation of the
Transactions. No vote of, or consent by, the holders of any class or series of
stock or other equity issued by Purchaser or Sub is necessary to authorize the
execution and delivery by Purchaser or Sub of this Agreement and such Related
Documents or the consummation by it of the Transactions. This Agreement has
been, and each of such Related Documents will be on or prior to the Closing,
duly executed and delivered by Purchaser and Sub, and, assuming due and valid
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, is, or in the case of such Related Documents, will be, a
valid and binding obligation of Purchaser and Sub, enforceable against
Purchaser and Sub in accordance with its respective terms except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement
of creditors' rights generally and (b) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations
. Except for the filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of the
HSR Act, none of the execution, delivery or performance of this Agreement or
any of the Related Documents to which Purchaser or Sub is, or is specified to
be, a party by Purchaser and Sub, the consummation by Purchaser and Sub of the
Transactions or compliance by Purchaser and Sub with any of the provisions
hereof or thereof will (a) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of Purchaser or Sub or
any of their respective Subsidiaries, (b) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or creation of a lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Purchaser, Sub or any of
their respective Subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound, or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Purchaser
or Sub or any of their respective Subsidiaries or any of their respective
properties or assets, excluding from the foregoing clauses (b), (c) and (d)
such violations, breaches or defaults which, individually or in the aggregate,
have not had, and would not reasonably be expected to have, a material adverse
effect on Purchaser's or Sub's ability to consummate the Transactions.
Section 4.4 Financing
. Purchaser has received financing commitments that, when funded
and together with funds provided by Purchaser, are sufficient to enable it to
consummate the transactions contemplated by this Agreement. True and correct
copies of such commitment letters and the related term sheets and conditions
precedent are attached hereto as Exhibit B (all such documents, the "Commitment
Letters") (such financing, the "Debt Financing"). The Commitment Letters have
been duly executed by all parties thereto, and are in full force and effect.
All commitment fees required to be paid thereunder have been paid in full or
will be duly paid in full when due. As of the date hereof, the Commitment
Letters have not been amended or terminated, and there is no breach existing
thereunder. Purchaser, as of the date hereof, does not have Knowledge of any
22
existing fact, occurrence or condition that would cause the commitments
provided in such Commitment Letters to be terminated or ineffective, any of the
conditions contained therein not to be met or the financing contemplated by the
Commitment Letters not to be consummated. Except for the conditions described
in the Commitment Letters, there are no other conditions precedent to the Debt
Financing. For the twelve month period ended March 31, 2005, the condition set
forth in paragraph 3 of the summary of conditions precedent to the Debt
Financing was satisfied, and Purchaser has no reason to believe that such
condition will not be satisfied for the latest twelve month period for which
financial statements are available as of the Closing Date.
Section 4.5 Litigation
. There are no material actions, suits, or proceedings by or
before any court or Governmental Entity pending or, to the Knowledge of
Purchaser, threatened against or involving Purchaser or any Subsidiary of
Purchaser that is reasonably expected to have a material adverse effect on the
ability of Purchaser or Sub to consummate the Merger or the Transactions.
Section 4.6 Due Diligence
. Purchaser and Sub have conducted their own independent
investigation, review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition and prospects of the
Company and the Company Subsidiaries, which investigation, review and analysis
was done by Purchaser, Sub and their respective Affiliates and, to the extent
Purchaser and Sub deemed appropriate, by Purchaser's and Sub's representatives.
Each of Purchaser and Sub acknowledges that it and its representatives have
been provided adequate access to the personnel, properties, premises and
records of the Company and the Company Subsidiaries for such purpose. In
entering into this Agreement, each of Purchaser and Sub acknowledges that it
has relied solely upon the aforementioned investigation, review and analysis
and not on any factual representations, opinions, financial projections,
presentations, management summaries or data room materials of the Company, the
Company Subsidiaries, Fremont, Fremont Partners or of any of their respective
directors, officers, shareholders, employees, Affiliates, controlling persons,
agents, advisors, attorneys or representatives (except for the specific
representations and warranties of the Company and the Sellers, respectively,
set forth in Article III together with the schedules thereto) and, except with
respect to the specific representations and warranties of the Company and the
Sellers set forth in Article III together with the schedules thereto, each of
Purchaser and Sub agrees, to the fullest extent permitted by Law, that none of
the Company, the Company Subsidiaries, Fremont, Fremont Partners or any of
their respective directors, officers, employees, shareholders, Affiliates,
controlling persons, agents, advisors, attorneys or representatives shall have
any liability or responsibility whatsoever to Purchaser, Sub or their
respective directors, officers, employees, Affiliates, controlling persons,
agents or representatives on any basis (including in contract or tort, under
federal or state securities laws or otherwise) based upon any information
provided or made available, or statements made (including in the management
summaries relating to the Company provided to Purchaser, in materials furnished
in the Company's data room, in presentations by the Company's management, in
the Confidential Information Memorandum dated February 2005 provided by
Deutsche Bank Securities, Inc. and Sagent Advisors Inc. or otherwise), to
Purchaser, Sub or their respective directors, officers, employees, Affiliates,
controlling persons, advisors, attorneys, agents or representatives (or any
omissions therefrom).
23
Section 4.7 Brokers or Finders
. Neither Purchaser, Sub nor any of their respective Subsidiaries
or Affiliates has entered into any agreement or arrangement entitling any
agent, broker, investment banker, financial advisor or other firm or Person to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the Transactions, except Xxxxxxx, Xxxxx & Co. and
JPMorgan Securities Inc., whose fees and expenses will be paid by Purchaser in
accordance with Purchaser's agreement with such firms.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company
. Except as expressly provided in this Agreement and except as set
forth in the Disclosure Schedule and except as may be consented to in writing
by Purchaser (such consent not to be unreasonably withheld, conditioned or
delayed) the Company shall assure that, after the date hereof and prior to the
Closing Date:
(a)The business of the Company and the Company Subsidiaries
shall be conducted in the same manner as heretofore conducted and only in the
ordinary course, and the Company shall, and shall cause each of the Company
Subsidiaries to, make commercially reasonable efforts consistent with past
practices to (A) preserve the existing relationships of the Company and the
Company Subsidiaries with their customers, suppliers and others with whom the
Company and the Company Subsidiaries deal, (B) preserve intact its business
organization, goodwill and ongoing operations, (C) retain the service of its
key employees, (D) perform its obligations under the Contracts listed or
required to be listed in Section 3.13 of the Disclosure Schedule, and (E)
maintain its material properties and assets;
(b)Neither the Company nor any Company Subsidiary shall:
(i) amend its certificate of incorporation or bylaws or similar organizational
documents, (ii) issue, sell, transfer, pledge, dispose of, encumber, grant or
award any shares of any class or series of its capital stock, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of any class or series of its
capital stock (excluding issuances and sales of Shares upon the exercise of
Options or conversion of Preferred Shares outstanding as of the date hereof),
(iii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series of
its capital stock, (iv) split, combine or reclassify any shares of any class or
series of its stock, (v) redeem, purchase or otherwise acquire directly or
indirectly any shares of any class or series of its capital stock, or any
instrument or security which consists of or includes a right to acquire such
shares other than repurchases from employees in connection with the termination
of their employment pursuant to repurchase agreements in effect before the date
hereof or (vi) make or authorize any capital expenditure other than in
accordance with the 2005 Budget of the Company, a copy of which has been made
available to Purchaser before the date hereof;
(c)Neither the Company nor any of the Company Subsidiaries
shall:
24
(i)incur or assume any Indebtedness, except
pursuant to the Credit Agreement,
(ii)materially modify or amend the terms of
the Credit Agreement (other than in connection with the repayment
or discharge thereof upon the Closing),
(iii) make any loans, advances or capital
contributions to, or assume or guarantee the obligations of, any
other Person, except in the ordinary course of business, or
(iv)acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any Person;
(d)Neither the Company nor any Company Subsidiary shall (i)
make any change in the compensation (including severance or termination pay)
payable or to become payable (including any change that results in an
acceleration thereof) to any of its employees, officers or directors (other
than normal recurring salary increases in the ordinary course of business or
required pursuant to any Plan existing on the date hereof); (ii) adopt or
establish any new employee benefit plan, program or arrangement (including, but
not limited to, severance or termination pay) or enter into any employment
arrangement (other than an at-will arrangement involving amounts not in excess
of $100,000 per year that does not provide for any type of severance or
termination pay beyond that required by law) in each case involving amounts in
excess of $50,000; (iii) amend or enter into any agreement with the PBGC; or
(iv) award bonuses to any of its employees, officers or directors other than to
officers and employees in the ordinary course of business consistent with past
practice;
(e)Neither the Company nor any Company Subsidiary shall
voluntarily permit any insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated prior to the Closing Date without
notice to Purchaser, except policies providing coverage for losses not in
excess of $5,000,000 which are replaced without diminution of or gaps in
coverage;
(f)Neither the Company nor any of the Company Subsidiaries
shall adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary;
(g)Neither the Company nor any Company Subsidiary shall
change in any material respect any of the accounting methods used by it unless
required or permitted by GAAP;
(h)Neither the Company nor any Company Subsidiary shall file
any Tax Return or make any Tax election other than in a manner consistent with
past practice or settle any Tax Audit with respect to a material amount of
Taxes;
25
(i)Neither the Company nor any Company Subsidiary shall waive
or cancel any valuable and material right, debt or claim of the Company or any
Company Subsidiary with a value to the Company or such Company Subsidiary of
greater than $100,000;
(j)Neither the Company nor any Company Subsidiary shall sell,
assign, transfer, mortgage, lease, pledge or otherwise dispose of or encumber,
any of its tangible or intangible assets or properties, except (i) in the
ordinary course of business consistent with past practice and (ii) assets for
which the book value does not exceed $250,000 and which are not, in the case of
(i) or (ii), individually or in the aggregate, material to the conduct of the
business of the Company and the Company Subsidiaries as presently conducted;
(k)Except as permitted under Section 5.1(d), neither the
Company nor any Company Subsidiary shall make any loan to, or enter into, amend
or modify any Contract with, any officer, director, consultant, employee or
stockholder of the Company or any Company Subsidiary, or any Affiliate of any
such Person (other than advances to such officers, directors, consultants and
employees in the ordinary course of business in connection with salary, wages,
travel and travel related expenses or other customary expenses);
(l)Except in the ordinary course of business consistent with
past practice, neither the Company nor any Company Subsidiary shall enter into
any transaction or agreement that provides for aggregate future payments to or
by the Company or any Company Subsidiary of more than $250,000 with respect to
any particular transaction or agreement entered into by the Company or any
Company Subsidiary after the date hereof (or except as expressly required by
this Agreement, amend or terminate any Contract listed on Section 3.13 of the
Disclosure Schedule;
(m)Neither the Company nor any Company Subsidiary shall take,
or agree to or commit to take, any action that would result in any of the
conditions to the Closing set forth in Article VI not being satisfied, or that
would materially impair the ability of Purchaser, Sub or the Company to
consummate the Closing in accordance with the terms hereof or materially delay
such consummation; and
(n)Neither the Company nor any Company Subsidiary shall enter
into any agreement, contract, commitment or arrangement to do any of the things
described in Subsections (a) through (m) above.
Section 5.2 Access; Confidentiality.
(a)Prior to the Closing, the Company shall (i) give Purchaser
and its authorized Representatives reasonable access during regular business
hours to all books, records, personnel, offices and other facilities and
properties of the Company and the Company Subsidiaries and shall direct its
auditors to give Purchaser access to all audit work papers, to the extent
reasonably obtainable, subject to the terms of any reasonable access
restrictions required by such auditors as a condition to receipt of such work
papers, (ii) permit Purchaser to make such copies and inspections thereof as
Purchaser may reasonably request and (iii) cause the officers of the Company to
furnish Purchaser with such financial and operating data and other information
26
with respect to the business and properties of the Company and the Company
Subsidiaries as Purchaser may from time to time reasonably request; provided
that any such access shall be conducted at Purchaser's expense, at a reasonable
time, under the supervision of the Company's personnel and in such a manner as
to maintain the confidentiality of this Agreement and the Transactions and not
to interfere with the normal operation of the business of the Company.
Notwithstanding anything contained in this or any other agreement between
Purchaser and the Company executed prior to the date hereof, none of the
Company, any Company Subsidiary or any Affiliate of the Company or any Company
Subsidiary or any Stockholder or any Affiliate of any Stockholder shall have
any obligation to make available to Purchaser or its representatives, or
provide Purchaser or its representatives with, any consolidated, combined or
unitary Tax Return filed by any Stockholder or any of their Affiliates (other
than the Company and the Company Subsidiaries) or predecessors, or any related
material, and nothing herein shall require the Company to disclose any
information to Purchaser if such disclosure would in the Company's good faith
judgment (i) include individual customer or per unit pricing data,
(ii) jeopardize any attorney-client or other legal privilege, or
(iii) contravene any applicable Law, fiduciary duty or binding agreement
entered into prior to the date of this Agreement (including any confidentiality
agreement to which any Stockholder, the Company or any Company Subsidiary is a
party).
(b)The provisions of the Confidentiality Agreement shall
remain binding and in full force and effect. The information contained herein,
in the Disclosure Schedule or delivered to Purchaser, Sub or their authorized
Representatives pursuant hereto shall be deemed to be Confidential Information
(as defined and subject to the exceptions contained in the Confidentiality
Agreement). Except as otherwise provided in Section 5.3 and this Section 5.2,
each of Purchaser and Sub shall cause its Representatives to treat the terms of
this Agreement after the date hereof as strictly confidential (unless compelled
to disclose by judicial or administrative process or, in the opinion of legal
counsel, by other requirements of Law).
Section 5.3 Efforts and Actions to Cause Merger to Occur.
(a)Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Purchaser, Sub, the Company and the Sellers shall
use their respective reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done and cooperate with each other in order
to do, all things necessary, proper or advisable (subject to any applicable
Laws) to consummate the Merger and the other Transactions as promptly as
practicable, including the preparation and filing of all forms, registrations
and notices required to be filed to consummate the Merger and the other
Transactions, the taking of such actions as are necessary to obtain any
requisite approvals, authorizations, consents, orders, licenses, permits,
qualifications, exemptions or waivers by any third party or Governmental
Entity, and the seeking of the vacation or reversal of any preliminary
injunction, temporary restraining order, stay or other legal restraint or
prohibition entered or imposed by any court or other Governmental Entity that
is not yet final and non appealable. In addition, no party hereto shall take
any action after the date hereof that could reasonably be expected to
materially delay the obtaining of, or result in not obtaining, any permission,
approval or consent from any Governmental Entity or other Person required to be
obtained prior to Closing. The Company shall use commercially reasonable
efforts to obtain the consents and approvals set forth on Section 5.3 of the
Disclosure Schedule.
27
(b)Each party shall promptly consult with the other party
hereto with respect to, provide any necessary information with respect to, and
provide the other parties (or their respective counsel) with copies of, all
filings made prior to Closing by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement and the Transactions. Each party hereto shall promptly
inform each other party of any communication received by such party from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for information or documentary material
from any such Governmental Entity with respect to any of the Transactions, then
such party shall endeavor in good faith to make, or cause to be made, as soon
as reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request.
(c)In addition to and without limiting the agreements of the
parties contained above, Purchaser, Sub and the Company shall (i) take promptly
all actions necessary to make the filings required of them or any of their
Affiliates under the HSR Act, (ii) comply, at the earliest practicable date,
with any request for additional information or documentary material received by
the Company, Purchaser, Sub or any of their Affiliates from the FTC or the DOJ
pursuant to the HSR Act or from any state Attorney General or other
Governmental Entity in connection with antitrust matters, (iii) cooperate with
each other in connection with any filing under the HSR Act and in connection
with resolving any investigation or other inquiry concerning the Transactions
commenced by the FTC, DOJ, any state Attorney General or any other Governmental
Entity, (iv) use its reasonable best efforts to resolve such objections, if
any, as may be asserted with respect to the Transactions under any antitrust
Law and (v) advise the other parties promptly of any material communication
received by such party from the FTC, DOJ, any state Attorney General or any
other Governmental Entity regarding any of the Transactions, and of any
understandings, undertakings or agreements (oral or written) such party
proposes to make or enter into with the FTC, DOJ, any state Attorney General or
any other Governmental Entity in connection with the Transactions.
Concurrently with the filing of notifications under the HSR Act or as soon
thereafter as practicable, Purchaser, Sub and the Company shall each request
early termination of the HSR Act waiting period. With regard to Purchaser and
Sub, "reasonable best efforts" for purposes of this Agreement shall not require
Purchaser or Sub to proffer or accept any order providing for the divestiture
by Purchaser or Sub of any properties, assets, operations, or businesses of
Purchaser, Sub, the Company or their respective Subsidiaries or to agree to
hold separate any properties, assets, operations or businesses or to accept any
other conditions, restrictions, limitations, or agreements affecting
Purchaser's and Sub's full rights of ownership of the stock or assets of the
Company, Purchaser, Sub and their respective Subsidiaries.
(d)The Company and the Sellers shall take such actions and
obtain such governmental approvals, if any, required to be taken or obtained
prior to consummation of the Merger pursuant to the New Jersey Industrial Site
Recovery Act ("ISRA"). Without limiting the foregoing, the Company and the
Sellers will submit a request for a Letter of Non-Applicability from the New
Jersey Department of Environmental Protection ("NJDEP"), seeking to obtain a
determination from the NJDEP that the Merger is not subject to ISRA and shall
exercise reasonable diligence to obtain such determination prior to Closing.
Purchaser shall reasonably cooperate with the Company and the Sellers with
respect to pre-Closing ISRA-related tasks, including pursuit of the foregoing
28
determination and, if there is a reasonable risk that such determination cannot
be obtained prior to Closing upon reasonable diligence, executing any other
documents and forms in a timely fashion required to achieve compliance with
ISRA, including, without limitation and if necessary, an application for a
Remediation Agreement (as such term is defined by ISRA) with respect to each
New Jersey industrial establishment (as such term is defined by ISRA).
(e)If in the Sellers' judgment, a Remediation Agreement is
necessary in order to allow for the consummation of the Merger pursuant to
ISRA, the Company shall and/or a relevant subsidiary of the Company shall enter
into a Remediation Agreement for each New Jersey industrial establishment and
be the responsible party pursuant to the Remediation Agreement(s). If a
Remediation Agreement or Remediation Agreements have been executed in order to
consummate the Merger, the Company and/or a relevant subsidiary of the Company
shall be responsible for compliance with ISRA after the consummation of the
Merger. In no event shall Sellers be responsible for compliance with ISRA
after the consummation of the Merger. Nothing in this Section 5.3(e) shall
impair or diminish, however, any of the representations and warranties set
forth in this Agreement.
Section 5.4 Publicity
. The initial press release with respect to the execution of this
Agreement shall be a joint press release acceptable to Purchaser and the
Company. Thereafter, Purchaser, Sub, the Sellers and any of their respective
Affiliates shall not issue or cause the publication of any press release or
other internal or external announcement with respect to this Agreement or the
Transactions without prior consultation with the Company and Purchaser, except
as may be required by Law or by any listing agreement with a national
securities exchange or trading market, or to the extent the information
contained therein has previously been publicly disclosed.
Section 5.5 Employees; Employee Benefits.
(a)For a period of one year after the Closing, Purchaser
shall cause the Surviving Corporation to maintain plans for the benefit of the
employees of the Surviving Corporation or its Subsidiaries that provide
benefits (except with respect to severance, change in control and equity-based
or equity related arrangements) that are not materially less favorable in the
aggregate to such employees than the benefits provided under the Plans
(including cash incentive compensation and cash bonus plans or arrangements),
as of the Closing.
(b)With respect to each employee benefit plan, practice,
policy or arrangement of Purchaser or any of its Affiliates, each Retained
Employee shall be given credit under such plan, practice, policy or arrangement
for all service with the Company or any predecessor employer (to the extent
such credit was given by the Company or any predecessor employer under a
comparable plan, practice, policy or arrangement), for purposes of determining
eligibility and vesting, and for all other purposes for which such service is
either taken into account or recognized except as would result in a duplication
of benefits. Such service also shall apply for purposes of satisfying any
waiting periods, evidence of insurability requirements, or the application of
any preexisting condition limitations except as would result in a duplication
of benefits. Retained Employees shall be given full credit for amounts paid
under any Plan during the same calendar year in which they commence
29
participation in a comparable employee benefit plan of Purchaser for purposes
of applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the
comparable employee benefit plan of Purchaser except as would result in a
duplication of benefits.
(c)If any Retained Employee is discharged by the Surviving
Corporation or any of its Subsidiaries as of or after the Closing, then
Purchaser shall be responsible for any and all severance costs for such
Retained Employee, including all payments owing under any Plan. Purchaser
shall be responsible and assume all liability for all notices or payments due
to any Retained Employees, and all notices, payments, fines or assessments due
to any Governmental Entity, pursuant to any applicable Law with respect to the
employment, discharge or layoff of employees by the Surviving Corporation or
any of its Subsidiaries as of or after the Closing, including the WARN Act,
Section 4980B of the Code and any rules or regulations that have been issued in
connection with the foregoing.
(d)The Company shall notify the PBGC in writing of the
existence of this Agreement no later than five (5) Business Days after the date
hereof. Without the prior written consent of the Company, neither Purchaser
nor Sub nor any of their agents, assignees, directors or employees shall
contact the PBGC in respect of the Xxxx Group, Inc. Retirement Income Plan or
the Transactions prior to the Closing. Each party hereto shall use its
reasonable best efforts to give each other party hereto a reasonable
opportunity to participate in any oral or written communications, discussions
or negotiations with the PBGC. Each party hereto shall promptly notify each
other party hereto of any communication received from the PBGC, and shall
provide a copy of any such communication that is written.
(e)With respect to (i) the Company's cash bonus plans and
(ii) the agreements set forth on Section 5.5(e) of the Disclosure Schedule, the
Company shall through the Closing Date properly accrue for such plans and
agreements in its books and records. On or before the Closing Date, the
Company shall pay to its employees, officers and directors the full amount of
cash bonuses so accrued under such plans and agreements through the Closing
Date. Before the Closing, the Company shall terminate each of the Company's
cash bonus plans.
(f)The Company shall obtain shareholder approval in
accordance with Section 280G of the Code and the final regulations thereunder
so that no payment or benefit which has been, will or may be made (including
giving effect to any past payments or benefits) by the Company or any Company
Subsidiary to any individual could be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code by reason of a
"change in the ownership," "change in the effective control" or "change in the
ownership of a substantial portion of the assets" of the Company or of any
Company Subsidiary occurring by reason of the transactions contemplated by this
Agreement.
Section 5.6 Intercompany Arrangements.
(a)Simultaneously with the Closing, the Company shall pay to
Fremont Partners, L.L.C. and Fremont Partners III, L.L.C. (collectively,
30
"Fremont Partners") all accrued and unpaid amounts payable through and
including the Closing Date under the Advisory Services Agreement dated as of
August 12, 2003, by and between the Company and Fremont Partners. Except as
otherwise expressly contemplated by this Agreement, all agreements and
commitments, whether written, oral or otherwise, between the Company or any
Company Subsidiary, on the one hand, and Fremont Partners and its Affiliates
(excluding the Company and the Company Subsidiaries), on the other hand, shall
be terminated and of no further effect, simultaneously with the Closing without
any further action or liability on the part of the parties thereto.
(b)Simultaneously with the Closing, the Company shall pay to
New Canaan Investments, Inc. all accrued and unpaid amounts payable through and
including the Closing Date under the Management Agreement dated as of January
1, 2003, by and between the Company and New Canaan Investments, Inc. Except as
otherwise expressly contemplated by this Agreement, all agreements and
commitments, whether written, oral or otherwise, between the Company or any
Company Subsidiary, on the one hand, and New Canaan Investments, Inc. and its
Affiliates (excluding the Company, the Company Subsidiaries and any directors
or officers of the Company), on the other hand, shall be terminated and of no
further effect, simultaneously with the Closing without any further action or
liability on the part of the parties thereto.
Section 5.7 Maintenance of Books and Records
. Each of the parties hereto shall preserve, until at least the
eighth anniversary of the Closing Date, all pre-Closing Date records possessed
or to be possessed by such party relating to the Company. After the Closing
Date, upon reasonable request from Sellers' Representative, the party holding
such records shall (a) provide to Sellers' Representative reasonable access to
such records during normal business hours and (b) permit Sellers'
Representative to make copies of such records, in each case at no cost to
Sellers' Representative (other than for reasonable out-of-pocket expenses);
provided that nothing herein shall require any party to disclose any
information to any Person if such disclosure would jeopardize any attorney-
client or other legal privilege or contravene any applicable Law. Such records
may be sought under this Section 5.7 for any reasonable purpose, including to
the extent reasonably required in connection with the audit, accounting, tax,
litigation, federal securities disclosure or other similar needs of any
Stockholder or former Stockholder or their respective stockholders, directors,
officers, Affiliates and employees seeking such records. Notwithstanding the
foregoing, any and all such records may be destroyed by a party if such
destroying party sends to the other party written notice of its intent to
destroy such records, specifying in reasonable detail the contents of the
records to be destroyed; such records may then be destroyed after the 30th day
following such notice unless the other party notifies the destroying party that
such other party desires to obtain possession of such records, in which event
the destroying party shall transfer the records to Sellers' Representative and
Sellers' Representative shall pay all reasonable expenses of the destroying
party in connection therewith.
Section 5.8 Directors' and Officers' Insurance and
Indemnification.
(a)In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action, suit, proceeding or investigation by or in
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the right of the Company, the Surviving Corporation or any of their respective
Subsidiaries, in which any of the present or former officers or directors of
the Company and the Company Subsidiaries (collectively, the "D&O Indemnified
Parties") is, or is threatened to be, made a party by reason of the fact that
he or she is or was, prior to the Closing Date, a director, officer, employee
or agent of the Company or any of the Company Subsidiaries or is or was, prior
to the Closing Date, serving as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise at
the request of the Company or any of the Company Subsidiaries, whether such
claim arises before, on or after the Closing Date, the Surviving Corporation
shall, and Purchaser shall cause the Surviving Corporation (which for the
purpose of this Section 5.8 shall include any successor to the Surviving
Corporation) to, indemnify and hold harmless, as and to the same extent and on
the same terms and conditions permitted in the Company's or such Company
Subsidiary's certificate of incorporation or bylaws or other similar formation
documents in effect on the date hereof (to the fullest extent permitted by
applicable laws), each such D&O Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before,
on or after the Closing Date) with respect to which the Company or the
Surviving Corporation (or any successor of the Surviving Corporation) is
required to provide indemnification hereunder, (i) Purchaser may cause the
Surviving Corporation to, at its election, assume the defense of such matter;
provided, that in the event that the Surviving Corporation fails to assume such
defense or, under applicable standards of professional conduct, a conflict of
interest exists between the Surviving Corporation, on the one hand, and the D&O
Indemnified Parties on the other hand, the D&O Indemnified Parties may retain
counsel satisfactory to them, and the Surviving Corporation shall, and
Purchaser shall cause the Surviving Corporation to pay all reasonable fees and
expenses of such counsel for the D&O Indemnified Parties promptly as statements
therefor are received and (ii) the Surviving Corporation shall, and Purchaser
shall cause the Surviving Corporation to, use its best efforts to assist in the
vigorous defense of any such matter; provided, that the Surviving Corporation
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld). If, on or after
the Closing Date, the Surviving Corporation is party to a reorganization,
recapitalization, merger, sale, business combination or similar transaction
after which the Surviving Corporation is unable to fulfill its obligations
under this Section 5.8(a), then from and after such time Purchaser shall
guarantee the performance by the Surviving Corporation of its obligations under
this Section 5.8(a).
(b)Purchaser shall cause the Surviving Corporation and its
Subsidiaries, for a period of six (6) years, to keep in effect in their
respective certificate of incorporation or bylaws or other similar formation
documents a provision which provides for indemnification of the D&O Indemnified
Parties to the extent required under Section 5.8(a).
(c)Purchaser shall cause the Surviving Corporation to obtain
policies of officers' and directors' liability insurance ("D&O Insurance")
covering the Company's existing officers and directors, which policies shall
contain terms no less favorable to the Company's current officers and directors
than the terms of the D&O Insurance currently covering the Company's existing
officers and directors, for a period of not less than six years after the
Closing Date; provided that in no event shall the Surviving Corporation be
required to pay aggregate premiums for insurance under this Section 5.8(c) in
32
excess of 300% of the aggregate premiums paid in 2004 in respect of the D&O
Insurance covering the Company's directors and officers (the "2004 Premium");
and provided further, that if the Surviving Corporation is unable to obtain the
amount of insurance required by this Section 5.8(c) for such aggregate premium,
Purchaser shall cause the Surviving Corporation to obtain as much insurance as
can be obtained for an annual premium not in excess of 300% of the 2004
Premium. Purchaser or the Surviving Corporation may purchase tail insurance
covering each Person currently covered by the Company's D&O Insurance, with
respect to matters or circumstances occurring at or prior to the Closing Date,
on coverage terms that are equivalent to the coverage terms of such D&O
Insurance in effect for the Company on the date hereof.
(d)This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the D&O Indemnified Parties and their
respective heirs and successors. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which a D&O Indemnified Party is
entitled, whether pursuant to Law, contract or otherwise. Purchaser shall, or
shall cause the Surviving Corporation to, pay all expenses, including
reasonable attorneys' fees, that may be incurred by any D&O Indemnified Party
which is the prevailing party in any action or proceeding to enforce the
indemnity and other obligations provided for in this Section 5.8.
(e)In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary to effectuate the purpose of this Section 5.8, Purchaser shall
cause the Surviving Corporation to make proper provision so that the successors
and assigns of the Surviving Corporation shall succeed to the obligations set
forth in this Section 5.8 and none of the actions described in clauses (i) or
(ii) shall be taken until such provision is made.
Section 5.9 Notice of Action by Written Consent
. In accordance with Section 228(d) of the DGCL and the
certificate of incorporation and bylaws of the Company, the Company shall,
after the date hereof, promptly notify holders of the Shares who did not
execute the action by written consent authorizing the execution and delivery by
the Company of this Agreement and the consummation by it of the Transactions of
such action by written consent.
Section 5.10 Expenses
. All out-of-pocket expenses incurred in connection with this
Agreement and the Related Documents and the Transactions shall be paid by the
party incurring such out-of-pocket expenses, except as specifically provided to
the contrary in this Agreement; provided that the costs and out of pocket
expenses of the Company and the Company Subsidiaries incurred in connection
with the Transactions shall be borne by the Sellers to the extent not included
in Transaction Costs.
Section 5.11 FIRPTA Certificate
. At the Closing, the Company shall deliver to Purchaser, in a
form reasonably satisfactory to Purchaser, an affidavit of the Company, issued
pursuant to and in compliance with Treasury Regulations 1.897-2(h) and 1.1445-
2(c)(3) and dated as of the Closing Date, certifying that an interest in the
33
Company is not a U.S. real property interest within the meaning of Section 897
of the Code.
Section 5.12 Tax Audits
. For a period ending three years from the Closing Date, Purchaser
shall not, and shall not cause the Surviving Corporation or any of its
Subsidiaries to, in each case directly or indirectly, seek any Tax Audit or
other review of any kind of the Company or the Company Subsidiaries, or
initiate any correspondence or communication with any Taxing Authority with
respect to any Tax period that ends on or before, or that includes, the Closing
Date with the objective of triggering a Tax Audit or a review of the Company's
or any Company Subsidiary's Tax position for such period. Purchaser shall not
amend, or cause or permit the Company or any Company Subsidiary to amend, any
Tax Return for any Tax year ending on or before or including the Closing Date
with respect to the Company or any Company Subsidiary without the prior written
consent of Sellers' Representative, which consent shall not be unreasonably
withheld, taking into account the likelihood that the amendment to such Tax
Return may ultimately lead to a material claim being made under Section 8.2.
Section 5.13 Appointment of Sellers' Representative.
(a)Each of the Sellers irrevocably appoints Fremont, as its
true and lawful attorney-in-fact, to act as its representative ("Sellers'
Representative") under this Agreement and, as such, to act, as such Seller's
agent (with full power of substitution), to take such action on such Seller's
behalf with respect to all matters relating to this Agreement and the
Transactions, including without limitation, to make all determinations,
agreements and settlements relating to the working capital procedures set forth
in Section 2.8, to negotiate, defend, settle and compromise indemnification
claims, to sign receipts, consents and other documents to effect any of the
Transactions and to take all actions necessary or appropriate in connection
with the foregoing. All decisions and actions by Sellers' Representative,
including any agreement between Sellers' Representative and Purchaser relating
to indemnification obligations of the Sellers under Article VIII, including the
defense or settlement of any claims and the making of payments with respect
hereto, shall be binding upon all of the Sellers, and no Seller shall have the
right to object, dissent, protest or otherwise contest the same. Sellers'
Representative shall incur no liability to the Sellers with respect to any
action taken or suffered by the Sellers in reliance upon any notice, direction,
instruction, consent, statement or other documents believed by Sellers'
Representative to be genuinely and duly authorized, nor for any other action or
inaction with respect to the indemnification obligations of the Sellers under
Article VIII, including the defense or settlement of any claims and the making
of payments with respect thereto. The Sellers' Representative may, in all
questions arising under this Agreement rely on the advice of counsel, and for
anything done, omitted or suffered in good faith by Sellers' Representative
shall not be liable to the Sellers. Sellers' Representative shall not have any
duties or responsibilities except those expressly set forth in this Agreement,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or shall otherwise exist against
Sellers' Representative.
(b)Purchaser and the Escrow Agent shall be entitled to
conclusively rely on the instructions, decisions and acts of Sellers'
34
Representative required, permitted or contemplated to be taken by Sellers'
Representative hereunder or under the Escrow Agreement, and the Escrow Agent
and Purchaser are hereby relieved from any liability to any Person for any acts
done by them in accordance with any instructions, decisions or acts of Sellers'
Representative. Purchaser and the Escrow Agent shall be entitled to treat as
genuine, and as the document it purports to be, any letter, paper or other
document furnished to it by or on behalf of Sellers' Representative, and
reasonably believed by Purchaser or the Escrow Agent to be genuine and to have
been signed and presented by the proper party or parties.
(c)Sellers' Representative shall be entitled to rely, and
shall be fully protected in relying, upon any statements furnished to it by any
Seller, or Purchaser, or any other evidence deemed by Sellers' Representative
to be reliable, and Sellers' Representative shall be entitled to act on the
advice of counsel selected by it. Sellers' Representative shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall have received such advice or concurrence of such Sellers as it deems
appropriate or it shall have been expressly indemnified to its satisfaction by
the Sellers appointing it severally according to their respective Ownership
Percentages against any and all liability and expense that Sellers'
Representative may incur by reason of taking or continuing to take any such
action.
(d)Each of the Sellers hereby agrees to (i) indemnify
Sellers' Representative (in its capacity as such) ratably according to their
respective Ownership Percentages against, and to hold Sellers' Representative
(in its capacity as such) harmless from, any and all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement of whatever kind which may at
any time be imposed upon, incurred by or asserted against Sellers'
Representative in such capacity in any way relating to or arising out of its
action or failures to take action pursuant to this Agreement or in connection
herewith in such capacity, and (ii) pay Sellers' Representative for all costs
and expenses incurred on behalf of the Sellers ("Representative Expenses"),
promptly upon demand by Sellers' Representative, ratably according to their
respective Ownership Percentages. The agreements in this Section 5.13 shall
survive termination of this Agreement.
Section 5.14 Debt Financing.
(a)Each of Purchaser and Sub shall use its reasonable best
efforts to obtain the Debt Financing. As soon as reasonably practicable after
the date hereof but in any event prior to the Closing, Purchaser will enter
into definitive agreements with respect to the financings contemplated by the
Commitment Letters on terms and conditions substantially in accordance with the
Commitment Letters. Purchaser will furnish correct and complete copies of such
definitive agreements to the Company promptly upon their execution.
(b)Purchaser shall keep the Company informed with respect to
all material activity concerning the status of the financings contemplated by
the Commitment Letters and shall give the Company prompt notice of any material
adverse change with respect to such financings. Without limiting the
foregoing, Purchaser agrees to notify the Company promptly, and in any event
within two (2) Business Days, if at any time prior to the Closing Date (i) any
Commitment Letter shall expire or be terminated for any reason, (ii) any
financing source that is a party to any Commitment Letter notifies Purchaser or
Sub that such source no longer intends to provide financing to Purchaser on the
35
terms set forth therein, or (iii) for any reason Purchaser or Sub no longer
believes in good faith that Purchaser will be able to obtain all or any portion
of the financing contemplated by the Commitment Letters on substantially the
terms described therein. Purchaser shall not, and shall not permit any of its
controlled Affiliates to, without the prior written consent of the Company, (x)
take any action outside of the ordinary course of business consistent with past
practice or (y) enter into any transaction, including any merger, acquisition,
joint venture, disposition, lease, contract or debt or equity financing, that,
in the case of (x) or (y), would reasonably be expected to impair, delay or
prevent Purchaser's obtaining of the financing contemplated by any Commitment
Letter. Purchaser shall not amend or alter, or agree to amend or alter, any
Commitment Letter in any manner that would impair, delay or prevent the
transactions contemplated by this Agreement without the prior written consent
of the Company.
(c)To the extent that any portion of the Debt Financing is
unavailable for any reason, each of Purchaser and Sub shall use its reasonable
best efforts to obtain alternative financing (the "Alternative Financing") as
necessary to effect the transactions contemplated by this Agreement; provided,
that such Alternative Financing shall be on terms and conditions no less
favorable in the aggregate to Purchaser than those provided in the Commitment
Letters, or otherwise on terms and conditions reasonably acceptable to
Purchaser.
Section 5.15 Assistance with Financing
. In addition to and without limiting the agreements of the
parties contained above or below and subject to the Confidentiality Agreement,
the Company, and the Sellers agree to assist Purchaser and Sub in timely
obtaining the Debt Financing, including, without limitation, (a) delivering
such financial and statistical information and projections relating to the
Company and the Company Subsidiaries as may be reasonably requested in
connection with the Debt Financing, (b) arranging for the Company's independent
accountants, lawyers and consultants to provide such services that may be
reasonably required in respect of the Debt Financing, (c) making appropriate
officers of the Company and the Company Subsidiaries available for due
diligence meetings and for participation in meetings with rating agencies and
prospective lenders, (d) providing timely access to diligence materials and
appropriate personnel to allow lenders and their representatives to complete
all appropriate diligence, and (e) providing assistance with respect to the
review and granting of security interests in collateral for the Debt Financing,
and obtaining any consents associated therewith (including pre-filing of
financing statements, which is hereby authorized). Purchaser shall promptly
reimburse the Company for any reasonable costs incurred in performing its
obligations under this Section 5.15.
Section 5.16 Post-Closing Cooperation; Confidentiality.
(a)After the Closing, upon reasonable written notice, the
Surviving Corporation and the Sellers shall furnish or cause to be furnished to
each other, as promptly as practicable, such information and assistance (to the
extent within the control of such party) relating to the Surviving Corporation
(including access to books and records (in any forum or medium)) as is
reasonably necessary for the filing of SEC reports, the filing of all Tax
Returns, and making of any election related to Taxes, the preparation for any
audit by any Taxing Authority, and the prosecution or defense of any proceeding
related to any Tax Return. The Sellers, the Surviving Corporation and
36
Purchaser shall cooperate with each other in the conduct of any audit or other
proceeding relating to Taxes involving the Company.
(b)Other than information which (i) is or becomes generally
available to the public other than as a result of a breach of this Agreement by
such Seller, (ii) is or becomes available to the Seller on a non-confidential
basis from a source other than the Company or any Company Subsidiary, provided
that such source was not known by the Seller to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Company or any Company Subsidiary with respect to such
information, (iii) is disclosed by such Seller with the Purchaser's or the
Surviving Corporation's prior written approval or (iv) is disclosed to its
attorneys, accountants, or other Representatives so long as each such Person is
bound by a confidentiality agreement or obligation, no Seller shall make public
or otherwise communicate any confidential information or trade secrets of the
Company or any Company Subsidiary. If any Seller is requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, any informal or formal investigation by
any government or governmental agency or authority or other supervisory
authority or otherwise) to disclose any such confidential information or trade
secret (collectively, the "Compelled Information"), such Seller will notify the
Surviving Corporation or the Purchaser promptly in writing of the terms and
circumstances surrounding such request so that it may seek a protective order
or other appropriate remedy or, in its sole discretion, waive compliance with
the terms of this Section 5.16(b). Each Seller agrees not to oppose any action
by the Purchaser or the Surviving Corporation to obtain a protective order or
other appropriate remedy and shall cooperate fully with Purchaser or the
Surviving Corporation in connection therewith. If no such protective order or
other remedy is obtained, or the Purchaser or the Surviving Corporation waives
compliance with the terms of this Section 5.16(b), such Seller will furnish
only that portion of the Compelled Information which such Seller is advised by
its counsel is legally required.
Section 5.17 Covenant of Certain Individual Sellers and the
Company
.. Each of Xxxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx, and Xxxxxxx Xxxxxxx (on behalf of
themselves and their respective spouses) (collectively, the "Section 5.17
Parties") and the Company agree to use their respective best efforts to take
the actions specified in Section 5.17 of the Disclosure Schedules. Each of the
Section 5.17 Parties and the Company represents and warrants that each of the
filings specified in Section 5.17 has been timely and properly filed. Each of
the Section 5.17 Parties and the Company agrees to keep Purchaser fully
informed of all material developments relating to their compliance with this
Section 5.17 and to promptly provide Purchaser with copies of all
correspondence and agreements in connection therewith.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Closing
. The respective obligation of each of the parties to effect the
Closing shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions:
37
(a)Statutes; Court Orders. No statute, rule or regulation
shall have been enacted or promulgated by any Governmental Entity which
prohibits the consummation of the Closing; there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Closing; provided that each of Purchaser, Sub and the
Company shall use their respective reasonable best efforts to have any such
order or injunction vacated or lifted; and there shall not be pending any suit,
action or proceeding by any Governmental Entity seeking to restrain or prohibit
the consummation of the Closing or the performance of any of the other
Transactions; and
(b)HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section 6.2 Conditions to Obligations of Purchaser and Sub to
Effect the Closing
. The obligations of Purchaser and Sub to consummate the Closing
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions:
(a)Representations and Warranties. The representations and
warranties in clause (i) of section 3.9 shall be true and correct as of the
date hereof and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
All of the other representations and warranties of the Company and the Sellers
set forth in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with the same effect as though all such representations
and warranties had been made on and as of the Closing Date, other than any such
representations and warranties made as of a specified date, which shall be true
and correct as of such date, except to the extent that the failures to be true
and correct, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect; provided, however for purposes of
this sentence of this Section 6.2(a) such representations and warranties shall
be construed as if they did not contain any qualification that refers to
materiality or Company Material Adverse Effect;
(b)Company's or any Seller's Breach. Neither the Company nor
any Seller shall have failed to perform in any material respect any material
obligation or to comply in any material respect with any covenant of the
Company or the Sellers to be performed or complied with by it under this
Agreement;
(c)Funding. Purchaser shall have received the proceeds of
the Debt Financing or the Alternative Financing;
(d)Consents Obtained. The third party consents identified in
Section 6.2(d) of the Disclosure Schedule shall have been obtained (provided,
that if Sellers agree in writing in form and substance reasonably satisfactory
to Purchaser to indemnify the Company and Purchaser for any and all Losses
(which indemnification shall not be subject to the Deductible Amount or the
Indemnity Cap and which Losses shall not constitute De Minimis Losses
regardless of amount, and any payment with respect to any such indemnification
shall be made outside of the Indemnification Escrow Account) that result from
the failure to obtain each of such consents not previously obtained, then this
Section 6.2(d) shall not constitute a condition to the obligation of Purchaser
or Sub to consummate the Closing); and
38
(e)Officer's Certificate. Purchaser shall have received a
certificate signed by the Chief Executive Officer and Chief Financial Officer
of the Company, certifying as to fulfillment of the conditions set forth in
Section 6.2 with respect to the Company.
Section 6.3 Conditions to Obligation of the Company and the
Sellers to Effect the Closing
. The obligation of the Company to consummate the Closing shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a)Representations and Warranties. All of the
representations and warranties of Purchaser and Sub set forth in this Agreement
shall be true and correct as of the date hereof and as of the Closing Date with
the same effect as though all such representations and warranties had been made
on and as of the Closing Date, other than any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, except to the extent that the failures to be true and correct,
individually or in the aggregate, would not reasonably be expected to impair
the ability of Purchaser and Sub to consummate the Transactions and to fulfill
their obligations under this Agreement and the Related Documents; provided,
however, for purposes of this Section 6.3(a) such representations and
warranties shall be construed as if they did not contain any qualification that
refers to materiality;
(b)Purchaser or Sub Breach. Neither Purchaser nor Sub shall
have failed to perform in any material respect any material obligation or to
comply in any material respect with any covenant of Purchaser or Sub to be
performed or complied with by it under this Agreement;
(c)Repayment of Credit Agreement and Release of Parent Pledge
Agreement. Purchaser shall have caused the Credit Agreement to be repaid in
full and Sellers' Representative shall have received a full release from the
Parent Pledge Agreement in form and substance satisfactory to Sellers'
Representative. This condition is made for the express benefit of Sellers'
Representative and may not be waived by the Company without Sellers'
Representative's prior written consent; and
(d)Officer's Certificate. The Company shall have received a
certificate signed by the Chief Executive Officer and Chief Financial Officer
of Purchaser and Sub, certifying as to fulfillment of the conditions set forth
in Section 6.3 with respect to each of Purchaser and Sub.
ARTICLE VII
TERMINATION
Section 7.1 Termination
. This Agreement may be terminated or the Transactions may be
abandoned at any time prior to the Closing Date:
(a)by the mutual written consent of Purchaser and the
Company;
(b)by Purchaser or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall use reasonable
39
best efforts to lift) which permanently restrains, enjoins or otherwise
prohibits the Merger and such order, decree, ruling or other action shall have
become final and non-appealable;
(c)by Purchaser or the Company if the Closing shall not have
occurred on or prior to July 29, 2005, and such party is not in willful breach
of this Agreement at the time such party terminates this Agreement or by the
Sellers;
(d)by the Company if Purchaser or Sub shall have breached in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement that would give rise to a failure of a
condition set forth in Sections 6.3, which breach cannot be or has not been
cured within thirty (30) days after the giving of written notice by the Company
to Purchaser specifying such breach; or
(e)by Purchaser if the Company or the Sellers shall have
breached any of its representations, warranties, covenants or other agreements
contained in this Agreement that would give rise to a failure of a condition
set forth in Section 6.2, which breach cannot be or has not been cured within
thirty (30) days as to the giving of written notice by Purchaser to the Company
specifying such breach.
Section 7.2 Effect of Termination
. In the event of the termination of this Agreement or abandonment
of the Transactions by any party hereto pursuant to the terms of this
Agreement, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination
of this Agreement or abandonment of the Transactions is made, and this
Agreement shall become null and void and of no further force and effect, except
for provisions of Sections 5.2(b), 5.4, this Article VII, Article IX and
Article X. Nothing in this Section 7.2 shall be deemed to release any party
from any liability for any prior breach of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
any other party of its surviving obligations under this Agreement.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
Section 8.1 Survival
. The representations and warranties of the Company, the Sellers,
and Purchaser and Sub in this Agreement shall survive the Closing solely for
purposes of this Article VIII and shall terminate upon the first anniversary of
the Closing. The covenants and agreements of the Company, the Sellers and
Purchaser in this Agreement required to be performed following the Closing
shall survive the Closing and shall be fully effective and enforceable for the
periods therein indicated. The covenants and agreements of the Company, the
Sellers and Purchaser and Sub in this Agreement required to be performed before
or at the Closing shall terminate upon the first anniversary of the Closing
Date.
Section 8.2 Indemnification.
40
(a)Subject to the limitations set forth in this Article VIII,
each Seller severally (but not jointly) and, except with respect to Losses
resulting from indemnification obligations contained in Section 6.2(d) or
Section 5.17 Losses, to the extent of such Seller's pro rata interest in the
Indemnification Escrow Account (and, except with respect to Losses resulting
from indemnification obligations contained in Section 6.2(d) or Section 5.17
Losses, solely out of the Indemnification Escrow Account) shall indemnify and
hold harmless Purchaser and its officers, directors, employees, stockholders,
representatives, agents, successors and assigns and each director of the
Company (each, a "Purchaser Indemnified Party"), from and against any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses, whether incurred in connection with a Third-Party Claim or a claim
against another party hereto) ("Losses") sustained or required to be paid by
Purchaser resulting from (i) any breach of any representation or warranty made
by the Company or any Seller in this Agreement, (ii) any breach of any
covenant, agreement or obligation of the Company or any Seller contained in
this Agreement, and (iii) any Section 5.17 Losses; provided, however, that,
notwithstanding any other provision in this Agreement, the Company may take any
and all actions prior to the Closing that it deems necessary or appropriate to
correct or mitigate any violations or circumstances described above. Except to
the extent that indemnification is required pursuant to Section 8.2(b), each of
the Sellers releases the Company from and against any Losses or potential
Losses resulting from such Seller's ownership of the Shares and/or Preferred
Shares, including those resulting from any proceeding, judicial or
administrative, or asserted by any other third party (any such proceeding being
referred to as a "Third-Party Claim"). For purposes of this Section 8.2(a),
the truth or correctness of any representation or warranty of the Company or
any Seller contained in this Agreement shall be determined without regard to
any "Company Material Adverse Change", "Company Material Adverse Effect" or
"materiality" qualifications set forth in such representation.
(b)Subject to the limitations set forth in this Article VIII,
Purchaser shall indemnify and hold harmless the Sellers and their respective
officers, directors, employees, stockholders, members, representatives, agents,
successors and assigns (each, a "Seller Indemnified Party") from and against
any Loss or Losses sustained or required to be paid resulting from (i) any
breach of any representation or warranty made by Purchaser in this Agreement,
(ii) any breach of any covenant, agreement or obligation of Purchaser or Sub
contained in this Agreement. Except to the extent that indemnification is
required pursuant to Section 8.2(a), the Company hereby releases, and Purchaser
shall cause the Company to indemnify and hold harmless, each Seller Indemnified
Party from and against any Losses or potential Losses resulting from such
indemnified party's relationship with the Company, including those resulting
from any Third-Party Claim.
(c)In the event that any indemnified party is entitled to
indemnification with respect to any Loss or potential Loss arising from any
Third-Party Claim, the indemnified party shall give the indemnifying party
prompt notice thereof. Any failure or delay on the part of the indemnified
party to give such notice shall not affect whether an indemnifying party is
liable for reimbursement except to the extent that the indemnifying party is
prejudiced thereby. The indemnifying party shall be entitled to control,
contest and defend such Third-Party Claim. Such contest and defense shall be
conducted by counsel chosen by the indemnifying party reasonably acceptable to
the indemnified party unless the indemnifying party shall not have taken any
41
action to defend such Third Party Claim within 30 days after assuming the
defense, in which case and notwithstanding any other provision of this Section
8.2(c), the indemnified party shall be entitled to conduct and control the
defense thereof and the reasonable fees and disbursements of such indemnified
party's counsel shall be at the expense of the indemnifying party. So long as
the indemnifying party is conducting the defense of the Third-Party Claim in
accordance with this Section 8.2(c), the indemnified party shall be entitled,
at its own cost and expense (which expense shall not constitute a Loss), to
participate in, but not control, such contest and defense and to be represented
by attorneys of its or their own choosing, provided that the indemnified party
will cooperate with the indemnifying party in the conduct of such defense.
Neither the indemnified party nor the indemnifying party may concede, settle or
compromise any Third-Party Claim without the consent of the other party (which
consent will not be unreasonably withheld, conditioned or delayed), except that
the indemnifying party may settle a Third-Party Claim if the indemnifying party
obtains a full release of all claims for which indemnification is required or
if the settlement is solely for money damages.
(d)If any indemnified party has a claim against any
indemnifying party that does not involve a Third-Party Claim, the indemnified
party shall deliver a written notice describing such claim in reasonable detail
to the indemnifying party within thirty (30) days after the discovery of the
basis for such claim.
Section 8.3 Limitations on Indemnification.
(a)In connection with any indemnification claim (except with
respect to any indemnification claims arising out of Section 6.2(d) or Section
5.17 Losses) by any Person, neither the Sellers (collectively) nor Purchaser
shall be liable in an aggregate amount which, if added to all other amounts
paid as indemnification payments by such indemnifying party would exceed an
amount equal to the Indemnity Cap. Notwithstanding the foregoing, except with
respect to Losses resulting from breaches of representations or warranties made
in Section 6.2(d) or Section 5.17 Losses, no indemnifying party shall be
required to indemnify any Person for Losses resulting from a breach of
representation or warranty made in this Agreement until, and only to the
extent, the aggregate amount of all Losses for which the indemnified parties
are otherwise entitled to indemnification pursuant to this Agreement exceeds an
amount equal to One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Deductible Amount"); provided, however, that De Minimis Losses shall not count
towards the Deductible Amount unless and until the aggregate amount of all De
Minimis Losses exceeds $1,000,000. If at any time, the indemnified parties'
aggregate Losses (except with respect to Losses resulting from breaches of
representations or warranties made in Section 6.2(d) or Section 5.17 Losses)
for which such indemnified parties are entitled to indemnification pursuant to
this Agreement exceed the Deductible Amount, then the indemnifying party shall
be liable only for Losses in excess of the Deductible Amount; provided further
that (except with respect to indemnification obligations contained in Section
6.2(d) or Section 5.17 Losses) the obligations of the Sellers shall be
satisfied solely from the Indemnification Escrow Account, without further
recourse.
(b)Any Loss otherwise indemnifiable hereunder shall be
reduced by (i) any amount actually recoverable in connection therewith under
insurance or the indemnified party shall, upon receiving full payment for such
Loss from the indemnifying party, assign to the indemnifying party the right to
42
pursue recovery under such insurance and (ii) any Tax benefit actually realized
arising from the payment or accrual of any such indemnified amount, which
payment shall be made to the Sellers within five (5) Business Days after the
filing of the Tax Return on which such benefits are reflected. There shall be
no indemnification pursuant to this Agreement for any punitive damages with
respect to any claims other than those incurred in connection with a Third-
Party Claim.
(c)If an indemnifying party makes any payment under this
Agreement in respect of any Losses, such indemnifying party shall be
subrogated, to the extent of such payment, to the rights of the indemnified
party against any third party with respect to such Losses; provided, however,
that such indemnifying party shall not have any rights of subrogation with
respect to any other party hereto or any of their respective Affiliates or
their Affiliates' respective officers, directors, agents or employees. To the
extent the indemnifying party does not have rights of subrogation against any
party as a result of the proviso to the proceeding sentence, the indemnified
party will take commercially reasonable steps to collect from such third party
in respect of such Losses, and will turn over to the indemnifying party any
amounts it receives from such third party in respect of such Losses (less any
and all reasonable costs and expenses associated with such collection), to the
extent of the payment actually made by the indemnifying party in respect of
such Losses.
(d)The obligations set forth in this Article VIII shall
terminate upon the first anniversary of the Closing, other than with respect to
Section 5.17 Losses, which shall survive until 60 days after the applicable
statute of limitations; provided, however, that such obligations shall continue
beyond such periods with respect to any claims properly made by delivery of a
notice of such claim before the expiration of the applicable period pursuant to
this Article VIII during such periods that are not resolved at the conclusion
of such periods.
Section 8.4 Escrow; Sole and Exclusive Remedy
. Notwithstanding anything in this Agreement to the contrary, the
Sellers, collectively, shall not be liable for any Losses (except with respect
to Losses resulting from indemnification obligations contained in Section
6.2(d) or Section 5.17 Losses) in an aggregate amount which, if added to all
other amounts paid as indemnification payments by the Sellers, would exceed the
balance of the Indemnification Escrow Account. Furthermore, except with
respect to Losses resulting from indemnification obligations contained in
Section 6.2(d) or Section 5.17 Losses), any indemnification or payment
obligation of the Sellers for Losses under this Agreement shall be satisfied
solely by recourse to the Indemnification Escrow Account, and Purchaser shall
not seek any indemnification, contribution or repayment directly or indirectly
(through any director or officer of the Company or otherwise) from any Seller
with respect to any matter relating to the Company or the subject matter of
this Agreement (whether on the basis of a claim sounding in tort, contract,
statute or otherwise) outside of the Indemnification Escrow Account other than
with respect to (i) fraud, (ii) criminal acts committed by such Seller against
the Company or any Company Subsidiary, (iii) transactions entered into by the
Company or any Company Subsidiary at such Seller's direction for which such
Seller or such Seller's immediate family member or Affiliate received a bribe,
kickback or similar improper benefit, (iv) any indemnification claim in
connection with Section 6.2(d) or Section 5.17 Losses or (v) loans of money or
property from the Company or any Company Subsidiary to such Seller, which loans
remain outstanding and unpaid after the Closing, provided, however, that
43
nothing contained herein shall preclude a party from bringing an action for
specific performance or other equitable remedy to require a party to perform
its agreements, covenants or obligations under this Agreement or for fraud.
The remaining balance of the Indemnification Escrow Account shall be released
to Sellers' Representative on the first anniversary of the Closing Date except
in respect of amounts relating to any claims for indemnification properly made
and not resolved before such time and retained therein pursuant to the terms of
the Escrow Agreement. For the avoidance of doubt, with respect to
indemnification obligations arising with respect to Section 6.2(d) or Section
5.17 Losses, at Purchaser's election, any such indemnification obligation may
be satisfied by recourse to the Indemnification Escrow Account.
Section 8.5 Contribution for Section 5.17 Losses
. If any amount is paid or payable by any Seller under this
Article VIII with respect to any Section 5.17 Losses, such Seller shall be
entitled to contribution from any or all of the other Sellers, so that the
respective amounts paid by each Seller with respect to such Section 5.17 Losses
are in proportion to the respective proceeds received by each Seller under this
Agreement. Nothing in this Section 8.5 shall affect the rights of any
Purchaser Indemnified Party to seek indemnification from any Seller under this
Article VIII.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions
. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:
"2004 Premium" has the meaning set forth in Section 5.8(c).
"2005 Budget" means the budget of the Company and the Company
Subsidiaries for the fiscal year ending December 31, 2005, a copy of which is
attached as Exhibit C.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act; provided, that with respect to the Company and the Company
Subsidiaries, "Affiliate" shall exclude Fremont, Fremont Partners and their
respective affiliates (other than the Company and the Company Subsidiaries).
"Agreement" or "this Agreement" means this Amended and Restated
Agreement and Plan of Merger, together with the Exhibits hereto and the
Disclosure Schedule.
"Agreement and Plan of Merger" means the Agreement and Plan of
Merger, dated as of May 5, 2005, by and among Purchaser, Sub, the Company, the
Sellers listed on the signature pages hereto, and Fremont Acquisition Company,
L.L.C., as Sellers' Representative.
"Audit" or "Audits" has the meaning set forth in Section 3.20(d).
44
"Balance Sheet" means the most recent balance sheet of the Company
and the consolidated Company Subsidiaries included in the Financial Statements.
"Balance Sheet Date" means the date of the Balance Sheet.
"Business Day" means a day other than Saturday, Sunday or any day
on which the principal commercial banks located in the State of New York are
authorized or obligated to close under the laws of such state.
"Cash" means cash (including checks received for deposit, whether
or not cleared), commercial paper, certificates of deposit and other bank
deposits, bank accounts, treasury bills and all other cash equivalents, and
excludes checks that have been written but not yet cleared.
"Certificate" has the meaning set forth in Section 2.2(a).
"Certificate of Merger" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 2.1.
"Closing Adjustments Holdback Amount" means $10,000,000, of which
$5,000,000 shall be deposited by Purchaser on behalf of the Sellers at the
Closing on the one hand, and $5,000,000 shall be deposited by Purchaser on
behalf of itself at the Closing on the other hand, which shall be deposited
into an escrow account (the "Closing Adjustments Holdback Escrow Account") to
be established by Purchaser and the Sellers with the Escrow Agent pursuant to
the terms of the Escrow Agreement.
"Closing Adjustments Holdback Escrow Account" has the same meaning
set forth under the definition of "Closing Adjustment Holdback Amount" set
forth in this Section 9.1.
"Closing Cash" means the Cash of the Company and the Company
Subsidiaries immediately prior to Closing.
"Closing Date" means the date on which the Closing occurs.
"Closing Indebtedness" means the Indebtedness of the Company and
the Company Subsidiaries immediately prior to Closing.
"Closing Statement" has the meaning set forth in Section 2.8(a).
"Code" means the Internal Revenue Code of 1986, as amended.
45
"Company" means Xxxx Group, Inc., a Delaware corporation.
"Company Intellectual Property" means all Intellectual Property
that is used or held for use (whether owned or licensed from third parties) in
connection with the business of the Company or any Company Subsidiary.
"Company Material Adverse Change" means any state of facts,
circumstance, change, development, effect, condition or occurrence that,
individually or in the aggregate, has a Company Material Adverse Effect;
provided, that (I) any state of facts, circumstance, change, development,
effect, condition or occurrence relating to (x) the economy or financial
markets in general or (y) the industries and markets in which the Company
operates generally, (II) the entry into, announcement and consummation of this
Agreement or the Transactions and any actions taken pursuant to and in
compliance with this Agreement, and (III) changes in Law or U.S. GAAP, but in
the case of clauses (I) and (III), solely to the extent that such facts,
circumstances, changes, developments, effects, conditions and occurrences do
not specifically relate to or disproportionately affect the Company and the
Company Subsidiaries, taken as a whole, shall not constitute a Company Material
Adverse Change.
"Company Material Adverse Effect" means a material adverse change
in, or effect on, the financial condition, business, assets, liabilities or
results of operations of the Company and the Company Subsidiaries, taken as a
whole; provided, that for purposes of Section 6.2(a) only (but solely as such
Section relates to Sections 3.8(c), 3.13, 3.14, 3.15 (last sentence thereof
only), 3.16, 3.17, 3.18, 3.19 (excluding subsection (g) thereof), 3.21 and
3.22), (I) any state of facts, circumstance, change, development, effect,
condition or occurrence relating to (x) the economy or financial markets in
general or (y) the industries and markets in which the Company operates
generally, (II) the entry into, announcement and consummation of this Agreement
or the Transactions and any actions taken pursuant to and in compliance with
this Agreement, and (III) changes in Law or U.S. GAAP, but in the case of
clauses (I) and (III), solely to the extent that such facts, circumstances,
changes, developments, effects, conditions and occurrences do not specifically
relate to or disproportionately affect the Company and the Company
Subsidiaries, taken as a whole, shall not constitute a Company Material Adverse
Effect.
"Company Subsidiary" means each Person that is a Subsidiary of the
Company.
"Computer Software" means computer software programs, databases,
data and all documentation related thereto.
"Confidentiality Agreement" means a letter agreement dated February
15, 2005 between the Company and Purchaser.
"Contract" has the meaning set forth in Section 3.13(a).
46
"Copyrights" means U.S. and foreign registered and unregistered
copyrights (including those in Computer Software and databases), all
registrations and applications to register the same and all renewals in
connection therewith.
"Credit Agreement" means the Credit Agreement dated as of August
13, 2003, as amended on August 5, 2004, among the Company, the banks, financial
institutions and other institutional lenders listed on the signature pages
thereof as the Initial Lenders (as defined therein), the bank listed on the
signature pages thereof as the Initial Issuing Bank (as defined therein), and
the Swing Line Bank (as defined therein), Xxxxxxx Xxxxx Capital, a division of
Xxxxxxx Xxxxx Business Financial Services Inc., as syndication agent, and Xxxxx
Fargo Bank, National Association, as collateral agent and as administrative
agent for the Lender Parties (as defined therein).
"Customer" means any Person which purchases goods from the Company
or any Company Subsidiary or which makes purchasing decisions on behalf of one
or more other Persons, whether or not the Person making such decisions is
actually invoiced for such purchases.
"De Minimis Loss" means a Loss resulting from a single set of facts
or circumstances that does not exceed $100,000.
"Deductible Amount" has the meaning set forth in Section 8.3(a).
"D&O Indemnified Parties" has the meaning set forth in Section
5.8(a).
"D&O Insurance" has the meaning set forth in Section 5.8(c).
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Schedule" means the disclosure schedule of even date
herewith prepared by the Company and delivered to Purchaser simultaneously with
the execution of the Agreement and Plan of Merger as amended or supplemented by
the Company pursuant to the terms hereof.
"Dissenting Shares" has the meaning set forth in Section 2.5.
"DOJ" means the Antitrust Division of the United States Department
of Justice.
"Effective Time" has the meaning set forth in Section 1.2.
"Employee" means each current, former or retired employee, officer
of the Company or any Company Subsidiary.
47
"Encumbrances" means any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions
on title or transfer of any nature whatsoever.
"Environmental Law" means all federal, state or local laws and
regulations, and all common law, governing public health and safety as such
matters relate to regulated hazardous substances (including applicable
environmental provisions of workplace health and safety laws addressing such
matters), or pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" with respect to a Person means each business or
entity that is a member of a "controlled group of corporations" under "common
control" or a member of an "affiliated service group" with such Person within
the meaning of Sections 414(b), (c) or (m) of the Code or required to be
aggregated with such Person under Section 414(o) of the Code, or is under
"common control" with such Person, within the meaning of Section 4001(a)(14) of
ERISA.
"Escrow Agent" and "Escrow Agreement" have the meanings set forth
under the definition of "Indemnification Holdback Amount" in this Section 9.1.
"Estimated Closing Adjustment" means (a) the Estimated Closing
Amount minus (b) the Target Net Working Capital Amount.
"Estimated Closing Amount" has the meaning set forth in Section
2.7.
"Estimated Closing Statement" has the meaning set forth in Section
2.7.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Calculation Date" has the meaning set forth in Section
2.8(a).
"Final Closing Amount" means the Closing Amount as set forth in the
Final Closing Statement.
"Final Closing Statement" has the meaning set forth in Section
2.8(c).
"Financial Statements" means (a) the audited consolidated balance
sheets of the Company as at December 31 in each of the fiscal years 2003 and
2004 together with consolidated statements of income, shareholders' equity and
cash flows for each of the twelve-month periods then-ended, and (b) the
unaudited consolidated balance sheet of the Company as at each of March 31,
48
2004 and March 31, 2005, and unaudited consolidated statements of income and
cash flows for the three-month periods then ended.
"Fremont" means Fremont Acquisition Company, L.L.C., a Delaware
limited liability company.
"Fremont Partners" has the meaning set forth in Section 5.6.
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Entity" means a federal, state, local or foreign
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency.
"Holdback Escrow Agreement" has the same meaning set forth under
the definition of "Closing Adjustments Holdback Amount" set forth in this
Section 9.1.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indebtedness" means, without duplication, (a) all indebtedness for
borrowed money or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices or being disputed
in good faith), (b) any other indebtedness that is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations in respect of acceptances
issued or created, (d) all liabilities secured by any lien on any property (e)
all guarantee obligations, and (f) all accrued interest related thereto in each
case other than (i) Permitted Encumbrances and (ii) immaterial liens that were
not created in connection with Indebtedness as defined in clause (a), (b) (c)
or (e) hereof. For the avoidance of doubt, "Indebtedness" shall not include
any obligations under operating leases of real property, including without
limitation all items listed on Section 3.12 of the Disclosure Schedule.
"Indemnification Escrow Account" has the meaning set forth under
the definition of "Indemnification Holdback Amount" in this Section 9.1.
"Indemnification Holdback Amount" means fifteen million
($15,000,000) dollars which shall be deposited into an escrow account (the
"Indemnification Escrow Account") to be established by Purchaser and the
Sellers with U.S. Bank National Association (the "Escrow Agent") pursuant to
49
the terms of an escrow agreement in the form attached hereto as Exhibit D (the
"Escrow Agreement").
"Indemnity Cap" means an amount equal to the Indemnification
Holdback Amount.
"Intellectual Property" means Trademarks, Patents, Copyrights,
Trade Secrets, and all other intellectual property rights.
"IRS" means the Internal Revenue Service.
"ISRA" has the meaning set forth in Section 5.3.
"Knowledge of the Company" means the actual (and not constructive
or imputed) knowledge of Xxxxxxx X. Xxxxxxx, president and chief executive
officer of the Company; Xxxxxxxx X. Xxxxxxxx, executive vice president,
secretary and treasurer of the Company; Xxxxxx X. Xxxxxxx, executive vice
president and chief financial officer of the Company; Xxxxx X. Xxxxxxx,
executive vice president and chief operating officer of the Company; Xxxxxxx
Xxxxxx, President of Tubed Products L.L.C., Xxxxxxx X. Xxxx, vice president and
corporate controller of the Company, Xxxxxx X. Xxxxxxxx, vice president,
healthcare sales, Xxxx X. Xxxxxx, vice president, product development and
research of the Company, Xxxxxx X. Xxxxxxx, vice president, food and beverage
sales, Xxxxxx X. Xxxx, vice president, quality management of the Company, Xxxxx
X. Xxxxxxxx, vice president, manufacturing and operational engineering, or Xxxx
X. Xxxxxx, vice president, manufacturing - closures. Each such person has
reviewed each provision of this Agreement in which the term "Knowledge of the
Company" appears, together with any related sections of the Disclosure Schedule
and the current files maintained by such person in or around such person's
individual office and not in off-site or remote storage.
"Knowledge of the Purchaser" means the actual (and not constructive
or imputed) knowledge of Xxx Boots, Xxxxx Xxxxxxxxxx, Xxxx Xxxxx, or Xxxx
Xxxxxxxx, in each case after reviewing the relevant provision of this
Agreement, any related sections of the Disclosure Schedule and the files
maintained by such person in such person's individual office. Each such person
has reviewed each provision of this Agreement in which the term "Knowledge of
the Purchaser" appears, together with any related sections of the Disclosure
Schedule and the current files maintained by such person in or around such
person's individual office and not in off-site or remote storage.
"Law" or "Laws" means any constitutional provision, law, statute,
rule, regulation, ordinance, treaty, order, decree, judgment, decision,
certificate, holding, injunction, enforceable at law or in equity, along with
the interpretation and administration thereof by any Governmental Entity
charged with the interpretation or administration thereof.
50
"Lease" means each lease pursuant to which the Company or any
Company Subsidiary currently leases any real or personal property, as lessor or
lessee (excluding leases relating solely to personal property calling for
rental or similar periodic payments not exceeding $50,000 per annum).
"Licenses" means all licenses, sublicenses and agreements pursuant
to which the Company or any Company Subsidiary has acquired permission to use
or rights in or to any Intellectual Property of any third party, or licenses
and agreements pursuant to which the Company or any Company Subsidiary has
licensed or transferred the right to use any of the foregoing to any third
party.
"Losses" has the meaning set forth in Section 8.2(a).
"Merger" has the meaning set forth in Section 1.1.
"Net Working Capital" means the consolidated working capital of the
Company and the Company Subsidiaries as of immediately before the Closing
calculated in accordance with GAAP consistently with the application thereof in
the Financial Statements, subject to accounting principles, methodologies,
procedures and classifications as are set forth in Section 2.7 of the
Disclosure Schedule.
"Neutral Auditors" has the meaning set forth in Section 2.8(c).
"NJDEP" has the meaning set forth in Section 5.3(d).
"Option" or "Options" has the meaning set forth in Section 1.7.
"Option Payment" has the meaning set forth in Section 1.7.
"Owned Company Intellectual Property" means all Company
Intellectual Property owned and not licensed by the Company or any Company
Subsidiary.
"Owned Real Property" means all real property that is currently
owned by the Company or any Company Subsidiary or that is reflected as an asset
of the Company or any Company Subsidiary on the Balance Sheet.
"Ownership Percentage" of any Seller, shall mean, a percentage
equal to such Seller's percentage of the Share Number.
"Parent Pledge Agreement" means the Pledge Agreement, dated as of
August 13, 2003 (as amended, amended and restated, supplemented or otherwise
51
modified from time to time), made from Fremont to Xxxxx Fargo Bank, National
Association, as collateral agent for the Secured Parties (as defined in the
Credit Agreement).
"Patents" means U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, re-examinations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and similar statutory
rights.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Per Share Holdback Amount" means an amount equal to the quotient
obtained by dividing (i) the Indemnification Holdback Amount plus $5,000,000
deposited by Purchaser on behalf of the Sellers at the Closing into the Closing
Adjustments Holdback Escrow Account by (ii) the Share Number.
"Per Share Merger Consideration" means the quotient of (a) the
aggregate of (i) four hundred and forty-five million dollars ($445,000,000)
less (ii) the Estimated Closing Adjustment plus (iii) the aggregate exercise
price of all in-the-money Options divided by (b) the Share Number.
"Permitted Encumbrances" means (i) those Encumbrances described in
the footnotes to Financial Statements; (ii) mechanics', carriers', workers',
repairmen's or other like liens arising or incurred in the ordinary course of
business or in respect of liabilities that are not yet due or that are being
contested in good faith; (iii) Encumbrances arising under original purchase
price conditional sales contracts and Leases entered into in the ordinary
course of business; (iv) liens for Taxes that are not yet delinquent or that
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the balance sheet as of the Balance
Sheet Date; (v) other imperfections of title, including, without limitation,
encumbrances, encroachments, easements, and covenants and restrictions,
relating to the Owned Real Property or any leased property, that do not,
individually or in the aggregate, materially impair the continued use and
operation of the property to which they relate; (vi) Encumbrances on any Owned
Real Property or any leased property securing financing or credit arrangements
existing as of the date hereof; (vii) with respect to leased real property
only, Encumbrances relating to any greater estate in the real property than
that held by the Company or its Subsidiary and (viii) any zoning, building and
similar laws or rights reserved to or vested in any Governmental Entity.
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or
organization.
"Plan" means each deferred compensation and each incentive
compensation, change in control, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance or
52
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the meaning of Section 3(1) of ERISA);
each profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to or with respect to which any
withdrawal liability has been incurred that has not been satisfied in full by
the Company or by any ERISA Affiliate, or to which the Company or an ERISA
Affiliate is party, whether written or oral, for the benefit of any director,
employee or former employee of the Company or any Company Subsidiary.
"Preferred Share" means a share of Series A Preferred Stock, par
value $0.01, issued by the Company.
"Purchaser" means Xxxxx Plastics Corporation, a Delaware
corporation.
"Purchaser Closing Payment" has the meaning set forth in Section
2.8(e).
"Purchaser Indemnified Party" has the meaning set forth in
Section 8.2(a).
"Purchaser Remaining Amount" has the meaning set forth in
Section 2.8(d).
"Related Documents" means the Escrow Agreement.
"Representative Expenses" shall have the meaning set forth in
Section 5.13(d).
"Representatives" means, as to any Person, such Person's
affiliates, partners, officers, directors, employees, agents, advisors (legal,
accounting and financial), consultants, financing sources and financing
sources' advisors.
"Resolution Period" has the meaning set forth in Section 2.8(b).
"Retained Employee" means each person who was an active or inactive
employee (including any such employee who is on any leave of absence, whether
paid or unpaid, including short or long-term disability leave, family and
medical leave, or workers' compensation leave) of the Company or any Company
Subsidiary immediately prior to the Closing Date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
53
"Section 5.17 Losses" means any Losses incurred by the Company (i)
that the Company would not have incurred but for the failure of Xxxxxxxx
Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx or the Company to enter into a
Section 5.17 Agreement and (ii) with respect to any breach by the Company or
any of the Section 5.17 Parties of any representation, warranty or covenant
contained in Section 5.17.
"Seller" or "Sellers" means each of the Stockholders and the Option
holders of the Company.
"Seller Closing Payment" has the meaning set forth in Section
2.8(d).
"Seller Indemnified Party" has the meaning set forth in
Section 8.2(b).
"Seller Remaining Amount" has the meaning set forth in
Section 2.8(e).
"Sellers' Representative" means Fremont Acquisition Company, L.L.C.
"Share Number" means the sum of (x) the total number of all Shares
outstanding plus (y) the total number of all Shares issuable upon the exercise
of all in-the-money Options plus (z) the total number of all Shares issuable
upon the conversion of any outstanding Preferred Shares, in each case as of
immediately prior to the Effective Time.
"Shares" means shares of common stock, par value $0.01 per share,
issued by the Company.
"Stockholder" or "Stockholders" means the holders of Shares and
Preferred Shares.
"Sub" means Xxxxx Plastics Acquisition Corporation VI, a Delaware
corporation, which is a wholly-owned subsidiary of Purchaser.
"Subsidiary" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such Person does not have a majority of the voting interest in
such partnership).
"Surviving Corporation" has the meaning set forth in Section 1.1.
54
"Target Net Working Capital Amount" shall be equal to forty million
($40,000,000) dollars.
"Tax" or "Taxes" means all Federal, state, local and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding) and including estimated Taxes, including any interest, additions
to tax, or penalties applicable thereto.
"Tax Audit" means any audit or assessment of Taxes, any examination
or investigation by any Tax Authority or any other administrative proceeding or
appeal relating to Taxes.
"Tax Authority" or "Taxing Authority" means the Internal Revenue
Service and any other domestic or foreign governmental authority responsible
for the administration of any Taxes.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
such document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Third-Party Claim" has the meaning set forth in Section 8.2(a).
"Title IV Plan" means a Plan that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
"Trade Secrets" means all categories of trade secrets as defined in
the Uniform Trade Secrets Act, including confidential research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, methods, schematics, technology, technical data, designs, drawings,
flowcharts, block diagrams, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals.
"Trademarks" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos and designs, trade names,
internet domain names, corporate names and all registrations and applications
in connection therewith.
"Transaction Costs" means all the out-of-pocket costs and expenses
of the Sellers, the Company and any Company Subsidiary relating to the
Transactions, which categories of items are set forth in Section 9.1 of the
Disclosure Schedule (which schedule will be updated on the Closing Date), but
specifically excluding any costs and expenses included in the definition of
"Closing Indebtedness"; provided that any item set forth on such schedule shall
not be included in Estimated Net Working Capital or the Closing Net Working
Capital; and provided further that there shall be no adjustment pursuant to
Section 2.8 for any amounts that constitute Transaction Costs to the extent
55
that such amounts have been paid before the Closing Date by wire transfer or by
a check that has cleared before the Closing Date.
"Transactions" means all the transactions provided for or
contemplated by this Agreement.
"Treasury Regulations" means the federal income tax regulations
issued by the United States Department of Treasury promulgated under the Code,
as such Treasury Regulations may be amended from time to time (it being
understood that all references herein to specific sections of the Treasury
Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Treasury Regulations).
"Unused Cap Ex Amount" means the difference (which may be a
negative number that results in an increase in the Estimated Closing Amount or
the Closing Amount) of (i) the budgeted amount of capital expenditures of the
Company and the Company Subsidiaries for the period from January 1, 2005 to the
Closing Date, as set forth in the 2005 Budget (with budgeted capital
expenditures prorated based upon the number of days in 2005 actually elapsed as
of and including the Closing Date) minus (ii) the actual capital expenditures
of the Company and the Company Subsidiaries for the period beginning on January
1, 2005 and ending on the Closing Date.
"WARN Act" means the Worker Adjustment and Retraining Notification
Act.
Section 9.2 Interpretation.
(a)The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(b)Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(c)The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(d)The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(e)A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
56
(f)A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-
enactment thereof, any legislative provision substituted therefor and all
regulations and statutory instruments issued thereunder or pursuant thereto.
(g)The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment and Modification
. This Agreement may be amended, modified and supplemented in any
and all respects, but only by a written instrument signed by all of the parties
hereto expressly stating that such instrument is intended to amend, modify or
supplement this Agreement.
Section 10.2 Notices
. All notices and other communications hereunder shall be in
writing and shall be deemed given if mailed, delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service, such as Federal
Express, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to Purchaser or Sub, to:
Xxxxx Plastics Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Boots
Telephone: 812-424-2904 ext. 11301
Telecopy: 000-000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. xx Xxxx, Esq.
Telephone: 000-000-0000
Telecopy: 000-000-0000
And
if to the Company, to:
57
Xxxx Group, Inc.
[if mailed]
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000-0000
[if delivered personally or
by overnight courier service]
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Sellers' Representatives, to:
Fremont Acquisition Company, L.L.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 10.3 Counterparts
. This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
58
parties. Each Seller who executes this Agreement after the date hereof shall
be treated as a party to this Agreement as if such Seller had executed this
Agreement on the date hereof.
Section 10.4 Entire Agreement; No Third Party Beneficiaries
. This Agreement and the Confidentiality Agreement (a) constitute
the entire agreement and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and thereof and (b) are not intended to confer any rights or remedies
upon any Person other than the parties hereto and thereto, the Sellers'
Representative and the D&O Indemnified Parties.
Section 10.5 Severability
. Any term or provision of this Agreement that is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest
to expressing the intention of the invalid or unenforceable term or provision.
Section 10.6 Governing Law
. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Section 10.7 Venue
. Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal or state court located in the City of New
York in the event any dispute that the parties fail to resolve arises out of
this Agreement or any of the Transactions, (b) agrees that it shall not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (c) agrees that it shall not bring any action
relating to this Agreement or any of the Transactions in any court other than a
federal or state court sitting in the State of New York.
Section 10.8 Waiver of Jury Trial
. EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF
THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH
WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
59
WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.8.
Section 10.9 Time of Essence
. Each of the parties hereto hereby agrees that, with regard to
all dates and time periods set forth or referred to in this Agreement, time is
of the essence.
Section 10.10 Extension; Waiver
. At any time prior to the Closing Date, either party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance by the other
parties with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by or on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 10.11 Assignment
. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties, except that Purchaser and Sub may assign any or all of their
rights and interests hereunder to any direct or indirect wholly owned
Subsidiary of Purchaser so long as such assignee expressly assumes in writing
the obligations hereunder of such assignor, which assumption shall not relieve
such assignor of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
[Signature Page to Follow]
60
175591.06-Palo Alto Server 1A - MSW
IN WITNESS WHEREOF, each of Purchaser, Sub, the Company, the
Sellers and Sellers' Representative has caused this Agreement to be executed by
its authorized officer thereunto duly authorized as of the date first written
above.
XXXXX PLASTICS CORPORATION
By:
Name:
Title:
XXXXX PLASTICS ACQUISITION CORPORATION VI
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
XXXX GROUP, INC.
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
SELLERS' REPRESENTATIVE:
FREMONT ACQUISITION COMPANY, L.L.C.
By: FREMONT PARTNERS, L.P.,
its Member
By: FP ADVISORS, L.L.C.,
its General Partner
By: FREMONT GROUP, L.L.C.,
its Managing Member
By: FREMONT INVESTORS, INC.,
its Manager
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
SELLER
FREMONT ACQUISITION COMPANY, L.L.C.
By: FREMONT PARTNERS, L.P.,
its Member
By: FP ADVISORS, L.L.C.,
its General Partner
By: FREMONT GROUP, L.L.C.,
its Managing Member
By: FREMONT INVESTORS, INC.,
its Manager
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
SELLER
FREMONT PARTNERS III, L.P.
By: FP ADVISORS III, L.L.C.,
its General Partner
By: FREMONT GROUP, L.L.C.,
its Managing Member
By: FREMONT INVESTORS, INC.,
its Manager
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
SELLER
FREMONT PARTNERS III SIDE-BY-SIDE, L.P.
By: FREMONT GROUP, L.L.C.,
its General Partner
By: FREMONT INVESTORS, INC.,
its Manager
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
SELLER
RDH PARTNERS, L.P.
By:
Name:
Title:
SELLER
LCC PARTNERS, L.P.
By:
Name:
Title:
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
Solely with respect to Section 5.17 and the provisions
of Article VIII with respect to Section 5.17 Losses:
----------------------------------
Xxxxxxx Xxxxxxx
Solely with respect to Section 5.17 and the provisions
of Article VIII with respect to Section 5.17 Losses:
----------------------------------
Xxxxxxxx Xxxxxxxx
Solely with respect to Section 5.17 and the provisions
of Article VIII with respect to Section 5.17 Losses:
----------------------------------
Xxxxxx Xxxxxxx
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
EXHIBIT A
---------
Form of Letter of Transmittal
175591.06-Palo Alto Server 1A - MSW
EXHIBIT B
---------
Commitment Letters
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
EXHIBIT C
---------
2005 Budget
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
EXHIBIT D
---------
Form of Escrow Agreement
[Signature Page to Amended and Restated Agreement and Plan of Merger]
175591.06-Palo Alto Server 1A - MSW
