EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and between
ASP/MILTEX LLC
as "Seller"
and
INTEGRA LIFESCIENCES CORPORATION
as "Buyer"
with respect to the Shares of
MILTEX HOLDINGS, INC.
Dated as of April 19, 2006
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..........................................................1
1.1. Certain Defined Terms........................................1
1.2. Other Defined Terms..........................................9
ARTICLE 2 PURCHASE AND SALE OF SHARES.........................................10
2.1. Transfer of Shares..........................................10
2.2. Purchase Price..............................................10
2.3. Pre-Closing Estimate........................................11
2.4. Post-Closing Adjustment.....................................11
2.5. Withholding.................................................13
2.6. Escrow......................................................13
ARTICLE 3 CLOSING.............................................................14
3.1. Closing.....................................................14
3.2. Closing Documents...........................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER............................14
4.1. Organization and Qualification; No Subsidiaries
or Other Interests..........................................14
4.2. Authorization, etc..........................................15
4.3. No Conflict or Violation....................................15
4.4. Third-Party Consents........................................16
4.5. Brokers.....................................................16
4.6. Financial Statements........................................16
4.7. No Material Adverse Change..................................17
4.8. Absence of Certain Changes and Events Since
Balance Sheet Date..........................................17
4.9. Permits.....................................................18
4.10. Compliance with Certain Laws and Permits....................18
4.11. Title to Shares; Title to and Condition of
Certain Assets..............................................18
4.12. Real Property...............................................19
4.13. Material Contracts..........................................21
4.14. Intellectual Property.......................................22
4.15. Litigation..................................................22
4.16. Inventory...................................................23
4.17. Certifications; Product Safety..............................23
4.18. Certain Relationships.......................................23
4.19. Export..................................................... 23
4.20. Insurance...................................................24
4.21. Employees and Plans.........................................24
4.22. Environmental Matters.......................................27
4.23. No Undisclosed Liabilities..................................27
4.24. Taxes...................................................... 27
4.25. Product Liability...........................................29
4.26. Exclusivity of Representations..............................30
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER.............................30
5.1. Organization, Authorization, etc............................30
5.2. No Conflict or Violation....................................30
5.3. Third-Party Consents........................................31
5.4. Litigation..................................................31
5.5. Funding.....................................................31
5.6. Investment Intent...........................................31
5.7. Brokers.....................................................31
ARTICLE 6 CERTAIN COVENANTS OF SELLER.........................................31
6.1. Access and Investigation....................................31
6.2. Operation of the Business...................................32
6.3. Negative Covenant...........................................32
6.4. Required Approvals..........................................32
6.5. Notification................................................33
6.6. No Negotiation, etc.........................................33
6.7. Best Efforts................................................33
6.8. Interim Financial Statements; S-X Modifications.............33
6.9. Nondisclosure...............................................34
6.10. Payment of Obligations......................................34
6.11. Contribution of Preferred Stock.............................35
6.12. Contribution of Owned Real Property.........................35
ARTICLE 7 CERTAIN COVENANTS OF BUYER..........................................35
7.1. Required Approvals..........................................35
7.2. Nondisclosure...............................................35
7.3. Notification................................................36
7.4. Withholding Amount..........................................36
7.5. Best Efforts................................................36
7.6. Officer and Director Indemnification........................36
7.7. Further Assurances..........................................37
ARTICLE 8 CONDITIONS TO SELLER'S OBLIGATIONS..................................37
8.1. Representations, Warranties and Covenants...................37
8.2. Certain Consents............................................37
8.3. No New Action with Respect to Transactions..................37
8.4. Additional Agreements.......................................37
8.5. Closing Documents...........................................37
ARTICLE 9 CONDITIONS TO BUYER'S OBLIGATIONS...................................38
9.1. Representations, Warranties and Covenants...................38
9.2. Certain Consents............................................38
9.3. No New Action With Respect to Transactions..................38
9.4. Additional Agreements.......................................38
9.5. Closing Documents...........................................38
9.6. No Material Adverse Change..................................39
9.7. Leased Real Property Subject to Installment
Sales Agreement.............................................39
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ARTICLE 10 TERMINATION BEFORE CLOSING.........................................39
10.1. Termination.................................................39
10.2. In the Event of Termination.................................40
ARTICLE 11 SURVIVAL AND INDEMNIFICATION.......................................40
11.1. Survival of Representations, Warranties
and Covenants...............................................40
11.2. General Indemnification.....................................41
11.3. Tax Indemnification.........................................43
11.4. Character of Indemnification Payments.......................45
ARTICLE 12 [RESERVED].........................................................45
ARTICLE 13 CERTAIN POST-CLOSING MATTERS.......................................45
13.1. Post-Closing Confidentiality................................45
ARTICLE 14 TAX AND ACCOUNTING MATTERS.........................................46
14.1. Preparation of Tax Returns..................................46
14.2. Tax Refunds.................................................47
14.3. Cooperation on Tax Matters..................................47
14.4. Withholding Forms...........................................48
14.5. Transfer Taxes..............................................48
14.6. Section 338 Election; Ordinary Course of
Business....................................................48
14.7. Tax Sharing Agreements......................................48
14.8. Tax Benefit Payment.........................................48
ARTICLE 15 MISCELLANEOUS......................................................48
15.1. Assignment; No Third Party Beneficiaries....................48
15.2. Notices.....................................................49
15.3. Choice of Law, etc..........................................49
15.4. Entire Agreement; Amendments and Waivers....................49
15.5. Counterparts................................................50
15.6. Expenses....................................................50
15.7. Invalidity..................................................50
15.8. Cumulative Remedies.........................................50
15.9. Time; Captions; Exhibits and Schedules......................50
15.10. No Strict Construction......................................50
15.11. Further Assurances..........................................51
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EXHIBITS
Exhibit A Miltex Subsidiaries
Exhibit 1.1(a) Calculation of Working Capital
Exhibit 1.1(b) Forms of Employment Agreements
Exhibit 1.1(c) Form of Escrow Agreement
Exhibit 1.1(d) Form of Sellers Agreement
Exhibit 2.2(a)(ii) Certain Obligations To Be Paid at Closing
Exhibit 3.2 Closing Agenda
Exhibit 6.9(b) Form of Press Release
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This Stock Purchase Agreement (this "Agreement") is entered into as of
April 19, 2006, by and between Integra LifeSciences Corporation, a Delaware
corporation ("Buyer") and ASP/Miltex LLC, a Delaware limited liability company
(in one capacity, "Seller" and, in another, the "Seller Representative" (to be
appointed under the "Sellers Agreement" defined herein)).
RECITALS
A. As of the date hereof, Seller owns, of record and beneficially, (i)
all of the outstanding preferred stock (the "Preferred Stock") of ASP/Miltex
Holdings, Inc., a Delaware corporation and (ii) all of the outstanding stock
(the "Shares") of Miltex Holdings, Inc., a Delaware corporation ("Miltex
Holdings"), which directly or indirectly owns 100% of the equity securities of
the companies listed on Exhibit A attached hereto (the "Miltex Subsidiaries";
together with Miltex Holdings, the "Miltex Companies").
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Shares, and the Optionholders (as defined herein) have agreed to
surrender the Options (as defined herein) upon the terms contained in this
Agreement and the Sellers Agreement (as defined herein).
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and
representations contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Certain Defined Terms
As used in this Agreement:
"Action" shall mean any legal action, product liability claim or other
claim, proceeding, audit or governmental investigation; and "pending Action" or
"Action pending" against or affecting any of the Miltex Companies shall mean any
such action, claim proceeding, audit or investigation concerning which any of
the Miltex Companies has received written notice.
"Additional Agreements" shall mean the following agreements:
(a) the Employment Agreements;
(b) the Escrow Agreement; and
(c) the Sellers Agreement.
"Affiliate" shall mean, with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
"Balance Sheet" shall mean the audited consolidated balance sheet of
Seller and the Miltex Companies dated as of December 31, 2005, a copy of which
is attached to this Agreement as part of Section 4.6 of the Disclosure Schedule.
"Balance Sheet Date" shall mean December 31, 2005.
"Base Working Capital" shall mean $18,244,000.
"Books and Records" shall mean all records used in or relating to the
Miltex Companies or customers or suppliers of the Business, including in each
case (i) all records that are in electronic form, (ii) all records relating to
quality assurance, including all quality system procedures, policies, orders,
complaints and related records, (iii) all lists of suppliers, vendors, or
current or past customers, and all lists or other documents describing
prospective customers (such as sales leads), (iv) all owned information
describing marketing and selling tactics and strategy, (v) all regulatory
filings and submissions to the FDA, (vi) all corporate minute books and stock
records, (vii) all records relating to the employees, and (viii) all financial,
accounting and Tax records.
"Business" shall mean the Miltex Companies' business of developing,
marketing, purchasing and selling hand-held, non-powered, alternate-site
surgical instruments, podiatric instruments, veterinary instruments and dental
instruments anywhere in the world.
"Business Employees" shall mean all employees of each of the Miltex
Companies who work in the Business.
"Carryforward Overage" shall mean (and shall be equal to the amount by
which) the Estimated Carryforward Payment exceeds the Carryforward Payment (as
finally determined pursuant to Section 2.4).
"Carryforward Payment" shall mean the product of 50 percent of (i) the
excess of (A) the total Tax Savings Expenses over (B) the portion of Tax Savings
Expenses that is used to reduce taxable income in any Pre-Closing Tax Period
multiplied by (ii) 38 percent.
"Carryforward Underage" shall mean (and shall be equal to the amount by
which) the Carryforward Payment (as finally determined pursuant to Section 2.4)
exceeds the Estimated Carryforward Payment.
"Closing Working Capital" shall mean: (i) those categories of current
assets of the Miltex Companies specified in Exhibit 1.1(a) as being included,
less (ii) those categories of current liabilities of the Miltex Companies
specified in Exhibit 1.1(a) as being included, in each case (A) as of the end of
the day on the Closing Date (without giving effect to the transactions
contemplated herein except as otherwise set forth on Exhibit 1.1(a)), and (B)
otherwise calculated in a manner consistent with the calculation of the monthly
working capital amounts averaged to create the Base Working Capital, all as
finally determined pursuant to Section 2.4.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall mean all written or unwritten
information about any Person and its business that is not available to the
general public (unless such availability occurs as a result of a breach of this
Agreement, any Additional Agreement, or any other agreement between parties
hereto), including proprietary information, trade secrets, formulae, operational
and financial data, product and process specifications and related costs, price
and sales information, marketing methods, systems and procedures, data bases,
computer programs and other computerized information, employee qualifications,
salaries and resumes, client and customer lists and all records (including
records that are in electronic form) and documents containing such information.
"Contract" shall mean any agreement, contract, Real Property Lease,
other lease, obligation, nongovernmental license or commitment to which any of
the Miltex Companies is a party or by which any of the Miltex Companies or the
Business is bound, whether oral or written, including any of the foregoing
relating to Intellectual Property.
"Disclosure Schedule" shall mean the schedule attached to and
incorporated in this Agreement which sets forth the exceptions to the
representations and warranties contained in Article 4 of this Agreement and
certain other information called for by Article 4.
"Employee Transaction Bonus Payments" shall mean an amount, if any, in
cash payable to any employee or director of the Company as a result of the
transactions contemplated hereby, up to $675,000 in the aggregate.
"Employment Agreements" shall mean the Employment Agreements, dated as
of the date hereof, between Buyer or one of the Miltex Companies and (i) Robert
Perrett, and (ii) each of George Groom and Sean Browne, the forms of which are
attached hereto as Exhibit 1.1(b).
"Encumbrance" shall mean any claim, lien, pledge, mortgage, deed of
trust, security interest, restriction, easement, option or other preemptive
right, possessory right, encumbrance or other similar right.
"Environmental Law" shall mean any federal, state, local or foreign
statute, rule, regulation, order or judgment of any Governmental Authority
designed to minimize, prevent, punish or remedy the consequences of, actions
that damage or threaten the environment (including land surface, subsurface
strata, above- and below-ground water, indoor and outdoor air and plant and
animal life) or threaten public health or safety.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"Escrow Agent" shall mean the escrow agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement, dated as of the
Closing, between Buyer, the Escrow Agent and the Seller Representative, in
substantially the form attached hereto as Exhibit 1.1(c).
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"FDA" shall mean the United States Food and Drug Administration.
"Fixtures" shall mean all structures, portions of structures, roofs,
elevators, heating or cooling systems, plumbing or water systems, electrical or
gas systems, and other fixtures or improvements affixed to a portion of the Real
Property.
"GAAP" shall mean generally accepted accounting principles for
financial reporting in the United States.
"Governing Documents" shall mean, with respect to: (a) a corporation,
the articles or certificate of incorporation and bylaws or code of regulations;
(b) a general partnership, the partnership agreement and any statement of
partnership; (c) a limited partnership, the limited partnership agreement and
certificate of limited partnership; a limited liability company, the articles of
organization or certificate of formation and operating agreement; and (e) a
different form of entity, any charter or similar document adopted or filed in
connection with the organization of such entity; plus, in each case (i) all
equity holders' agreements, voting agreements, joint venture agreements,
registration rights agreements and other agreements relating to the organization
of such Person or to the rights and obligations of the equity holders of such
Person, and (ii) all amendments to any of the foregoing.
"Governmental Authority" shall mean any: (a) nation, state, county,
city, town, borough, village, or district; (b) federal, state, local, municipal,
foreign or other government; (c) domestic or foreign agency, branch, department,
board, commission, court, tribunal or other entity exercising administrative,
executive, judicial, legislative, police, regulatory or taxing authority; (d)
multinational organization; or (e) official of any of the foregoing.
"GPO" shall mean a group purchasing organization.
"Hazardous Substance" shall mean any substance, material or waste that
is subject to regulation, control or mediation under any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, including all regulations promulgated thereunder, and any
foreign equivalents.
"including" shall mean including without limitation.
"Installment Sales Agreement" shall mean that certain Installment Sale
Agreement dated as of April 28, 1994 by and between York County Economic
Development Corporation (f/k/a York County Industrial Development Corporation)
and Miltex Dental Technologies, Inc. (successor in interest, by Assumption and
Assignment Agreement dated May 25, 2001, to Moyco Industries Inc.), as amended
by Amendment to Installment Sale Agreement dated as of May 2, 1995, with respect
to the parcel of real property located in the Township of Springettsbury, County
of York, Commonwealth of Pennsylvania, as more fully described in Section
4.12(c) of the Disclosure Schedule.
"Intellectual Property" shall mean all Copyrights, Patents, Know-How,
Trademarks and rights (including moral rights) used in or necessary to the
4
Business as currently conducted, including the items set forth on Section
4.14(a) of the Disclosure Schedule. For purposes of this definition:
(i) "Copyrights" shall mean registered claims of copyright,
assignments of copyright, design rights, rights to mask works and database
rights, and registrations and applications for registration of any of the
foregoing;
(ii) "Know-How" shall mean methods, devices, technology,
software, trade secrets, industrial designs, instrument drawings, know-how,
show-how, technical and training manuals and documentation and other proprietary
information, including proprietary processes, designs and formulae, and
invention studies, invention disclosures and rights in inventions;
(iii) "Patents" shall mean United States patents and patent
applications, continuations, continuations-in-part, divisions, reissues, reexam
certificate, extensions, and foreign counterparts of such patents and related
items; and
(iv) "Trademarks" shall mean (A) United States registered
trademarks and United States registered service marks, applications for
registration of such trademarks and service marks, renewal registrations and
applications for renewal registrations, extensions and foreign counterparts of
such registered trademarks, registered service marks and related items; (B)
unregistered trademarks and service marks; (C) corporate names, business names
and trade names, whether registered or unregistered; and (D) internet domain
names and associated addresses and URLs.
"Inventory" shall mean (i) all inventory held for resale with respect
to the Business, including all inventory on consignment, and (ii) all raw
materials, parts, supplies, components, work-in-process, finished products and
packaging materials and similar items with respect to the Business, in each case
wherever located.
"knowledge" shall mean, (i) with respect to Seller, the knowledge of
Robert Perrett, George Groom, Kevin Breeden, Sean Browne or Sharon McKiernan,
and (ii) with respect to Buyer, the knowledge of Stuart M. Essig or John B.
Henneman, III; provided, that, in each case, such individual shall be deemed to
have knowledge if: (x) he or she has actual knowledge, or (y) a prudent
individual would acquire actual knowledge in the course of a reasonable
investigation regarding the accuracy of the relevant representation or warranty
in this Agreement.
"Law" shall mean any federal, state, local or foreign statute, rule,
regulation, order, or judgment of any Governmental Authority applicable to any
of the Miltex Companies or the Business, including any Environmental Law.
"Leased Real Property" shall mean all real property, including all
rights, easements and privileges appertaining or relating to such real property,
and all Fixtures located on such real property, that is leased, licensed, or
otherwise possessed (whether or not such possession is exclusive) by any of the
Miltex Companies.
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"Losses" shall mean all costs, losses, diminutions in value, Taxes,
liabilities, obligations, damages (whether direct, consequential, punitive,
special or incidental), Actions, claims, costs of mitigation or remedial action,
and expenses, including attorneys' fees and all amounts paid in investigation,
defense or settlement of any of the foregoing, whether or not pursuant to a
third-party claim; provided, however, that "Losses" includes punitive damages
only to the extent required to paid to a third party and includes consequential
damages (i) only to the extent reasonably foreseeable and (ii) only with respect
to willful actions or omissions resulting in covenant breaches.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, change or effect that is materially adverse to the financial condition,
results of operations, business, assets or operations of the Miltex Companies
taken as a whole.
"Optionholder" means a holder of Options who is listed in Section
4.11(b) of the Disclosure Schedule.
"Options" means the outstanding options to purchase shares of
ASP/Miltex Group Holdings, Inc. or Miltex Dental, Inc. common stock pursuant to
the Option Agreements listed in Section 4.11(b) of the Disclosure Schedule.
"Ordinary Course of Business" shall mean an action taken by a Person if
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
and (b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority) and is not required to be specifically authorized by the parent
company (if any) of such Person.
"Owned Real Property" shall mean all real property, including all
rights, easements and privileges appertaining or relating to such real property,
and all Fixtures located on such real property, that is owned in fee by any of
the Miltex Companies.
"Pension Catch-Up Amount" shall mean an amount equal to $141,000.
"Permit" shall mean any license, permit, authorization, certificate or
order of any Governmental Authority used in or related to the Business,
including any issued pursuant to an Environmental Law.
"Permitted Encumbrances" shall mean:
(a) All building codes, zoning ordinances and similar Laws
affecting the Real Property, or any portion thereof;
(b) All easements, rights-of-way, servitudes, covenants,
conditions, restrictions, reservations, licenses,
agreements, imperfections of title and other similar
matters (i) that are disclosed as items # 9 (other than
37-Z page 83), 10, 11, 13, 14, 15, and 16 (other than
II-635, II-73, II-53, and MM-457) in Schedule B-2 of
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Title Commitment No. 81060015 dated March 31, 2006
issued by Chicago Title Insurance Company with respect
to the property located at 589 Davies Road, York, PA
(the "Davies Road Commitment") and that is disclosed as
item #19 in Schedule B of Title Commitment No. MT-53747
dated March 21, 2006 issued by Western Title and Escrow,
as agent for Chicago Title Insurance Company with
respect to the Owned Real Property (the "Montana
Commitment"), so long as, in each case, the location on
the applicable Real Property of any such title exception
or matter noted in either of such title commitments
(exclusive of item #15 in the Davies Road Commitment)
does not impair in any material respect the present use
of the applicable Real Property or (ii) the exercise or
existence of any such title matter does not impair in
any material respect the present use of the applicable
Real Property;
(c) Any Encumbrances for Taxes not yet due and payable or
Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves have been
established and maintained in accordance with GAAP;
(d) All matters not otherwise defined herein as a "Permitted
Encumbrance" that (i) are disclosed in the Davies Road
Commitment or the Montana Commitment, other than the
items specifically noted in clause (b) above or (ii)
would be reflected on an accurate and currently dated
survey(s) of any portion of the Real Property, so long
as, in each case, the exercise or existence of such
matter does not impair in a material respect the present
use of the applicable Real Property;
(e) All existing public and private roads and streets lying
adjacent to any portion of the Real Property, and all
rights therein and thereto;
(f) Any matters to which a Real Property Lease is subject or
subordinate, provided that the use or exercise of any
such matter does not impair in any material respect the
present use of the Real Property affected thereby;
(g) Encumbrances consisting of mechanics', carriers', or
workmen's, repairmen's or similar liens arising or
incurred in the Ordinary Course of Business;
(h) All notes or notices of violation of law or municipal
ordinances, orders or requirements noted in or issued by
or any federal, state, county or municipal department
having jurisdiction over the Real Property or any
portion thereof and disclosed in Section 4.12 of the
Disclosure Schedule; and
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(i) Any Encumbrances that are described in the Disclosure
Schedule as being terminated or released at or prior to
Closing, and that are so terminated or released.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, trust, governmental body or other
entity.
"Post-Closing Tax Period" means any Tax Period beginning after the
Closing Date and that portion of any Straddle Period beginning after the Closing
Date.
"Pre-Closing Tax Period" means any Tax Period ending on or before the
Closing Date and that portion of any Straddle Period ending on the Closing Date.
"Real Property" shall mean, collectively, the Owned Real Property and
the Leased Real Property.
"Real Property Lease" shall mean any agreement, including without
limitation, the Installment Sales Agreement, pursuant to which any of the Miltex
Companies holds a possessory interest in any of the Leased Real Property, and
all amendments thereto and renewals or extensions thereof.
"Representative" shall mean, with respect to any Person, any officer,
director, principal, attorney, agent, employee or other representative of such
Person.
"Sellers Agreement" shall mean the Sellers Agreement, dated as of the
Closing, among Seller (as Seller and as the Seller Representative) and the
Optionholders, in substantially the form attached hereto as Exhibit 1.1(d).
"Straddle Period" means any Tax Period beginning before the Closing
Date and ending after the Closing Date.
"Tax" or "Taxes" shall mean, with respect to any Person, any and all
taxes, assessments, levies, tariffs, duties or other charges or impositions in
the nature of a tax (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any
Governmental Authority, including income, estimated income, gross receipts,
profits, business, license, occupation, franchise, capital stock, real or
personal property, sales, use, transfer, value added, employment or
unemployment, social security, disability, alternative or add-on minimum,
customs, excise, stamp, environmental, commercial rent or withholding taxes, and
shall include any liability for Taxes of any other Person under Treasury
Regulation ss. 1.1502-6 or any similar provision of state, local or foreign Tax
Law, as a transferee or successor, by contract or otherwise.
"Tax Period" means any period prescribed by any Governmental Authority
for which a Tax Return is required to be filed or a Tax is required to be paid.
"Tax Return" shall mean any return (including any information return),
report, statement, schedule, notice, form, election, estimated Tax filing or
8
other document (including any amendments thereof and attachments thereto) filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Authority with respect to any Tax.
"Tax Savings Expenses" shall mean (i) any payment to employees (or
former employees) or any other Optionholder of any of the Miltex Companies with
respect to nonqualified options issued prior to the Closing, (ii) the Employee
Transaction Bonus Payments, (iii) any unamortized deferred finance fees relating
to the Indebtedness and any other deductions with respect to repayment of
Indebtedness and (iv) amounts paid to terminate foreign currency exchange
contracts.
"Transaction Fees" shall mean an amount in cash equal to, as of the
Closing Date, the sum of (i) the outstanding fees and expenses of Kaye Scholer
LLP (ii) the outstanding fees and expenses of PricewaterhouseCoopers LLP, the
Company's accountants, and (iii) any other outstanding or expected fees and
expenses incurred or expected to be incurred by the Company or the Seller in
connection with the transactions contemplated by this Agreement.
"Transfer Taxes" shall mean any and all transfer, documentary, sales,
use, gross receipts, stamp, registration, value added, recording, escrow and
other similar Taxes and fees (including any penalties and interest) incurred in
connection with the transactions contemplated by this Agreement (including
recording and escrow fees and any real property or leasehold interest transfer
or gains tax and any similar Tax).
"Withholding Amount" means the amount required to be withheld under
applicable Law by the Miltex Companies from (a) any Optionholder for employee
payroll, withholding and other Taxes relating to compensation payable or deemed
paid to such Optionholder in respect of the cancellation and termination of the
Options held by such Optionholder or (b) any Person in respect of the Employee
Transaction Bonus Payments.
1.2. Other Defined Terms
Each of the following terms shall have the meaning given it in the
Section set forth opposite such term below:
Term Section
---- -------
Agreement Preamble
Basket 11.2(d)(i)
Buyer Preamble
Buyer Group 6.1
Buyer-Side Indemnified Persons 11.2(a)
Calculations 2.4(a)
Cap 11.2(d)(i)
Closing 3.1
Closing Agenda 3.2
Closing Date 3.1
COBRA 4.21(e)(iii)
Consents 4.4
Dispute Notice 2.4(c)
9
Employee Plan 4.21(c)
Equipment 4.11(d)
Escrow Disbursement Date 2.6
Estimated Carryforward Payment 2.3
Estimated Working Capital Overage 2.3
Estimated Working Capital Underage 2.3
Financial Statements 4.6(a)
Indemnity Claim 11.2(c)(i)
Indemnity Claim Notice 11.2(c)(i)
Indemnity Escrow Amount 2.2(a)(i)
Material Contract 4.13(b)
Miltex Companies Recitals
Miltex Holdings Recitals
Miltex Subsidiaries Recitals
Miltex Subsidiaries Shares 4.11(b)
PBGC 4.21(e)(i)
Per Diem Taxes 11.3(c)(i)
Preferred Stock Recitals
Purchase Price 2.2
Seller Preamble
Seller Representative Preamble
Seller-Side Indemnified Persons 11.2(b)
Shares Recitals
Tax Benefit 14.2(6)
Tax Claim 11.3(e)
Tax Refund 14.2(a)
U.S. Subsidiaries 14.1
Working Capital Estimate 2.3
Working Capital Escrow Amount 2.2(a)(i)
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1. Transfer of Shares
At the Closing, Seller will sell and transfer to Buyer, and Buyer will
purchase from Seller, the Shares, free and clear of all Encumbrances.
2.2. Purchase Price
The purchase price for the Shares (the "Purchase Price") shall be:
(a) $101,000,000 (One Hundred and One Million Dollars), minus the
Pension Catch-Up Amount, plus the Estimated Working Capital Overage or minus the
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Estimated Working Capital Underage described in Section 2.3, plus the Estimated
Carryforward Payment described in Section 2.3 payable at Closing by wire
transfer of immediately available funds from Buyer as follows:
(i) an amount equal to the sum of (A) $5,000,000 (Five Million
Dollars) (the "Indemnity Escrow Amount") and (B) $2,000,000 (Two Million
Dollars)(the "Working Capital Escrow Amount"), to the interest-bearing escrow
account designated by the Escrow Agent pursuant to the Escrow Agreement; and
(ii) the amounts, and to the accounts, necessary to repay all
obligations set forth on Exhibit 2.2(a)(ii);
(iii) an amount in cash equal to the Withholding Amount to
Miltex Holdings;
(iv) an amount necessary to pay the Transaction Fees and the
Employee Transaction Bonus Payments (net of Withholding Amounts applicable
thereto), to the accounts designated by Seller; and
(v) the remainder to the Seller Representative for further
distribution to (A) Seller and the Optionholders as set forth in the Sellers
Agreement and (B) to the other accounts designated by the Seller Representative
pursuant to the Closing Agenda;
(b) plus or minus the amount of the adjustment provided for in
Section 2.4 hereof.
(c) plus the payment described in Section 14.8.
2.3. Pre-Closing Estimate
At least five days prior to the Closing Date, Seller shall deliver to
Buyer (a) a good faith estimate (the "Working Capital Estimate") of (i) the
Closing Working Capital and (ii) any Estimated Working Capital Overage or
Estimated Working Capital Underage and (b) a good faith estimate (the "Estimated
Carryforward Payment") of the Carryforward Payment. An "Estimated Working
Capital Overage" shall exist when (and shall be equal to the amount by which)
the Working Capital Estimate exceeds the Base Working Capital and an "Estimated
Working Capital Underage" shall exist when (and shall be equal to the amount by
which) the Base Working Capital exceeds the Working Capital Estimate.
2.4. Post-Closing Adjustment
(a) Closing Working Capital. No later than sixty (60) days after
the Closing, Buyer shall deliver to the Seller Representative (i) a pro forma
balance sheet for the Business as of the end of the day on the Closing Date,
(ii) its calculation with respect to the Closing Working Capital and (iii) its
calculation of the Carryforward Payment, in each case prepared in collaboration
with the Seller Representative (the "Calculations").
(b) Review and Cooperation. The Seller Representative and its
Representatives shall have the right to review the Calculations, and Buyer will
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cooperate with them in the review process and will provide them reasonable
access to all Miltex Companies information used in the preparation of the
Calculations.
(c) Dispute Resolution. Pursuant to such review, no later than
thirty (30) days after its receipt of the Calculations, the Seller
Representative shall deliver to Buyer a notice (the "Dispute Notice") describing
any item or amount in any of the Calculations that is disputed by the Seller
Representative. The parties shall attempt to resolve any such dispute, but if
they cannot do so within fifteen (15) days after the date that Buyer receives
the Dispute Notice, then the parties shall jointly select an independent
accountant to do so, which the parties initially agree will be Deloitte and
Touche, if such firm will accept such appointment. The scope of the disputes to
be resolved by the independent accountant shall be limited to the items of
dispute set forth in the Dispute Notice and the independent accountants shall
not make any determination even with respect to those items other than to settle
the specific dispute within the amounts proposed by the parties. The
determination made by such independent accountant will be final and binding on
the parties, and Buyer, on the one hand, and the Seller Representative, on the
other hand, will share equally the cost of retaining such independent
accountant.
(d) Adjustment Payment.
(i) If it is determined, pursuant to this Section 2.4, that
(a) the Closing Working Capital is less than the Working Capital Estimate, and
(b) there is a Carryforward Overage, then, not later than five (5) business days
after such determination, the Seller Representative and Buyer shall instruct the
Escrow Agent (x) to pay from the Working Capital Escrow Amount to Buyer the sum
of (i) the excess of the Working Capital Estimate over the Closing Working
Capital and (ii) the Carryforward Overage, by wire transfer of immediately
available funds (and, if the Working Capital Escrow Amount is less than such
sum, Seller shall pay to Buyer, by wire transfer of immediately available funds,
an amount sufficient to make up, when combined with the Working Capital Escrow
Amount, the full amount of such sum) and (y) to pay from the Working Capital
Escrow Amount to the Seller Representative the remainder thereof, if any.
(ii) If it is determined, pursuant to this Section 2.4, that
(a) the Closing Working Capital is less than the Working Capital Estimate, and
(b) there is a Carryforward Underage, then, not later than five (5) business
days after such determination, (i) the Seller Representative and Buyer shall
instruct the Escrow Agent to pay from the Working Capital Escrow Amount to Buyer
the excess of the Working Capital Estimate over the Closing Working Capital by
wire transfer of immediately available funds (and, if the Working Capital Escrow
Amount is less than the amount of such excess, Seller shall pay to Buyer, by
wire transfer of immediately available funds, an amount sufficient to make up,
when combined with the Working Capital Escrow Amount, the full amount of such
excess), (ii) the Seller Representative and Buyer shall instruct the Escrow
Agent to pay from the Working Capital Escrow Amount to the Seller Representative
the remainder thereof, if any, and (iii) Buyer will pay to the Seller
Representative the Carryforward Underage, by wire transfer of immediately
available funds. Notwithstanding the foregoing, if the excess of the Working
Capital Estimate over the Closing Working Capital is greater than the
Carryforward Underage, then the Seller Representative and Buyer shall instruct
the Escrow Agent to deduct the Carryforward Underage from the amount the Escrow
Agent is otherwise required to pay from the Working Capital Escrow Amount
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pursuant to clause (i) above, and Buyer shall not be obligated to pay the
Carryforward Underage to the Seller Representative pursuant to clause (iii)
above.
(iii) If it is determined, pursuant to this Section 2.4, that
(a) the Closing Working Capital is greater than the Working Capital Estimate,
and (b) there is a Carryforward Underage, then, not later than five (5) business
days after such determination, (i) Buyer will pay to the Seller Representative
the sum of (x) the excess of the Closing Working Capital over the Working
Capital Estimate and (y) the Carryforward Underage, by wire transfer of
immediately available funds and (ii) the Seller Representative and Buyer shall
instruct the Escrow Agent to disburse to the Seller Representative the Working
Capital Escrow Amount.
(iv) If it is determined, pursuant to this Section 2.4, that
(a) the Closing Working Capital is greater than the Working Capital Estimate,
and (b) there is a Carryforward Overage, then, not later than five(5) business
days after such determination (i) Buyer will pay to the Seller Representative
the excess of the Closing Working Capital over the Working Capital Estimate, by
wire transfer of immediately available funds, (ii) the Seller Representative and
Buyer shall instruct the Escrow Agent to pay from the Working Capital Escrow
Amount the Carryforward Overage to Buyer by wire transfer of immediately
available funds (and, if the Working Capital Escrow Amount is less than the
Carryforward Overage, Seller shall pay to Buyer, by wire transfer of immediately
available funds, an amount sufficient to make up, when combined with the Working
Capital Escrow Amount, the full amount of the Carryforward Overage) and (iii)
the Seller Representative and Buyer shall instruct the Escrow Agent to pay from
the Working Capital Escrow Amount to the Seller Representative the remainder
thereof, if any. Notwithstanding the foregoing, if the excess of the Closing
Working Capital over the Working Capital Estimate is greater than the
Carryforward Overage, then the Buyer shall deduct the Carryforward Overage from
the amount it is required to pay to the Seller Representative pursuant to clause
(i) above, and the Seller Representative and Buyer shall instruct the Escrow
Agent to disburse to the Seller Representative the Working Capital Escrow
Amount.
2.5. Withholding
Buyer shall be entitled to deduct and withhold from the Purchase Price
(including any amounts payable under Sections 2.3 and 2.4) and any other
payments made pursuant to this Agreement, the Withholding Amount and any other
amounts required to be deducted and withheld under the Code or other applicable
Tax Law, and shall promptly remit any such amounts to the appropriate
Governmental Authority. Any amounts deducted and withheld pursuant to this
Section 2.5 shall be treated for all purposes of this Agreement as having been
paid to Seller or other applicable payee.
2.6. Escrow
On the date following the twelve (12)-month anniversary of the Closing
Date (the "Escrow Disbursement Date"), the Indemnity Escrow Amount, subject to
any reduction of such amount pursuant to Article 11 hereof and the Escrow
Agreement, shall be released to the Seller Representative. Notwithstanding the
foregoing, if on the Escrow Disbursement Date there are one or more pending
Claims (as defined in the Escrow Agreement), which have not been the subject of
a final resolution, then the Escrow Agent shall not disburse amounts from the
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Indemnity Escrow Amount that would deplete the cash value of the escrow account
below the amount of the Losses so claimed, unless and until there has been final
resolution of such matter pursuant to the Escrow Agreement.
ARTICLE 3
CLOSING
3.1. Closing
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Seller's counsel in New York City,
New York on the third business day following the date on which the conditions
set forth in Article 8 and Article 9 have been satisfied or waived (unless such
date is not a business day in which event the Closing shall occur on the next
business day), or on such other date as the parties may agree (in any case, the
"Closing Date"). The Closing shall be effective for all purposes as of 11:59
p.m. on the Closing Date.
3.2. Closing Documents
At the Closing, (i) Buyer shall deliver to Seller the items shown in
the Closing Agenda attached hereto as Exhibit 3.2 (the "Closing Agenda") as
being delivered by Buyer or Buyer's counsel, and such other instruments and
documents as may be reasonably requested by Seller, all in form reasonably
satisfactory to Seller's counsel; and (ii) Seller shall deliver to Buyer the
items shown in the Closing Agenda as being delivered by Seller or Seller's
counsel, and such other instruments and documents as may be reasonably requested
by Buyer, all in form reasonably satisfactory to Buyer's counsel.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
The Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Article 4; however,
any information disclosed therein under any Section number shall be deemed
disclosed and incorporated into any other Section of the Disclosure Schedule
where it is cross-referenced or it is clearly apparent from the disclosure
contained therein that such cross-reference would be appropriate. Except as
otherwise set forth on the Disclosure Schedule, Seller represents and warrants
to Buyer as follows:
4.1. Organization and Qualification; No Subsidiaries or Other Interests
(a) Miltex Holdings. Miltex Holdings is a corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with full corporate power and authority to conduct the Business as it is
presently being conducted and to own and lease its properties and assets. Miltex
Holdings is qualified to do business as a foreign corporation and in good
standing in the jurisdictions listed on Section 4.1(a) of the Disclosure
Schedule, and Miltex Holdings does not engage in business or own properties such
as to require it to qualify to do business in any other jurisdiction, except
where the failure to do so would not be material. Except for the Miltex
Subsidiaries, Miltex Holdings has no subsidiaries and owns no direct or indirect
interest in any other Person.
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(b) Miltex Subsidiaries. Each of the Miltex Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation (which jurisdiction is set forth on Exhibit
A), with full corporate power and authority to conduct the Business as it is
presently being conducted and to own and lease its properties and assets. Each
of the Miltex Subsidiaries is qualified to do business as a foreign corporation
and in good standing in the jurisdictions listed on Section 4.1(b) of the
Disclosure Schedule, and none of the Miltex Subsidiaries engages in business or
owns properties such as to require it to qualify to do business in any other
jurisdiction, except where the failure to do so would not be material. The
Miltex Subsidiaries have no subsidiaries and own no direct or indirect interest
in any Person other than as shown on Section 4.1(b) of the Disclosure Schedule.
4.2. Authorization, etc.
(a) Power and Actions Taken. Seller has all requisite power and
authority, and has (or at Closing will have) taken all action necessary, to
execute and deliver this Agreement and to consummate the transactions
contemplated on its part hereunder, and to perform its obligations hereunder.
Each of Seller, each of the Miltex Companies, and, to Seller's knowledge, each
of the Optionholders, has all requisite power and authority, and has (or at
Closing will have) taken all action necessary, to execute and deliver each
Additional Agreement to which it is a party, to consummate the transactions
contemplated on its part thereunder, and to perform its obligations thereunder.
(b) Due Execution, Delivery and Enforceability. Each of Seller,
each of the Miltex Companies, and to Seller's knowledge, each of the
Optionholders, has (or at Closing will have) duly executed and delivered this
Agreement and each Additional Agreement to which it is a party, and this
Agreement and each such Additional Agreement is (or when so executed and
delivered will be) a valid and legally binding obligation of such party,
enforceable against such party in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding in law or at equity).
4.3. No Conflict or Violation
The execution, delivery and performance of this Agreement and any
Additional Agreements to which it is a party by Seller and each of the Miltex
Companies: (a) will not violate or conflict with the Governing Documents of any
of the Miltex Companies; (b) will not violate any Law in any material respect;
and (c) except as set forth on Section 4.3(c) of the Disclosure Schedule, will
not, in any material respect, violate, conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the creation of any material Encumbrance upon any
of the assets of the Miltex Companies pursuant to, or give rise to any right of
termination, cancellation or acceleration under, any Material Contract to which
any of the Miltex Companies or Seller is a party or to which any assets of the
Miltex Companies are subject.
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4.4. Third-Party Consents
No consent or approval of, notice to, or filing with, any Person is
required to be obtained, given or made by Seller or the Miltex Companies to
permit Seller to transfer the Shares to Buyer, except any such consent,
approval, notice or filing that (i) is required under the HSR Act or (ii) has
been listed on Section 4.3(c) of the Disclosure Schedule (together, the
"Consents") and obtained by Seller or the Miltex Companies, as applicable,
before the Closing, or (iii) the failure of which to be obtained, given, or made
would not be, and would not reasonably be expected to be, materially adverse to
the Miltex Companies or to Seller's ability to perform its obligations under
this Agreement.
4.5. Brokers
Except as set forth in Section 4.5 of the Disclosure Schedule, no
broker, finder or financial advisor or other Person is entitled to any brokerage
fees, commissions, finders' fees or financial advisory fees in connection with
the transactions contemplated hereby by reason of any action taken by Seller or
any of its Affiliates or agents.
4.6. Financial Statements
(a) 2004 and 2005. Attached hereto as Section 4.6 of the
Disclosure Schedule are the audited consolidated balance sheet of Seller and the
Miltex Subsidiaries at December 31, 2004 and the Balance Sheet, and the related
audited statements of income, changes in stockholders equity and cash flows for
each of the years then ended (including notes thereto and the accounting
policies used in connection therewith), all certified by PricewaterhouseCoopers
LLP, independent certified public accountants, whose reports thereon are
included therein (the "Financial Statements").
(b) Financial Statements. The Financial Statements have been
derived from the Books and Records of Seller and the Miltex Subsidiaries. Each
balance sheet and the notes thereto included in the Financial Statements fairly
presents in all material respects the consolidated assets, liabilities and
financial condition of the relevant Miltex Company as at the respective dates
thereof, and each statement of income and cash flows and the notes thereto
included in the Financial Statements fairly presents in all material respects
the results of operations of the relevant Miltex Company for the periods
referred to therein.
(c) GAAP. The Financial Statements have been prepared in
conformity with GAAP throughout the periods involved.
(d) Inclusion of Seller in Financial Statements. Seller has no
assets other than the shares of capital stock of the Miltex Companies and rights
created under this Agreement, and no liabilities except for accrued franchise
Taxes and other similar ordinary course liabilities that would be customary for
a holding company with no assets other than the stock of its subsidiaries and
liabilities created under this Agreement.
(e) Accounts Receivable. All accounts receivable of the Miltex
Companies that are reflected on the Balance Sheet or on the accounting records
16
of the Miltex Companies as of the Closing Date represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business.
4.7. No Material Adverse Change
Since the Balance Sheet Date, there has been no Material Adverse
Change, or event or circumstance that will, or could reasonably be expected to,
result in a Material Adverse Change, other than as a result of (i) any change in
general economic, business, industry, legal or political conditions (including
conditions arising from wars, national emergencies, hostilities, or terrorist or
anti-terrorist acts) not having a disproportionate effect on the Business
compared to its effect on other entities engaged in businesses similar to the
Business; or (ii) the transactions contemplated by this Agreement or the
announcement of the transactions contemplated by this Agreement.
4.8. Absence of Certain Changes and Events Since Balance Sheet Date
Except as set forth on Section 4.8 of the Disclosure Schedule, since
the Balance Sheet Date the Business has been conducted in all material respects
only in the Ordinary Course of Business, and (except after conference with Buyer
as contemplated by Section 6.2 and receipt of Buyer's consent thereto), there
has not been any: (a) change in any Miltex Company's authorized or issued
capital stock; grant of option or right to purchase shares of capital stock of
any Miltex Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Miltex Company of any shares of any such capital stock;
or declaration or payment of any dividend or other distribution or payment in
respect of shares of such capital stock; (b) amendment to the Governing
Documents of any Miltex Company; (c) payment or increase by any Miltex Company
of any bonuses, salaries, or other compensation to any stockholder, director,
officer or employee (except, in the case of officers and employees, in the
Ordinary Course of Business) or entry into any employment, severance, or similar
Contract with any director or officer, or adoption of, or increase in the
payments to or benefits under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee benefit plan for or
with any employees of any Miltex Company; (d) material damage to or material
destruction or material loss of any material asset of the Miltex Companies,
whether or not covered by insurance; (e) other than in the Ordinary Course of
Business, entry into, termination of, or receipt of notice of termination of (i)
any Material Contract or (ii) any Contract with a GPO, whether or not material;
(f) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any material asset or mortgage, pledge, or
imposition of any Encumbrance on any material asset of the Miltex Companies; (g)
other than in the Ordinary Course of Business, waiver of any claim or right
having a material value to the Business; (h) change in the financial or Tax
accounting methods used by any of the Miltex Companies; (i) material Tax
election (including any change in election) or settlement or compromise of a
material Tax liability of any of the Miltex Companies; or (j) agreement, whether
oral or written, by any of the Miltex Companies or Seller to do any of the
foregoing.
17
4.9. Permits
Section 4.9 of the Disclosure Schedule contains a list of the material
Permits that is complete and accurate. Such listed Permits constitute all
material licenses, permits, authorizations, certificates or orders of any
Governmental Authority which are required to operate the Business as it is now
being conducted.
4.10. Compliance with Certain Laws and Permits
Except with respect to Laws relating to Real Property (which are
covered in Section 4.12(d)), Laws relating to employment and Employee Plans
(which are covered in Sections 4.21(b) and (c)), Environmental Laws and Permits
thereunder (which are covered in Section 4.22), and Tax Laws (which are covered
in Section 4.24), none of the Miltex Companies has violated any material Law or
Permit in any material respect and neither the Miltex Companies nor Seller has
since January 1, 2003 received any notice to the effect that, or otherwise been
advised that, the Miltex Companies or the Business is not in compliance with any
Law or Permit.
4.11. Title to Shares; Title to and Condition of Certain Assets
(a) Title to Shares. The authorized equity securities of the
Miltex Holdings consist of one thousand (1,000) shares of common stock, $0.01
par value, of which one hundred (100) shares are issued and outstanding and
constitute the Shares. Seller is the record and beneficial owner and holder of
the Shares, free and clear (except as set forth in Section 4.11(a) of the
Disclosure Schedule) of all Encumbrances. No legend or other reference to any
purported Encumbrance appears upon any certificate representing the Shares. The
Shares have been duly authorized and validly issued and are fully paid and
nonassessable. Except for this Agreement, there are no agreements or
arrangements relating to the issuance, sale, or transfer of the Shares. None of
the Shares was issued in violation of any preemptive right. There are no
outstanding or authorized options, warrants, preemptive, conversion or other
rights, agreements or commitments to which Seller or Miltex Holdings is a party
or which are binding upon Seller or Miltex Holdings providing for the issuance,
redemption, disposition or acquisition of any equity securities of Miltex
Holdings.
(b) Title to Shares of Miltex Subsidiaries. The authorized equity
securities of the Miltex Subsidiaries are set forth on Section 4.11(b) of the
Disclosure Schedule. Section 4.11(b) of the Disclosure Schedule also lists all
outstanding equity securities of each of the Miltex Subsidiaries, which
constitute the "Miltex Subsidiaries Shares." All of (i) the outstanding common
equity interests of each of the Miltex Subsidiaries are owned of record and
beneficially by one or more of the Miltex Companies and (ii) the outstanding
Preferred Stock of ASP/Miltex Holdings, Inc. is owned of record and beneficially
by Seller, in each case as set forth on Section 4.11(b) of the Disclosure
Schedule, free and clear (except as set forth in Section 4.11(b) of the
Disclosure Schedule) of all Encumbrances. No legend or other reference to any
purported Encumbrance appears upon any certificate representing the Miltex
Subsidiaries Shares. The Miltex Subsidiaries Shares have been duly authorized
and validly issued and are fully paid and nonassessable. Except for this
Agreement, there are no agreements or arrangements relating to the issuance,
sale, or transfer of the Miltex Subsidiaries Shares. None of the Miltex
18
Subsidiaries Shares was issued in violation of any preemptive right. As of the
date hereof, there are not, except for the agreements with Optionholders set
forth on Section 4.11(b) of the Disclosure Schedule, any outstanding or
authorized options, warrants, preemptive, conversion or other rights, agreements
or commitments to which Seller, Miltex Holdings or any of the Miltex
Subsidiaries is a party or which are binding upon Seller, Miltex Holdings or any
Miltex Subsidiary providing for the issuance, redemption, disposition or
acquisition of any equity securities of such Miltex Subsidiary. Upon surrender
by the Optionholders of the Options at the Closing pursuant to the Sellers
Agreement, there will be no outstanding or authorized options, warrants,
preemptive, conversion or other rights, agreements or commitments to which
Seller, Miltex Holdings or any of the Miltex Subsidiaries is a party or which
are binding upon Seller, Miltex Holdings or any Miltex Subsidiary providing for
the issuance, redemption, disposition or acquisition of any equity securities of
such Miltex Subsidiary.
(c) No Other Equity Interests. None of the Miltex Companies owns,
or has any Contract to acquire, any direct or indirect equity or ownership
interest in any Person (other than Miltex Companies).
(d) Title to and Condition of Certain Assets. Section 4.11(d) of
the Disclosure Schedule contains a list of all material furnishings, machinery,
supplies, equipment, tools and other material tangible personal property used in
or related to the Business, wherever located (the "Equipment") as of March 31,
2006. The Miltex Companies have good and valid title to the owned Equipment, the
Inventory and the other tangible, non-real property assets owned by the Miltex
Companies, free and clear of any Encumbrances other than those set forth in
Section 4.11(d) of the Disclosure Schedule. Except as set forth on Section
4.11(d) of the Disclosure Schedule, the owned Equipment are usable and operable
for their current use by Seller, in good working order and condition (taking
into account their age and usage "mileage") (other than Equipment under repair
or temporarily out of service in the Ordinary Course of Business and having a
value of less than Fifty Thousand Dollars ($50,000), and are in a reasonable
state of repair, subject only to ordinary wear and tear, and have been subject
to regular maintenance.
4.12. Real Property
(a) Owned Real Property. Section 4.12(a) of the Disclosure
Schedule contains a complete and accurate list of the Owned Real Property,
setting forth the street addresses of the Owned Real Property.
(b) Title. A Miltex Company holds insurable fee simple title to
the Owned Real Property, free and clear (except as set forth in Section 4.12(b)
of the Disclosure Schedule) of all Encumbrances other than Permitted
Encumbrances. There are no leases, agreements to lease, or tenancies in effect
with respect to the Owned Real Property other than Permitted Encumbrances.
(c) Leased Real Property. Section 4.12(c) of the Disclosure
Schedule contains a complete and accurate list of the Leased Real Property and
the Real Property Leases, and there are no subleases or agreements to sublease
or other tenancies in effect with respect to the Leased Real Property. The
copies of the Real Property Leases (including amendments, if any) delivered by
Seller to Buyer are complete and correct in all material respects.
19
(d) No Violations. To Seller's knowledge, the Owned Real Property
and the Leased Real Property comply in all material respects with all Laws,
including all building, zoning, fire and health Laws affecting the Owned Real
Property or the Leased Real Property, as applicable. Except as set forth on
Section 4.12(d) of the Disclosure Schedule, since January 1, 2003, the Miltex
Companies have not received written notice from a Governmental Authority that
the Owned Real Property or the Leased Real Property is in violation of an
applicable Law.
(e) No Defects. Except as set forth on Section 4.12(e) of the
Disclosure Schedule, to the knowledge of the Seller's principal manager of each
applicable Property, the material improvements situated on the Owned Real
Property or the Leased Real Property are structurally sound in all material
respects and each Fixture owned, leased or used by a Miltex Company and required
for the conduct of the Business as currently conducted is in all material
respects in good working condition (taking into account its age and usage
"mileage", normal wear and tear excepted) and adequate for the operation of the
Business as currently conducted.
(f) Utilities. The Owned Real Property and the Leased Real
Property, and all material improvements thereon, are served by utilities
adequate to operate the Business as currently conducted there.
(g) Real Property Taxes. There are no challenges or pending
appeals brought by Seller or any of the Miltex Companies regarding the amount of
Taxes on, or the assessed valuation of, the Owned Real Property (or if any of
the Miltex Companies is liable for the payment of such Taxes assessed against
the Leased Real Property, the Leased Real Property), and (to Seller's knowledge
with regard to the Leased Real Property only), no special arrangements or
agreements exist with any Governmental Authority with respect thereto. Except as
set forth on Section 4.12(g) of the Disclosure Schedule, no special or
condominium assessments are currently levied against the Owned Real Property (or
if any of the Miltex Companies is liable for the payment of such special
assessments assessed against the Leased Real Property, the Leased Real Property)
or any portion thereof, and, to Seller's knowledge, there are no intended public
improvements which would result in any special assessments being levied against
the Owned Real Property (or if any of the Miltex Companies is liable for the
payment of such special assessments assessed against the Leased Real Property,
the Leased Real Property) or any portions thereof.
(h) Pending Actions. Except as set forth in Section 4.12(h) of the
Disclosure Schedule, neither Seller nor the Miltex Companies have received
written notice of any pending condemnation procedure or eminent domain
proceeding of any kind against the Owned Real Property or the Leased Real
Property and, neither Seller nor any of the Miltex Companies has received
written notice of, any threatened legal actions, lawsuits or administrative
proceedings, including condemnation actions or rezoning proceedings, affecting
all or any portion of the Owned Real Property or the Leased Real Property.
(i) Certain Commitments. Except as set forth on Section 4.12(i) of
the Disclosure Schedule, none of the Miltex Companies is a party to or bound by:
(i) any agreement for the purchase, sale or lease of any real estate, or (ii) to
Seller's knowledge, any obligation to make any contribution or dedication of
money or property (whether real or personal) to construct or maintain any road
or other improvement of a public or private nature.
20
4.13. Material Contracts
(a) Certain Contracts Listed. Section 4.13(a) of the Disclosure
Schedule contains a complete and accurate list (and description, if the Contract
is oral) of all Contracts:
(i) that any of the Miltex Companies has entered into with
GPOs, distributors or physicians, podiatrists, dentists and veterinarians (other
than routine purchase orders) with payments by such customers in excess of
$50,000 (Fifty Thousand Dollars) in any year;
(ii) except for purchase orders entered into in the Ordinary
Course of Business, under which any of the Miltex Companies is required to make
payments of (or deliver goods and services having a value of) more than $50,000
(Fifty Thousand Dollars) in any year;
(iii) under which any of the Miltex Companies is required to
make payments of (or deliver goods and services having a value of) more than
$100,000 (One Hundred Thousand Dollars) and that are not cancelable by any of
the Miltex Companies upon thirty (30) days' or less notice without penalty; or
(iv) that are of the following types: (A) collective
bargaining agreement or contract with any labor union; (B) Contract or
arrangement with any employee earning over $100,000 (One Hundred Thousand
Dollars) annually or Affiliate, including any loan or arrangement governing the
right to use assets used in the Business; (C) confidentiality agreement
restricting the Miltex Companies from disclosing any information; (D)
confidentiality agreement restricting others from disclosing any information
regarding the Miltex Companies; (E) non-compete agreement restricting any of the
Miltex Companies or their respective Affiliates from freely engaging in business
anywhere in the world; (F) other agreement binding or purporting to bind
Affiliates of any of the Miltex Companies; (G) non-compete agreement with any of
the Miltex Companies restricting others from freely engaging in business in
competition with any of the Miltex Companies anywhere in the world; (H) power of
attorney or agency agreement; (I) Real Property Lease; (J) forward foreign
currency Contract; (K) agreements, instruments, and other documents evidencing
indebtedness for borrowed money; (L) joint venture agreements or other
agreements involving the sharing of profits; (M) guaranties of indebtedness for
borrowed money, suretyships, or surviving post-acquisition indemnification
obligations of any of the Miltex Companies; or (N) Contracts entered into other
than in the Ordinary Course of Business.
(b) Material Contracts. The Contracts described in Section 4.13(a)
above, whether or not actually listed on Section 4.13(a) of the Disclosure
Schedule, are the "Material Contracts."
(c) Enforceability, etc. The Material Contracts are valid and
legally binding obligations of the Miltex Companies, as applicable, and, to the
knowledge of Seller, of the other parties thereto, each enforceable in
accordance with its terms against the applicable Miltex Company and, to the
knowledge of Seller, against the other parties thereto, in each case except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject to general principles of equity (regardless of whether
21
such enforcement is considered in a proceeding in law or at equity). None of the
Miltex Companies has breached any Material Contract in any material respect.
Neither Seller nor any of the Miltex Companies has received any written notice
of alleged breach of any Material Contract, and Seller has no knowledge of any
breach by any other party. Neither Seller nor any of the Miltex Companies has
received any written notice of termination or non-renewal under any Material
Contract.
(d) Copies of Material Contracts. The copies of the Material
Contracts (including amendments, if any) delivered by Seller to Buyer are
complete and correct in all material respects.
4.14. Intellectual Property
(a) List. Section 4.14(a) of the Disclosure Schedule contains a
complete and accurate list of the following categories of the Intellectual
Property: (i) trademark registrations and pending trademark applications; (ii)
material unregistered trademarks; (iii) issued patents and pending patent
applications; (iv) copyright registrations and pending copyright applications;
and (v) registered domain names.
(b) Title. The right, title and interest of each Miltex Company in
the Intellectual Property as owner or, subject to the terms of any applicable
license, as licensee, is valid, enforceable, and, to Seller's knowledge,
uncontested, and is free and clear (except as set forth on Section 4.14(b) of
the Disclosure Schedule and except to the extent any of the Intellectual
Property is licensed to the Miltex Companies) of all Encumbrances, and all of
the Intellectual Property is either owned by or licensed to the Miltex
Companies.
(c) No Infringement. To Seller's knowledge, there is no
infringement, unlawful use or default by any third party under any license or
other Contract with respect to the Intellectual Property. None of the Miltex
Companies is in default under any such license or other Contract, or to Seller's
knowledge, infringing upon any rights of any third party, in its use of the
Intellectual Property (nor does any Intellectual Property provided by any of the
Miltex Companies to its direct or indirect customers for their use infringe upon
the rights of any third party), and none of the Miltex Companies and Seller has
received any written notice alleging any such default or infringement.
(d) Copies of Listed Intellectual Property Documents. The copies
of the Intellectual Property Documents (including amendments, if any) delivered
by Seller to Buyer are complete and correct in all material respects.
4.15. Litigation
There is no Action pending or, to Seller's knowledge, threatened: (i)
except as set forth on Section 4.15 of the Disclosure Schedule, relating to any
of the Miltex Companies or the Business which if adversely determined could
result in a payment in excess of $250,000 or the entry of injunctive or similar
relief affecting the Miltex Companies in any material respect; or (ii) seeking
to delay, limit or enjoin any transaction contemplated by this Agreement.
22
4.16. Inventory
Section 4.16 of the Disclosure Schedule contains a complete and
accurate list of addresses at which Inventory is located. All Inventory
reflected in the Balance Sheet and all other Inventory acquired by any of the
Miltex Companies since the Balance Sheet Date was acquired in the Ordinary
Course of Business and in a manner consistent with such of the Miltex Companies'
regular inventory practices. Except as set forth on Section 4.16 of the
Disclosure Schedule, no Inventory is held by any Person (including any Affiliate
of any of the Miltex Companies) on consignment. All excess and obsolete
Inventory reserves on the Balance Sheet or on any of the Miltex Companies' books
after the Balance Sheet Date, have been made consistent with the policies set
forth in Exhibit 1.1(a).
4.17. Certifications; Product Safety
All operations of the Miltex Companies that have ISO 9001 certification
and compliance have achieved and maintained the applicable ISO and quality
certifications and are compliant, in all material respects, with the applicable
FDA Quality System Regulations, and EEC directives, and there is no pending,
and, to Seller's knowledge, no threatened, Action to audit, repeal, fail to
renew or challenge any such certification. Except as set forth in Section 4.17
of the Disclosure Schedule, (i) none of the Miltex Companies, Seller, nor any of
their respective Affiliates has been required to file any notification or other
report with or provide information to any Governmental Authority concerning
actual or potential hazards with respect to any product purchased, distributed,
sold or leased, or with respect to service rendered, by the Miltex Companies or
the Business or any employee or agent thereof, and (ii) each product
distributed, sold or leased, or service rendered, by the Miltex Companies or the
Business complies in all material respects with all product safety standards of
each applicable Governmental Authority in jurisdictions where such products are
manufactured by the Miltex Companies or sold.
4.18. Certain Relationships
Section 4.18 of the Disclosure Schedule sets forth the names of the ten
suppliers and ten customers to whom the Miltex Companies paid or from whom the
Miltex Companies received the greatest sums of money in respect of services,
products or materials provided to or from the Miltex Companies during the year
ended December 31, 2005. Since January 1, 2005, none of the suppliers or
customers listed in Section 4.18 of the Disclosure Schedule has notified any of
the Miltex Companies in writing that it is canceling, otherwise terminating,
materially reducing, or that it intends to cancel, otherwise terminate, or
materially reduce its relationship with the Miltex Companies.
4.19. Export
Since January 1, 2003, none of the Miltex Companies has sold, directly
or indirectly through any Affiliate, or (to Seller's knowledge) through a
distributor or other Person, any products in an amount in excess of Two Hundred
Fifty Dollars ($250) in or to any of the following countries (or to any Person
acting on behalf of any of the following countries): Burma (Myanmar), Cuba,
Iran, Libya, North Korea, Sudan, Syria, Yugoslavia or Zimbabwe.
23
4.20. Insurance
Section 4.20 of the Disclosure Schedule contains a complete and
accurate list of all policies or binders of fire, liability, worker's
compensation, product liability and other forms of insurance (showing as to each
policy or binder the carrier, policy number, and a general description of the
type of coverage provided) maintained by each of the Miltex Companies or Seller
on the Business or the Business Employees. Such insurance provides coverage to
the extent and in the manner required by Law and required by any Contract. None
of the Miltex Companies or Seller (i) is in default under any such policy or
binder, (ii) has received any written notice alleging any default under any
material such binder or policy, (iii) has received any written notice requesting
any repair or modification pursuant to such policy or binder, or (iv) has
received any written notice of termination or non-renewal with respect to any
such policy or binder.
4.21. Employees and Plans
(a) Business Employees. Section 4.21(a) of the Disclosure Schedule
lists all Business Employees as of March 31, 2006, stating their names, job
titles, state or country of employment, hourly rate of compensation or base
salary for 2005, total compensation for 2005, hourly rate of compensation or
base salary as of the date hereof, and the commencement dates of their
employment.
(b) Labor Matters. Except as set forth in Section 4.21(b) of the
Disclosure Schedule, (i) the Miltex Companies are in material compliance with
all Laws regarding employment and employment practices, (ii) there is no unfair
labor practice charge or complaint against the Miltex Companies pending before
the National Labor Relations Board nor is there any material grievance nor any
material arbitration proceeding arising out of or under collective bargaining
agreements pending with respect to the Business, (iii) there is no labor strike,
slowdown, work stoppage or lockout in effect or, to the knowledge of Seller,
threatened, against the Miltex Companies, and the Miltex Companies have not
experienced any such labor controversy since January 1, 2005, (iv) there is no
material charge or complaint pending against Miltex Companies before the Equal
Employment Opportunity Commission, the Office of Federal Contract Compliance
Programs or any similar state, local or foreign agency responsible for the
prevention of unlawful employment practices, (v) none of the Miltex Companies is
a party to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices, except
where any such consent decree or citation would not result in a Material Adverse
Effect; (vi) the Miltex Companies will not have any liability under any benefit
or severance policy, practice, agreement, plan or program which exists or arise,
or may be deemed to exist or arise, under any applicable Law or otherwise, as a
result of the transactions contemplated hereunder, (vii) none of the Miltex
Companies is a party to any collective bargaining agreement, and (viii) the
Miltex Companies are in compliance with their respective obligations pursuant to
the Worker Adjustment and Retraining Notification Act of 1988. None of the
Miltex Companies has received written notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of employment
laws to conduct an investigation of, or relating to the Business and, to the
knowledge of Seller, no such investigation is in progress.
24
(c) Employee Plans or Policies. There does not exist, with respect
to the Business Employees, any of the Miltex Companies or the Business: (i)
except as set forth on Section 4.13(a) of the Disclosure Schedule, any
employment contract; (ii) except as set forth on Section 4.21(c) of the
Disclosure Schedule, any "employee benefit plan" (as defined under Section 3(3)
of ERISA), incentive, bonus, deferred compensation, vacation, holiday,
cafeteria, medical, disability, fringe benefit, stock purchase, stock option,
stock appreciation, phantom stock, restricted stock or other stock-based
compensation plan, policy, program, practice or arrangement maintained or
contributed to by the Miltex Companies, Seller or any of their respective
Affiliates in which the Business Employees are eligible to participate (each, an
"Employee Plan"); (iii) any right on the part of any former Business Employee to
be rehired prior to the hiring of any new employee; (iv) any obligation to
provide retiree medical benefits; or (v) any current request for union
representation, strike, or labor dispute.
(d) Employee Plans. Seller has delivered or made available to
Buyer with respect to each Employee Plan a current, true and complete copy of
(i) all documents which comprise the most current version of each such Employee
Plan and any related trust agreement or other funding instrument; (ii) the most
recent summary plan description for each such Employee Plan; (iii) the most
recent Form 5500 and attached schedules; (iv) the most recent determination by
the Internal Revenue Service for each Employee Plan that is intended to be
qualified within the meaning of Section 401(a) of the Code.
(e) Compliance. Each Employee Plan has been maintained and
operated in material compliance with all applicable Laws, including ERISA, the
Code, and the Health Insurance Portability and Accountability Act of 1996:
(i) Except as set forth in Section 4.21(e)(i) of the
Disclosure Schedule, (A) each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has obtained a favorable determination letter
from the Internal Revenue Service to such effect and, to the knowledge of
Seller, nothing has occurred, whether by action or inaction, that could
reasonably be expected to cause the loss of such qualification; (B) no
"reportable event" within the meaning of Section 4043 of ERISA (other than
reportable events for which the notice period has been waived) or "prohibited
transaction" within the meaning of Section 406 of ERISA has occurred with
respect to any Employee Plan and no material Tax has been imposed pursuant to
Section 4975 or Section 4976 of the Code in respect thereof; and (C) none of the
Miltex Companies has incurred any material liability to the Pension Benefit
Guaranty Corporation (the "PBGC");
(ii) Except as set forth in Section 4.21(e)(ii) of the
Disclosure Schedule, there are no claims, suits or actions pending by any
employee or beneficiary covered under any such Employee Plan or otherwise
involving any such Employee Plan (other than routine claims for benefits);
(iii) The Miltex Companies are in material compliance with the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and all other applicable Laws which require the continuation of benefit coverage
upon the happening of certain events, such as the termination of employment or
change in beneficiary or dependent status. None of the Miltex Companies has any
25
obligation to provide health or other non-pension benefits to retired or other
former employees, except as specifically required by COBRA;
(iv) There are no unpaid contributions due or unaccrued prior
to the date hereof that are required to have been made with respect to any
Employee Plan;
(v) With respect to any Employee Plan: (i) no filing,
application or other matter is pending with the Internal Revenue Service, the
PBGC, the United States Department of Labor or any other Governmental Authority,
and (ii) there are no outstanding material liabilities for Taxes, penalties or
fees;
(vi) None of the Miltex Companies has incurred any liability
or taken any action and, to the knowledge of Seller, there is no action or event
that could cause any one of them to incur any material liability under Section
412 of the Code or Title IV of ERISA with respect to any "single-employer plan"
(as defined in Section 4001(a)(15) of ERISA);
(vii) Except as set forth in Section 4.21(e)(vii) of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of any or all of the contemplated transactions will: (A)
entitle any current or former employee of the Miltex Companies to unemployment
compensation or any similar payment; (B) accelerate the time of payment or
vesting or increase the amount of any compensation due to any such employee or
former employee; (C) directly or indirectly result in any payment made or to be
made to or on behalf of any Person that would constitute a "parachute payment"
within the meaning of Section 280G of the Code; or (D) directly or indirectly
result in the payment to or on behalf of any Person of an amount that will be an
"excess parachute payment" (within the meaning of Section 280G of the Code);
(viii) None of the Miltex Companies has filed a notice of
intent to terminate any Employee Plan that is subject to Title IV of ERISA or
adopted any amendment to treat any such Employee Plan as terminated. The PBGC
has not instituted proceedings to terminate any such Employee Plan and, to the
knowledge of Seller, no other event or condition has occurred which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Employee Plan.
(f) Nonqualified Deferred Compensation Plan. No additional Tax
under Section 409A(a)(1)(B) of the Code has been or is reasonably expected to be
incurred by a participant in a nonqualified deferred compensation plan (within
the meaning of Section 409A(d)(1) of the Code) of any of the Miltex Companies.
(g) Controlled Group. Other than the Miltex Companies, no other
employer of Business Employees is a part of the "controlled group" (as such term
is defined in Section 414 of the Code and Section 4001 of ERISA) that includes
the Miltex Companies or has been part of such controlled group since January 1,
2000. Since January 1, 2000, Neither the Miltex Companies nor any member of such
controlled group has contributed to a "multiemployer plan" (as such term is
defined in Section 3(37) of ERISA).
(h) Underfunded Plan. As of the most recent actuarial valuation
performed for the Miltex Instrument Company Inc. Retirement Plan, the "amount of
26
unfunded benefit liabilities" as defined in Section 4001(a)(18) of ERISA, for
such plan did not exceed the value of its assets by more than the than the
Pension Catch-Up Amount.
4.22. Environmental Matters
(a) Compliance. None of the Miltex Companies or Seller has
received any notice, citation, inquiry or complaint from any Governmental
Authority with respect to the Owned Real Property or the Leased Real Property
relating to Environmental Laws since January 1, 2003. Each of the Miltex
Companies has complied in all material respects with all Environmental Laws and
no material violation of any Environmental Law by the Miltex Companies exists
with respect to the Owned Real Property or the Leased Real Property. Any
Hazardous Substances generated or handled on the Owned Real Property or the
Leased Real Property by the Miltex Companies or their agents during the
possession of the Owned Real Property or the Leased Real Property by any of the
Miltex Companies have been stored, transported, treated and disposed of by the
Miltex Companies or their agents in a lawful manner.
(b) No Orders, Etc. None of the Miltex Companies has entered into,
agreed to or is subject to any award, decision, judgment, injunction, order,
ruling subpoena or verdict entered, issued, made or rendered by any Governmental
Authority under any Environmental Laws.
(c) Copies of Documents. The copies of Permits and other documents
relating to Environmental Laws (including amendments to such documents, if any)
delivered by Seller to Buyer are complete and correct in all material respects.
4.23. No Undisclosed Liabilities
To Seller's knowledge, none of the Miltex Companies has any liabilities
or obligations (whether absolute, accrued or contingent, whether matured or
unmatured, and whether known or unknown) except: (i) liabilities that are
reflected on the Balance Sheet (or in the footnotes thereto); (ii) current
liabilities incurred in the Ordinary Course of Business since the Balance Sheet
Date, and adjusted for in (or specifically excluded from) the calculation of
Closing Working Capital; (iii) liabilities described in the Disclosure Schedule;
and (iv) liabilities that could not reasonably be expected to have a Material
Adverse Effect.
4.24. Taxes
Except as set forth in Section 4.24 of the Disclosure Schedule:
(a) Tax Returns. All income and other material Tax Returns
required to be filed by or with respect to each of the Miltex Companies have
been timely filed with the appropriate Governmental Authority (taking into
account applicable extensions of time to file), and all such Tax Returns are
complete and accurate in all material respects. None of the Miltex Companies is
currently the beneficiary of any extension of time to file a Tax Return.
(b) Tax Liabilities. All income and other material Taxes due and
payable by or with respect to each of the Miltex Companies, whether or not shown
or reportable on any Tax Return, have been paid. The accruals and reserves for
Taxes (excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Balance Sheet
27
are adequate (determined in accordance with GAAP) with respect to the liability
of the Miltex Companies for unpaid Taxes as of the Balance Sheet Date. Since the
Balance Sheet Date, none of the Miltex Companies has incurred any Taxes outside
the Ordinary Course of Business.
(c) Withholding Taxes. All material Taxes required by applicable
Tax Law to be collected or withheld by each of the Miltex Companies have been
duly collected or withheld and, to the extent required, have been timely paid to
the proper Governmental Authority. Each of the Miltex Companies has properly
requested, received and retained all necessary exemption certificates and other
documentation supporting any claimed exemption or waiver of Taxes on sales or
other transactions as to which such company would have been obligated to collect
or withhold Taxes.
(d) Tax Administrative Matters. No deficiencies for Taxes have
been threatened, claimed, proposed or assessed (in each case, in writing) by any
Governmental Authority against any of the Miltex Companies for any open Tax
Period which have not been fully resolved. There are no ongoing, pending or, to
the knowledge of Seller, threatened audits, examinations or other administrative
or judicial proceedings relating to any liability of any of the Miltex Companies
for any Taxes, and there are no matters under discussion with any Governmental
Authority with respect to material Taxes of any of the Miltex Companies. No
waiver or extension of any statute of limitations is in effect with respect to
Taxes of any of the Miltex Companies. No written claim has ever been made
against any of the Miltex Companies by a Governmental Authority in a
jurisdiction where such company does not file Tax Returns that it is or may be
subject to taxation in that jurisdiction.
(e) Tax Elections. None of the assets of any of the Miltex
Companies is required to be treated as owned by another Person for Tax purposes.
None of the Miltex Companies that are U.S. entities has made an election or is
required to treat any of its assets as "tax-exempt bond financed property" or
"tax-exempt use property" within the meaning of Section 168 of the Code or under
any comparable provision of other applicable Tax Law. None of the Miltex
Companies has agreed to make, or is required to make, any adjustment for any Tax
Period under Section 481(a) of the Code or any similar provision of other
applicable Tax Law by reason of a change in accounting method or otherwise.
(f) Tax Rulings. None of the Miltex Companies has requested or
received any ruling from any Governmental Authority, or signed any binding
agreement with any Governmental Authority (including, without limitation, any
advance pricing agreement) that would impact the amount of Taxes of any of the
Miltex Companies for any Post-Closing Tax Period.
(g) Tax Liens. There are no Encumbrances for Taxes (other than for
current Taxes not yet due and payable) upon any of the assets of any of the
Miltex Companies.
(h) Affiliated Group. Since the year 2000, none of the Miltex
Companies has ever been a member of an affiliated group of corporations (other
than an affiliated group of which Miltex Holdings is, or another Miltex Company
was, the common parent) which filed, or was required by applicable Tax Law to
file, a combined, consolidated or unitary Tax Return. None of the Miltex
Companies is
28
liable for the Taxes of any other Person (other than members of an affiliated
group of which Miltex Holdings is, or another Miltex Company was, the common
parent) under Treasury Regulation ss. 1.1502-6 or any similar provision of other
applicable Tax Law.
(i) Tax Agreements. None of the Miltex Companies is a party to or
bound by any Tax sharing, Tax indemnity, Tax allocation or similar agreement.
None of the Miltex Companies has any contractual obligation to indemnify any
other Person for Taxes.
(j) Partnerships. None of the Miltex Companies is a party to any
joint venture, partnership or other agreement, arrangement or contract that is
treated as a partnership for Tax purposes.
(k) Spin-Offs. Since January 1, 2004, none of the Miltex Companies
has been a party to any transaction that was treated by the parties as a
distribution to which Section 355 of the Code applies.
(l) USRPHC. Miltex Holdings has not been a "United States real
property holding company" within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) Tax Shelters. None of the Miltex Companies has entered into or
participated in (i) any reportable transaction within the meaning of Treasury
Regulation ss. 1.6011-4(b) or (ii) any confidential corporate tax shelter within
the meaning of Section 6111(d) of the Code and Treasury Regulation ss.
301.6111-2, as in effect prior to the enactment of the American Jobs Creation
Act of 2004.
(n) Compensation Deductions. None of the Miltex Companies is a
party to any agreement, arrangement or plan that has resulted in or would result
in the payment of any "excess parachute payments" within the meaning of Section
280G of the Code or payments that are not deductible under Section 162(m) of the
Code.
(o) Subpart F. None of the Miltex Subsidiaries that are organized
in a jurisdiction other than the United States or a state thereof (i) has an
investment in "United States property" for purposes of Section 956 of the Code,
(ii) has been engaged in a U.S. trade or business for U.S. federal income Tax
purposes; or (iii) has been a passive foreign investment company within the
meaning of Section 1297 of the Code.
(p) Boycotts. None of the Miltex Companies has participated in or
cooperated with an international boycott or has been requested to do so in
connection with any transaction or proposed transaction.
4.25. Product Liability
Except as set forth in Section 4.25 of the Disclosure Schedule, since
January 1, 2003, none of the Miltex Companies has received any written notice
that the Miltex Companies has, and, to Seller's knowledge, there is no
reasonable basis for any Action against the Miltex Companies for, any material
liability arising out of any injury to any Person or property as a result of a
29
product or component thereof manufactured or shipped by, or service provided by,
any of the Miltex Companies.
4.26. Exclusivity of Representations
The representations and warranties made by Seller in this Agreement (or
in documents delivered by Seller at the Closing) are the exclusive
representations and warranties made by Seller. Seller hereby disclaims any other
express or implied representations or warranties, including any regarding pro
forma financial information, financial projections or other forward-looking
statements provided by or on behalf of Seller and the Miltex Companies.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Organization, Authorization, etc.
(a) Power and Actions Taken. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power and authority, and has taken
all corporate action necessary, to execute and deliver this Agreement and each
Additional Agreement to which it is a party, to consummate the transactions
contemplated on its part under this Agreement and each such Additional
Agreement, and to perform its obligations under this Agreement and each such
Additional Agreement.
(b) Due Execution, Delivery and Enforceability. Buyer has duly
executed and delivered this Agreement and each Additional Agreement to which it
is a party, and this Agreement and each such Additional Agreement is a valid and
legally binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity
(regardless of whether such enforcement is considered in a proceeding in law or
at equity).
5.2. No Conflict or Violation
The execution, delivery and performance by Buyer of this Agreement and
each Additional Agreement to which it is a party: (i) will not violate or
conflict with the Governing Documents of Buyer; (ii) will not violate in any
material respect any federal, state, local or foreign statute, rule, regulation,
order or judgment of any Governmental Authority applicable to Buyer; and (iii)
will not, in any material respect violate, conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, any contract, lease or agreement to which Buyer is
a party.
30
5.3. Third-Party Consents
Except as required under the HSR Act, no consent or approval of, notice
to, or filing with, any Person is required to be obtained, given or made by
Buyer to permit Buyer to purchase the Shares from Seller.
5.4. Litigation
There are no claims, actions, suits, proceedings or governmental
investigations pending or, to the knowledge of Buyer, threatened, in writing
against or affecting Buyer or its assets, by or before any Governmental
Authority, that would materially impair Buyer's ability to consummate the
transactions contemplated hereby, and there are no outstanding orders of any
Governmental Authority, affecting Buyer or its assets, that would materially
impair Buyer's ability to consummate the transactions contemplated hereby.
5.5. Funding
Buyer has the necessary funding to meet all of its obligations under
this Agreement and the Additional Agreements to which it is a party, including
payment of the Purchase Price, any adjustments thereto and all of its fees and
expenses in connection with the transactions contemplated by this Agreement.
5.6. Investment Intent
Buyer is acquiring the Shares for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act
of 1933, as amended.
5.7. Brokers
No broker, finder or financial advisor or other Person is entitled to
any brokerage fees, commissions, finders' fees or financial advisory fees in
connection with the transactions contemplated hereby by reason of any action
taken by Buyer or any of its Affiliates or agents.
ARTICLE 6
CERTAIN COVENANTS OF SELLER
6.1. Access and Investigation
Between the date of this Agreement and the Closing Date, and upon
reasonable advance notice received from Buyer, Seller shall, and shall cause
each of the Miltex Companies to: (a) afford Buyer and its Representatives
(collectively, "Buyer Group") full and free access, during regular business
hours, to each Miltex Company's respective personnel, properties, Contracts,
Permits and Books and Records, such rights of access to be exercised in a manner
that does not unreasonably interfere with the operations of the Miltex
Companies; (b) furnish Buyer Group with copies of all such Contracts and
Permits, and copies of such other existing documents and data as Buyer may
reasonably request; (c) furnish Buyer Group with such additional financial,
operating and other relevant data and information as Buyer may reasonably
31
request with respect to the Miltex Companies; and (d) otherwise cooperate and
assist, to the extent reasonably requested by Buyer, with Buyer's continuing
investigation of the Business as conducted by each of the Miltex Companies.
6.2. Operation of the Business
Between the date of this Agreement and the Closing, Seller shall, and
shall cause each of the Miltex Companies to:
(a) conduct its Business only in the Ordinary Course of Business
(other than as provided in Sections 6.7, 6.10, 6.11, 6.12 hereof and Sections
4.8 and 4.21(b) of the Disclosure Schedule);
(b) confer with Buyer before implementing operational decisions of
a material nature;
(c) use commercially reasonable efforts to keep available the
services of the Business Employees and to comply, consistent with its past
practices in the Ordinary Course of Business, with all Laws and all of the
Miltex Companies' obligations under the Material Contracts; and
(d) use commercially reasonable efforts to continue in full force
and effect the insurance policies described in Section 4.20 of the Disclosure
Schedule.
6.3. Negative Covenant
Except as otherwise expressly permitted herein, between the date of
this Agreement and the Closing, Seller shall not, and shall not permit any of
the Miltex Companies to, without the written consent of Buyer, which consent
shall not be unreasonably withheld, delayed or conditioned:
(a) take any affirmative action, or fail to take any reasonable
action within its control, as a result of which any of the changes or events
listed in Sections 4.7 or 4.8 would be likely to occur;
(b) except in the Ordinary Course of Business, make any material
modification to any Material Contract or material Permit; or
(c) enter into any compromise or settlement of any litigation or
proceeding relating to any of the Miltex Companies or the Business other than a
settlement solely for monetary damages not greater than Fifty Thousand Dollars
($50,000).
6.4. Required Approvals
The parties have made their initial filings under the HSR Act, and
Seller shall, and shall cause each of the Miltex Companies to, make all other
filings required by Law to be made by them in order to consummate the
transactions contemplated by this Agreement (including any further filings under
the HSR Act). In addition, Seller and the Miltex Companies shall cooperate with
32
Buyer and its Representatives (i) with respect to all filings that Buyer elects
or is required to make in connection with the transactions contemplated by this
Agreement, and (ii) in obtaining all Consents (including taking all actions
requested by Buyer to cause early termination of any applicable waiting period
under the HSR Act).
6.5. Notification
Between the date of this Agreement and the Closing, Seller shall (and
shall cause each of the Miltex Companies to) promptly notify Buyer in writing if
Seller or such Miltex Company acquires knowledge of (a) any fact or condition
that causes or constitutes a material breach of any of Seller's representations
and warranties made as of the date of this Agreement; (b) the occurrence after
the date of this Agreement of any fact or condition that would be reasonably
likely to cause or constitute a material breach of any such representation or
warranty had the representation or warranty been made as of the time of the
occurrence of, or Seller's or any of the Miltex Companies' discovery of, such
fact or condition; (c) any material breach of a covenant of Seller contained in
this Article 6; or (d) any fact that makes the satisfaction of the conditions of
Article 9 impossible or reasonably unlikely.
6.6. No Negotiation, etc.
Until such time as this Agreement shall be terminated pursuant to
Section 10.1, Seller shall not (and shall cause each of the Miltex Companies not
to) directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals from, any
Person (other than Buyer) relating to any business combination transaction
involving any of the Miltex Companies or the Business, including the sale of any
of the Miltex Companies' stock, the merger or consolidation of any of the Miltex
Companies or the sale of any of the Miltex Companies' Business or any of their
assets except Inventory in the Ordinary Course of Business. Seller and the
Miltex Companies shall notify Buyer in writing of any such inquiry or proposal
within twenty-four (24) hours after their receipt or awareness of such inquiry
or proposal.
6.7. Best Efforts
Seller shall, and Seller shall cause each of the Miltex Companies to,
use its or such Miltex Company's reasonable best efforts to cause the conditions
in Article 9 to be satisfied.
6.8. Interim Financial Statements; S-X Modifications
Until the Closing, (a) Seller shall deliver to Buyer within twenty (20)
calendar days after the end of each month a copy of the Miltex Companies'
consolidated balance sheet as of the end of such month and statement of income
for the one (1) month period ending at the end of such month prepared in a
manner and containing information consistent with the Miltex Companies' current
practices; and (b) Seller shall deliver to Buyer within twenty (20) business
days after the end of each quarter a copy of the Miltex Companies' consolidated
balance sheet as of the end of such quarter and statement of income for the
three (3) month period ending at the end of such quarter prepared in a manner
and containing information consistent with the Miltex Companies' current
practices, in each case certified by Miltex Holdings' chief financial officer as
to compliance with the representation set forth in Section 4.6(b). In addition
33
to the foregoing, Seller shall deliver to Buyer prior to Closing a version of
the audited Balance Sheet and a version of the audited statements of income,
changes in stockholders equity and cash flows for the year ended December 31,
2005 (including notes thereto and the accounting policies used in connection
therewith), all certified by PricewaterhouseCoopers LLP, independent certified
public accountants, whose reports thereon are included therein, in each case
modified as may be necessary to comply with the requirements of the U.S.
Securities and Exchange Commission Regulation S-X.
6.9. Nondisclosure
(a) Of Proprietary Information. Seller acknowledges the
confidential and proprietary nature of the Confidential Information of Buyer and
its Affiliates and agrees that from the date hereof until the earlier of (x) the
Closing or (y) two years after the date of termination of this Agreement such
Confidential Information (whether obtained before or after the date of this
Agreement): (i) shall be kept confidential by Seller and the Miltex Companies;
and (ii) without limiting the foregoing, shall not be disclosed by Seller to any
Person, except in each case as otherwise expressly permitted or contemplated by
this Agreement, with the prior written consent of Buyer or as required by law.
Seller shall disclose the Confidential Information of Buyer or its Affiliates
only to its Representatives who require such material for the purpose of
evaluating the transactions contemplated hereby and are informed by Seller of
the obligations of this Section 6.9 with respect to such information. Seller
shall (x) enforce the terms of this Section 6.9 as to the Representatives of
Seller; (y) take such actions as are necessary to cause the Representatives of
Seller to comply with the terms and conditions of this Section 6.9; and (z) be
responsible and liable for any breach of the provisions of this Section 6.9 by
Seller or the Representatives of Seller. In any case, such Confidential
Information shall not be used for any reason or purpose other than to evaluate
and consummate the transactions contemplated by this Agreement. From and after
the Closing, if it occurs, the provisions of Section 13.1 shall control the
treatment of the Confidential Information of Buyer and its Affiliates.
(b) Of Transaction. After the date of this Agreement but before
the Closing (if any) hereunder, except (i) as expressly permitted or
contemplated by this Agreement, (ii) to the Representatives described in the
second sentence of Section 6.9(a) above, (iii) in the form of a public
announcement coordinated with Buyer and set forth on Exhibit 6.9(b) hereto, or
(iv) to the extent that, in the opinion of its counsel, failure to make such
disclosure would constitute a violation of law (and in such event, after
coordination and cooperation with Buyer), neither Seller nor the Miltex
Companies shall disclose to any Person the fact of, or information regarding,
the negotiations with respect to this Agreement and the transactions
contemplated hereby.
6.10. Payment of Obligations
On or prior to the Closing Date, Seller shall cause the applicable
Miltex Company to terminate the foreign currency exchange contracts, interest
rate, interest rate cap and other hedging arrangements of each such Miltex
Company.
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6.11. Contribution of Preferred Stock
On or prior to the Closing Date, (i) Seller shall contribute the
Preferred Stock to Miltex Holdings, (ii) Miltex Holdings shall contribute the
Preferred Stock to ASP/Miltex Group Holdings, Inc. and (iii) ASP/Miltex Group
Holdings, Inc. shall cancel the Preferred Stock
6.12. Contribution of Owned Real Property
On or prior to the Closing Date, (i) Seller shall cause Miltex Dental
Instruments, Inc. to create a new, wholly-owned subsidiary for the purpose of
holding the Owned Real Property (the "Montana Subsidiary"), (ii) Miltex Dental
Instruments, Inc. shall contribute title to the Owned Real Property, the
Fixtures appurtenant thereto and the Standard Commercial Listing Agreement
described on Section 4.12(i) of the Disclosure Schedule to the Montana
Subsidiary and the Montana Subsidiary shall assume any liabilities related to
such Owned Real Property, Fixtures or Standard Commercial Listing Agreement, and
(iii) Miltex Dental Instruments, Inc. and Miltex Holdings, respectively, shall
declare a dividend of the equity securities in the Montana Subsidiary to Miltex
Holdings and Seller, respectively.
ARTICLE 7
CERTAIN COVENANTS OF BUYER
7.1. Required Approvals
The parties have made their initial filings under the HSR Act, and
Buyer shall make all other filings required by Law to be made by it in order to
consummate the transactions contemplated by this Agreement (including any
further filings under the HSR Act). In addition, Buyer shall cooperate with
Seller and the Miltex Companies with respect to all filings that Seller is
required by Law to make in connection with the transactions contemplated by this
Agreement; provided, however, that this Agreement does not require Buyer to
dispose of or make any change in any portion of its business.
7.2. Nondisclosure
(a) Of Proprietary Information. Buyer acknowledges the
confidential and proprietary nature of the Confidential Information of Seller,
the Miltex Companies and the Business and agrees that, from the date hereof
until the earlier of (w) the Closing or (x) two years after the date of
termination of this Agreement such Confidential Information (whether obtained
before or after the date of this Agreement) (i) shall be kept confidential by
Buyer; and (ii) without limiting the foregoing, shall not be disclosed by Buyer
to any Person, except in each case as otherwise expressly permitted or
contemplated by this Agreement, with the prior written consent of Seller or as
required by law. Buyer shall disclose the Confidential Information of Seller,
the Miltex Companies or the Business only to its Representatives who require
such material for the purpose of evaluating the transactions contemplated hereby
and are informed by Buyer of the obligations of this Section 7.2 with respect to
such information. Buyer shall (y) enforce the terms of this Section 7.2 as to
its Representatives; (z) take such action to the extent necessary to cause its
Representatives to comply with the terms and conditions of this Section 7.2; and
(z) be responsible and liable for any breach of the provisions of this Section
7.2 by it or its Representatives. In any case, if the Closing does not occur,
such Confidential
35
Information shall not be used for any reason or purpose other than to evaluate
and consummate the transactions contemplated by this Agreement. From and after
the Closing, if it occurs, the provisions of Section 13.1 shall control the
treatment of the Confidential Information of Seller, the Miltex Companies and
the Business.
(b) Of Transaction. After the date of this Agreement but before
the Closing (if any) hereunder, except in the form of a public announcement
coordinated with Seller and set forth on Exhibit 6.9(b) hereto, or to the extent
that, in the opinion of its counsel, failure to make such disclosure would
constitute a violation of law (and in such event, after coordination and
cooperation with Seller), Buyer shall not disclose to any Person the fact of, or
information regarding, the negotiations with respect to this Agreement and the
transactions contemplated hereby.
7.3. Notification
Between the date of this Agreement and the Closing, Buyer shall
promptly notify Seller in writing if Buyer acquires knowledge of (a) any fact or
condition that causes or constitutes a material breach of any Buyer's
representations and warranties made as of the date of this Agreement; (b) the
occurrence after the date of this Agreement of any fact or condition that would
be reasonably likely to cause or constitute a material breach of any such
representation or warranty had the representation or warranty been made as of
the time of the occurrence of, or Buyer's discovery of, such fact or condition;
(c) any material breach of a covenant contained in this Article 7; or (d) any
fact that makes the satisfaction of the conditions of Article 8 impossible or
reasonably unlikely.
7.4. Withholding Amount
Prior to the Closing Date, Seller shall provide Buyer with a final
determination of the Withholding Amount as of the Closing Date for each
Optionholder. At the Closing, Buyer shall deliver to Miltex Holdings an amount
in cash equal to the Withholding Amount. Miltex Holdings shall remit the
Withholding Amount to the appropriate Governmental Authority when due.
7.5. Best Efforts
Buyer shall use its reasonable best efforts to cause the conditions in
Article 8 to be satisfied.
7.6. Officer and Director Indemnification
Buyer agrees that all rights to indemnification and exculpation from
liability for acts or omissions occurring on or prior to the Closing Date now
existing in favor of the current or former directors, officers or employees of
the Miltex Companies, as provided in the respective certificates of
incorporation or by-laws of the Miltex Companies shall survive the Closing Date
and shall continue in full force and effect in accordance with their respective
terms for a period of not less than six (6) years after the Closing Date.
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7.7. Further Assurances
Buyer and the Miltex Companies shall cooperate with and provide all
reasonable assistance to Seller and the Montana Subsidiary to facilitate the
sale of the Owned Real Property, whether prior to or following the Closing Date,
at Buyer's sole expense.
ARTICLE 8
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller with respect to consummation of the
transactions provided for in this Agreement are subject, in the discretion of
Seller, to the satisfaction at or before the Closing of the following
conditions:
8.1. Representations, Warranties and Covenants
All representations and warranties of Buyer contained in Article 5 of
this Agreement shall have been true and correct in all material respects,
without duplication of any materiality qualifier contained therein, as of the
date of this Agreement and as of the Closing, and Buyer shall have performed in
all material respects all covenants required by this Agreement to be performed
by it as of or before the Closing.
8.2. Certain Consents
All HSR Act filings shall have been made, and all waiting periods (and
any extensions thereof) under the HSR Act shall have expired, lapsed or been
terminated with respect to the Closing, and all HSR Act authorizations, orders,
recognitions, grants, consents, licenses, confirmations, clearances, permissions
and approvals necessary for the completion of the Closing shall have been
obtained.
8.3. No New Action with Respect to Transactions
Since the date of this Agreement, no Action shall have been instituted
or threatened by any Governmental Authority or other Person that (i) challenges,
seeks damages in connection with, or seeks to restrain, any of the transactions
contemplated by this Agreement or (ii) would reasonably be expected to have the
effect of preventing, making illegal, or otherwise materially interfering with
any of the transactions contemplated by this Agreement.
8.4. Additional Agreements
Buyer shall have executed the Escrow Agreement.
8.5. Closing Documents
Buyer shall have delivered to Seller the items shown in the Closing
Agenda as being delivered by Buyer or Buyer's counsel, and such other
instruments and documents as may have been reasonably requested by Seller, all
in form reasonably satisfactory to Seller's counsel.
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ARTICLE 9
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for in
this Agreement are subject, in the discretion of Buyer, to the satisfaction at
or before the Closing of the following conditions:
9.1. Representations, Warranties and Covenants
All representations and warranties of Seller contained in Article 4 of
this Agreement shall have been true and correct in all material respects,
without duplication of any materiality qualifier contained therein, as of the
date of this Agreement and as of the Closing (except for representations that
speak as of a particular date, which shall be true and correct in all material
respects as of such date); provided, however, that for purposes of this
condition, such representations and warranties will be deemed to be true and
correct in all material respects unless the matters underlying the failure or
failures or such representations and warranties to be so true and correct,
individually or in the aggregate, represent or reasonably would be expected to
result in a Material Adverse Effect; and Seller shall have performed in all
material respects all covenants required by this Agreement to be performed by it
as of or before the Closing.
9.2. Certain Consents
All HSR Act filings shall have been made, and all waiting periods (and
any extensions thereof) under the HSR Act shall have expired, lapsed or been
terminated with respect to the Closing, and all HSR Act authorizations, orders,
recognitions, grants, consents, licenses, confirmations, clearances, permissions
and approvals necessary for the completion of the Closing shall have been
obtained.
9.3. No New Action With Respect to Transactions
Since the date of this Agreement, no Action shall have been instituted
or threatened by any Governmental Authority or other Person that (i) challenges,
seeks damages in connection with, or seeks to restrain, any of the transactions
contemplated by this Agreement or (ii) would reasonably be expected to have the
effect of preventing, making illegal, or otherwise materially interfering with
any of the transactions contemplated by this Agreement.
9.4. Additional Agreements
Each of Seller and the Miltex Companies shall have executed and
delivered to Buyer the Additional Agreements to which it is a party.
9.5. Closing Documents
Seller shall have delivered to Buyer the items shown in the Closing
Agenda as being delivered by Seller or Seller's counsel, and such other
instruments and documents as may have been reasonably requested by Buyer, all in
form reasonably satisfactory to Buyer's counsel.
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9.6. No Material Adverse Change
There shall not have been, since the date hereof, any Material Adverse
Change, or event or circumstance that will, or could reasonably be expected to,
result in a Material Adverse Change, other than as a result of (i) any change in
general economic, business, industry, legal or political conditions (including
conditional arising from wars, national emergencies, hostilities, or terrorist
or anti-terrorist acts) not having a disproportionate effect on the Business
compared to its effect on other entities engaged in businesses similar to the
Business; or (ii) the transactions contemplated by this Agreement or the
announcement of the transactions contemplated by this Agreement.
9.7. Leased Real Property Subject to Installment Sales Agreement
Seller shall have delivered either (i) to a Miltex Company a special
warranty deed of the Leased Real Property subject to the Installment Sales
Agreement or (ii) to Buyer an escrow letter from any applicable Government
Authority setting forth the conditions to release such deed from escrow, in each
case in reasonable form.
ARTICLE 10
TERMINATION BEFORE CLOSING
10.1. Termination
This Agreement may be terminated by notice at any time prior to
Closing:
(a) By written consent of Buyer and Seller;
(b) By Buyer or Seller if the Closing shall not have occurred on
or before May 15, 2006; provided, that this provision shall not be available to
Buyer if Seller has the right to terminate this Agreement under clause (d)(i) of
this Section 10.1, and this provision shall not be available to Seller if Buyer
has the right to terminate this Agreement under clause (c)(i) of this Section
10.1;
(c) By Buyer if (i) there is a material breach of any covenant to
be performed by Seller under this Agreement which, if curable, has not been
cured within thirty (30) days of the breach or waived by Buyer, (ii) any of the
conditions contained in Article 9 of this Agreement has not been satisfied
(other than through a breach of a covenant contained in this Agreement by Buyer)
or waived by Buyer as of the Closing, or (iii) satisfaction of any of the
conditions contained in Article 9 of this Agreement has become impossible (other
than through a breach of a covenant contained in this Agreement by Buyer) and
Buyer has not waived such condition; or
(d) By Seller if (i) there is a material breach of any covenant to
be performed by Buyer under this Agreement which, if curable, has not been cured
within thirty (30) days of the breach or waived by Seller, (ii) any of the
conditions contained in Article 8 of this Agreement has not been satisfied
(other than through a breach of covenant contained in this Agreement by Seller)
or waived by Seller as of the Closing, or (iii) satisfaction of any of the
conditions contained in Article 8 of this Agreement has become impossible (other
39
than through a breach of covenant contained in this Agreement by Seller) and
such condition has not been waived by Seller.
10.2. In the Event of Termination
In the event of termination of this Agreement:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated by this
Agreement, whether so obtained before or after the execution of this Agreement,
to the party furnishing the same;
(b) The provisions of Sections 6.9 and 7.2 and Article 15 shall
continue in full force and effect; and
(c) No party hereto shall have any liability to any other party to
this Agreement, except as stated in this Section 10.2 and except for any breach
of this Agreement occurring prior to the termination of this Agreement. The
foregoing provisions shall not limit or restrict the availability of specific
performance or other injunctive relief to the extent that specific performance
or such other relief would otherwise be available to a party hereunder.
ARTICLE 11
SURVIVAL AND INDEMNIFICATION
11.1. Survival of Representations, Warranties and Covenants
The representations, warranties and covenants of the parties made in
this Agreement shall survive the Closing as follows:
(a) the representations and warranties made in Sections 4.11(a),
(b) and (c) ("Title to Shares," "Title to Subsidiary Shares" and "No Other
Equity Interests") shall survive without limitation;
(b) the representations and warranties made in Section 4.24 and
the covenants made in Section 11.3 and Article 14 shall survive until the three
(3) year anniversary of the Closing Date; and
(c) all other representations, warranties and covenants made in
this Agreement shall survive until the twelve (12) month anniversary of the
Closing Date, except for the covenants in Sections 7.6 (which shall survive for
the six (6) year period set forth therein) and 13.1 (which shall survive until
the expiration of the statute of limitations relating thereto), and Article 15
(which shall survive without limitation);
provided, however, that in each case such representations, warranties and
covenants shall survive, with respect to any Indemnity Claim, until the
resolution of such Indemnity Claim, so long as notice of such Indemnity Claim
was provided on or prior to such date.
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11.2. General Indemnification
(a) By Seller. Except with respect to Taxes and matters relating
to Taxes: Seller hereby indemnifies and saves and holds harmless Buyer, the
Miltex Companies, its and their respective Affiliates and its and their
respective Representatives (collectively, the "Buyer-Side Indemnified Persons"),
from and against any and all Losses (other than any Losses specifically taken
into account in the purchase price adjustment provided for in Article 2)
incurred in connection with or arising out of:
(i) any breach of a representation or warranty made by Seller
in this Agreement or in any document delivered at the Closing; provided, that if
any representation or warranty that contains qualifications as to materiality,
Material Adverse Change or Material Adverse Effect is breached the amount of
Losses will be determined without regard to such qualifiers;
(ii) any breach of a covenant made by Seller in this
Agreement; or
(iii) any liability by any of the Miltex Companies to, or
claim against any of the Miltex Companies by, Seller or any Affiliates (other
than employees, officers and directors of Seller in each case arising out of
acts, omissions, events, facts or circumstances occurring before the Closing).
(b) By Buyer. Except with respect to Taxes and matters relating to
Taxes: Buyer hereby indemnifies and saves and holds harmless Seller, Seller's
Affiliates, and its and their respective Representatives (collectively, the
"Seller-Side Indemnified Persons"), from and against any and all Losses (other
than any Losses specifically taken into account in the purchase price adjustment
provided for in Article 2) incurred in connection with or arising out of:
(i) any breach of a representation or warranty made by Buyer
in this Agreement or in any document delivered at the Closing; provided, that if
any representation or warranty that contains qualifications as to materiality,
Material Adverse Change or Material Adverse Effect is breached, the amount of
Losses will be determined without regard to such qualifiers;
(ii) any breach of a covenant made by Buyer in this Agreement;
or
(iii) the operation of the Business by Buyer after the
Closing.
(c) Notice and Defense. Except as otherwise provided in Section
11.3 with respect to Taxes and matters relating to Taxes:
(i) Notice. If a claim for Losses (an "Indemnity Claim") is to
be made by a party entitled to indemnification hereunder, the party claiming
such indemnification shall give notice (an "Indemnity Claim Notice") to the
indemnifying party and the Escrow Agent as promptly as practicable after the
party entitled to indemnification becomes aware of any fact, condition or event
which may give rise to Losses for which indemnification may be sought. If any
Action in the form of a lawsuit is filed against any party entitled to
indemnification hereunder, notice thereof shall be given to the indemnifying
party and the Escrow Agent as promptly as practicable (and in any event within
41
fifteen (15) calendar days after service). The failure of any indemnified party
to give timely notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that the indemnifying party suffers actual
damage caused by such failure.
(ii) Conduct of Defense. After such notice, the indemnifying
party shall be entitled, if it so elects: (x) to take control of the defense and
investigation of such Action; (y) to employ and engage attorneys of its own
choice to handle and defend the same (unless the named parties to such Action
include both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that there may be one
or more legal defenses available to such indemnified party that are different
from or additional to those available to the indemnifying party, in which event
the indemnified party shall be entitled, at the indemnifying party's expense, to
separate counsel of its own choosing); and (z) to compromise or settle such
Action, which compromise or settlement shall be made only with the written
consent of the indemnified party, which consent shall not be unreasonably
withheld. If the indemnifying party fails to assume the defense of such Action
within fifteen (15) calendar days after receipt of the Indemnity Claim Notice,
the indemnified party against which such Action has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's expense, the defense, compromise or
settlement of such Action; provided, however, that such Action shall not be
compromised or settled without the written consent of the indemnifying party,
which consent shall not be unreasonably withheld.
(d) Limits on Liability.
(i) Limits on Liability of Seller. Seller shall not be
obligated to indemnify any Buyer-Side Indemnified Person under Sections
11.2(a)(i) or (ii) unless such Losses collectively suffered or incurred by all
Buyer-Side Indemnified Persons aggregate more than $1,000,000 (One Million
Dollars) (the "Basket"), in which event Seller shall be obligated to indemnify
the applicable Buyer-Side Indemnified Persons for the full amount of such Losses
up to an aggregate amount equal to (a) Five Million Dollars ($5,000,000) (the
"General Cap") with respect to claims made prior to the twelve (12) month
anniversary of the Closing Date and (b) One Million Dollars ($1,000,000) (the
"Special Cap") with respect to claims made pursuant to Section 11.3 subsequent
to such twelve (12) month anniversary and prior to the thirty-six (36) month
anniversary of the Closing Date.
(ii) Limits on Liability of Buyer. Buyer shall not be
obligated to indemnify any Seller-Side Indemnified Person under Section 11.2(b)
for Losses pursuant to such Section unless such Losses collectively suffered or
incurred by all Seller-Side Indemnified Persons aggregate more than the Basket,
in which event Buyer shall be obligated to indemnify the applicable Seller-Side
Indemnified Persons for the full amount of such Losses, up to an aggregate
amount equal to the Cap, provided, that the foregoing limitations shall not
apply to the obligations of Buyer to pay the Purchase Price under Article 2.
(e) Sole Remedy. The parties acknowledge that, in the absence of
fraud, the rights accorded to each Buyer-Side Indemnified Person or Seller-Side
Indemnified Person under this Article 11 shall be the sole rights to money
42
damages that any such Person may have under this Agreement or for breach of this
Agreement; provided, however, that notwithstanding the foregoing or anything to
the contrary contained in this Agreement, nothing in this Article 11 shall
restrict or limit any rights that any Buyer-Side Indemnified Person or
Seller-Side Indemnified Person may have to seek equitable relief.
(f) Buyer's Right of Set-Off; First Remedy. Upon notice to Seller
Representative specifying in reasonable detail the basis therefore, Buyer may
set off any claim under this Article 11 against amounts owing under Section 2.4
hereof or give notice of a claim in such amount under the Escrow Agreement.
Neither the exercise of nor the failure to exercise such right of setoff or to
give a notice of a claim under the Escrow Agreement will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it. Any payment of Losses to the Buyer-Side
Indemnified Persons hereunder shall be paid solely from the Indemnity Escrow
Amount, other than Losses pursuant to Section 11.1(a).
(g) Insurance Proceeds. Buyer shall use commercially reasonable
efforts to claim and recover any Losses suffered under its insurance policies
(but shall not be required to bring a lawsuit to do so), and shall remit to the
Seller Representative any proceeds actually received by Buyer with respect to
Losses previously indemnified by Seller hereunder.
11.3. Tax Indemnification
(a) Subject to the limitations described in Section 11.1, Section
11.2(e) and this Section 11.3, and without duplication of any amounts otherwise
payable under this Agreement or covered by Section 14.5, from and after the
Closing, Seller shall indemnify and hold harmless the Buyer-Side Indemnified
Persons from and against (i) all Taxes of the Miltex Companies for all
Pre-Closing Tax Periods, except to the extent such Taxes are included as current
liabilities in the determination of Closing Working Capital, (ii) all Taxes of
Seller imposed on any of the Miltex Companies, (iii) any and all Losses arising
out of, resulting from or incident to any breach by Seller or any of its
Affiliates of any covenant contained in this Section 11.3 or Article 14, and
(iv) any and all Losses arising out of, resulting from or incident to any breach
by Seller or its Affiliates (including the Miltex Companies on or prior to the
Closing Date) of any representation or warranty contained in Section 4.24, to
the extent not otherwise indemnified pursuant to the foregoing clauses (i)-(iii)
(provided, however, that a claim for a Loss that relates to a liability for
Taxes of any Miltex Company to a Governmental Authority may be made only if such
Loss arises out of, results from or is incident to a written Tax Claim);
provided, however, that the aggregate amount of all claims for indemnification
or reimbursement of Taxes made by any Buyer-Side Indemnified Persons pursuant to
this Section 11.3, when taken together with the aggregate amount of all claims
for other Losses made by any Buyer-Side Indemnified Persons pursuant to Section
11.2(a), may not exceed, in the aggregate, the General Cap prior to the twelve
(12) month anniversary of the Closing Date (and if notice of such claim is
provided prior to such date, the General Cap shall continue to apply to such
claim until such claim is resolved); provided, further, that the aggregate
amount of all claims for indemnification or reimbursement of Taxes made by any
Buyer-Side Indemnified Persons pursuant to this Section 11.3 may not exceed, in
the aggregate, the Special Cap for the period subsequent to the twelve (12)
month anniversary of the Closing Date and prior to the thirty six (36) month
43
anniversary of the Closing Date. From and after the thirty six (36) month
anniversary of the Closing Date, no Buyer-Side Indemnified Person may make any
claim for indemnification or reimbursement of Taxes pursuant to this Agreement.
For purposes of this Section 11.3, Taxes shall include the amount of Taxes that
would have been due and payable but for the application of any credit or net
operating loss or capital loss deduction attributable to a Post-Closing Tax
Period.
(b) From and after the Closing, Buyer shall indemnify and hold
harmless the Seller-Side Indemnified Persons from and against (i) all Taxes of
the Miltex Companies for any Post-Closing Tax Period, except to the extent such
Taxes are attributable to a breach by Seller or any of its Affiliates of any
covenant contained in this Section 11.3 or Article 14 and (ii) any and all
Losses arising out of, resulting from or incident to the breach by Buyer or any
of its Affiliates (including the Miltex Companies after the Closing Date) of any
covenant contained in this Section 11.3 or Article 14.
(c) In the case of any Straddle Period:
(i) Real, personal and intangible property Taxes or other
Taxes levied on a per diem basis (collectively, "Per Diem Taxes") of any of the
Miltex Companies for a Pre-Closing Tax Period shall be equal to the amount of
such Per Diem Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are in
the Pre-Closing Tax Period and the denominator of which is the total number of
days in the Straddle Period; and
(ii) Taxes of any of the Miltex Companies (other than Per Diem
Taxes) for any Pre-Closing Tax Period shall be computed as if such Tax Period
ended as of the end of the day on the Closing Date.
(d) Seller's indemnification obligation for Taxes for a
Pre-Closing Tax Period shall initially be effected by its payment to Buyer of
the excess of (i) the amount of Taxes due for such Pre-Closing Tax Period as
evidenced by a Tax Return prepared in accordance with Section 14.1 or as
otherwise indicated in a written notice prepared by Buyer over (ii) the amount
of such Taxes paid by Seller at any time plus the amount of such Taxes paid by
the Miltex Companies on or prior to the Closing Date, plus the amount of Taxes
included as current liabilities in the determination of Closing Working Capital.
The Seller Representative shall pay such excess to Buyer within ten (10) days
after written demand is made by Buyer; provided, however, prior to the Escrow
Disbursement Date, such excess may be paid to Buyer from the Indemnity Escrow in
accordance with the terms of the Escrow Agreement; provided further, in no event
shall the Seller Representative or, if applicable, the Escrow Agent be obligated
to make any such payment earlier than five (5) days before the date on which
such Taxes are required to be paid to the relevant Governmental Authority. In
the case of any contested Tax, payment of the Tax to the appropriate
Governmental Authority shall not be considered to be due earlier than the date a
final determination with respect to such Tax liability is made by the
appropriate Governmental Authority or court.
(e) If a Governmental Authority shall make any claim relating to
Taxes that, if successful, might result in an indemnification payment pursuant
to this Section 11.3 (a "Tax Claim"), the indemnified party shall promptly and
in any event no more than fifteen (15) calendar days following receipt of such
Tax Claim, give written notice of such Tax Claim to the indemnifying party,
together with copies of all notices and communications relating to such Tax
Claim;
44
provided, however, the failure of the indemnified party to give such notice
shall only relieve the indemnifying party from its indemnification obligations
hereunder to the extent it is actually prejudiced by such failure.
(f) The Seller Representative shall, upon written notification to
Buyer, control all proceedings at its own expense and may make all decisions
with respect to any Tax Claim relating to a Tax Period ending on or prior to the
Closing Date; provided, however, the Seller Representative shall not settle any
such Tax Claim without Buyer's consent, which shall not be unreasonably withheld
or delayed; and provided further, that the Seller Representative and Buyer shall
jointly control any such Tax Claim if the resolution of such Tax Claim
reasonably would be expected to affect any of the Miltex Companies' liability
for Taxes for any Tax Period ending after the Closing Date. The Seller
Representative and Buyer shall jointly control all proceedings with respect to
any Tax Claim relating to a Straddle Period. The Seller Representative shall
promptly notify Buyer if it decides not to control the defense or settlement of
any Tax Claim which it is entitled to control or jointly control pursuant to
this Section 11.3(f), and Buyer shall thereupon be permitted to defend and
settle such proceeding.
(g) Seller and Buyer shall reasonably cooperate, and shall cause
their respective Affiliates, officers, employees, agents, auditors and other
representatives to reasonably cooperate, in contesting any Tax Claim. Such
cooperation shall include the retention and, upon the request of the party or
parties controlling proceedings relating to such Tax Claim, the provision to
such party or parties of records and information which are reasonably relevant
to such Tax Claim, and making employees available on a mutually convenient basis
to provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
11.4. Character of Indemnification Payments
Seller and Buyer agree to treat all payments made pursuant to this
Article 11 as adjustments to the Purchase Price for Tax purposes, unless
otherwise required by applicable Law.
ARTICLE 12
[RESERVED]
ARTICLE 13
CERTAIN POST-CLOSING MATTERS
13.1. Post-Closing Confidentiality
After the Closing, Seller shall, and shall cause its Affiliates to,
continue to maintain the confidentiality of all Confidential Information
relating to Buyer, the Miltex Companies or the Business, including all such
materials which remain in the possession of Seller or its Affiliates, except to
the extent that disclosure of any such information is required by law or
authorized by Buyer or reasonably occurs in connection with any dispute over the
terms of this Agreement. After the Closing, Buyer shall, and shall cause its
45
Affiliates to, maintain the confidentiality of all Confidential Information
relating to Seller or Seller's Affiliates (other than that relating to the
Business) which Buyer or any of its Affiliates has obtained in connection with
this Agreement or with the transactions contemplated herein, except to the
extent disclosure of such information is required by law or authorized by
Seller, or reasonably occurs in connection with any dispute over the terms of
this Agreement. After the Closing, in the event that any party reasonably
believes that it or any of its Affiliates is required by law to disclose any
such Confidential Information, the disclosing party will (i) provide the other
parties with prompt notice (before such disclosure, unless this is impractical
because an applicable warrant requires immediate disclosure) in order that such
parties may attempt to obtain a protective order or other assurance that
confidential treatment will be accorded such confidential information and (ii)
cooperate with such other parties in attempting to obtain such order or
assurance.
ARTICLE 14
TAX AND ACCOUNTING MATTERS
14.1. Preparation of Tax Returns
(a) Except as otherwise provided in Section 14.5 with respect to
Transfer Taxes, Buyer shall prepare (or cause to be prepared) all Tax Returns of
the Miltex Companies relating to any Straddle Period and Seller shall prepare
(or cause to be prepared) all Tax Returns relating to Tax Periods ending on or
before the Closing Date that are required to be filed after the Closing Date.
Buyer and Seller agree to prepare and file all Tax Returns of the Miltex
Companies for any Tax Period that includes the Closing Date on the basis that
such Tax Period ended as of the end of the day on the Closing Date unless the
relevant Governmental Authority will not accept a Tax Return filed on that
basis. Each party shall have the right to review and comment on any Tax Returns
prepared by the other party pursuant to this Section 14.1(a) prior to filing,
and each party shall make any changes to such Tax Returns as reasonably
requested by the other party. Subject to the provisions of Section 11.3 and this
Article 14, Buyer shall timely file (or cause to be timely filed) with the
appropriate Governmental Authority when due all Tax Returns of each of the
Miltex Companies relating to any Pre-Closing Tax Period that are required to be
filed after the Closing Date (including, without limitation, a federal income
Tax Return for Miltex Holdings and the Miltex Subsidiaries that are entities
formed in the United States (the "U.S. Subsidiaries") for the Tax Period ending
on the Closing Date) and Buyer shall pay or cause to be paid all Taxes shown as
due on such Tax Returns. All Tax Returns prepared pursuant to this Section 14.1
shall be prepared in a manner consistent with past practice (unless a contrary
position is required under applicable Law) and, in the case of any Tax Return
that includes the Closing Date, Buyer and Seller will cause the Miltex Companies
to claim deductions for the Tax Savings Expenses and any other deductions that
lawfully may be claimed and will consult with PricewaterhouseCoopers LLP (or
other nationally recognized accounting firm that may be mutually agreed to by
Buyer and the Seller Representative) regarding the proper allocation of such
deductions among Miltex Holdings, its U.S. Subsidiaries and any other Miltex
Companies. Buyer shall not elect, and shall not permit the Miltex Companies to
elect, to waive the carryback of any net operating loss attributable to a
Pre-Closing Tax Period (including, without limitation, the Tax Period that ends
on the Closing Date) pursuant to Code Section 172(b)(3) or any similar provision
of foreign, state, or local income Tax Law.
46
(b) Buyer shall provide copies of all Tax Returns (or the portions
thereof relating to the Miltex Companies) relating to any Pre-Closing Tax Period
that are filed after the Closing Date to the Seller Representative and shall
not, except as provided in Section 14.2(a), file any amended Tax Return for any
Pre-Closing Tax Period of the Miltex Companies without the prior written consent
of the Seller Representative (which consent shall not be unreasonably withheld,
conditioned or delayed).
14.2. Tax Refunds
Any refund, rebate, abatement or other recovery (whether directly or
indirectly through a right of setoff or credit) of Taxes (including payments of
estimated Taxes) of any of the Miltex Companies and any interest thereon
(collectively, a "Tax Refund") with respect to any Pre-Closing Tax Period that
is not included in Closing Working Capital shall be for the account of Seller,
other than any Tax Refund resulting from a carryback of a net operating loss,
credit or other loss or deduction from a Post-Closing Tax Period. Buyer shall
pay to the Seller Representative the amount of any such Tax Refund as promptly
as practicable after Miltex Holdings or any of the other Miltex Companies
receives the Tax Refund (or receives the benefit of the Tax Refund through a
right of offset or credit). Seller shall prepare (or cause to be prepared) at
Seller's expense, and Buyer shall promptly cause Miltex Holdings to file, any
required Tax Return (including, without limitation, amended Tax Returns
reflecting a carryback of losses) that may be necessary to enable the Miltex
Companies to obtain any such Tax Refund; provided, however, that any claim for a
Tax Refund for a Pre-Closing Tax Period on the basis of a carryback of a net
operating loss attributable to deductions for Tax Savings Expenses shall be
filed on IRS Form 1120X and comparable state, local and foreign tax forms;
provided, further, that, if any action is required to be taken beyond the filing
of any Tax Return in order to obtain a Tax Refund, Seller shall pay all
reasonable expenses in connection with the pursuit of such Tax Refund. Buyer
shall, upon the Seller Representative's written request, promptly prepare and
prosecute a claim or suit for a refund of Taxes for any Pre-Closing Tax Period,
provided that Seller shall pay all reasonable expenses in connection with the
preparation and prosecution of such claim or suit.
14.3. Cooperation on Tax Matters
Seller and Buyer shall reasonably cooperate, and shall cause their
respective Affiliates, officers, employees, agents, auditors and other
representatives to reasonably cooperate, in preparing and filing all Tax
Returns, including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits
relating to Taxes. Seller and Buyer agree (i) to retain all books and records
with respect to Tax matters pertinent to the Miltex Companies relating to any
Tax Period beginning before the Closing Date until the applicable statute of
limitations has expired and to abide by all record retention agreements entered
into with any Governmental Authority; (ii) to allow the other party and its
representatives at times and dates mutually acceptable to the parties, to
inspect, review and make copies of such records as such party may deem necessary
or appropriate from time to time, such activities to be conducted during normal
business hours at such party's expense; and (iii) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Seller and Buyer, as
the case may be, shall allow the other party to take possession of such books
and records.
47
14.4. Withholding Forms
At or prior to Closing, Seller shall provide Buyer with (i) a properly
executed IRS Form W-9, (ii) a statement executed by Seller, in form and
substance satisfactory to Buyer, that satisfies the requirements of Treasury
Regulation ss. 1.1445-2(b)(2), and (iii) any other certifications, affidavits,
forms or documents required to be delivered to Buyer under any applicable Tax
Law in order to relieve Buyer of any obligation to withhold any portion of the
Purchase Price (including any amounts payable under Sections 2.3 and 2.4).
14.5. Transfer Taxes
All Transfer Taxes shall be paid 50% by Buyer and 50% by Seller. Seller
and Buyer shall cooperate in preparing and timely filing all Tax Returns and
other documentation relating to such Transfer Taxes as may be required by
applicable Tax Law.
14.6. Section 338 Election; Ordinary Course of Business
Neither Buyer nor any of its Affiliates shall make an election under
Section 338 of the Code with respect to the purchase of the Shares of Miltex
Holdings or any stock that is held, directly or indirectly, by Miltex Holdings
without Seller's prior written consent. Buyer agrees not to cause any of the
Miltex Companies to engage in any transaction on the Closing Date after the
Closing that is outside of the Ordinary Course of Business of the Miltex
Companies, except for the transactions contemplated by this Agreement.
14.7. Tax Sharing Agreements
Seller shall cause any Tax sharing agreement or similar arrangement to
which any Miltex Company is a party to be terminated on or before the Closing
Date. After the Closing Date, no party shall have any rights or obligations
under any such Tax sharing agreement or similar agreement.
14.8. Tax Benefit Payment.
No later than March 31, 2007, Buyer shall pay to Seller an amount equal
to 19% of the amount of the Miltex Companies' federal charitable contribution
carryforward from a Pre-Closing Tax Period that is deducted on Buyer's federal
consolidated income Tax Return for its 2006 tax year.
ARTICLE 15
MISCELLANEOUS
15.1. Assignment; No Third Party Beneficiaries
Neither this Agreement nor any of the rights or obligations hereunder
may be assigned by any party without the prior written consent of the other
parties; except that Buyer may assign its rights and obligations hereunder to
one or more of its Affiliates, provided, that no such assignment shall relieve
Buyer of its obligations hereunder. This Agreement shall be binding upon and
48
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other Person (including any Business Employee) shall
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
15.2. Notices
All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given: (a) when received if personally delivered; (b) the day after being sent,
if sent for next-day delivery within the United States by recognized overnight
delivery service (e.g., Federal Express); and (c) upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice
shall be sent to the following address or to such other place and with such
other copies as either party may designate as to itself by notice to the other:
If to Seller or the Seller Representative
addressed to: If to Buyer addressed to:
------------ ------------------------
ASP/Miltex LLC Integra LifeSciences Corporation
666 Third Avenue 311 Enterprise Drive
New York, NY 10017 Plainsboro, NJ 08536
Attention: David L. Horing, Attention: Richard Gorelick, Esq.
Matthew F. LeBaron and
Eric L. Schondorf, Esq.
With a copy to: With a copy to:
Kaye Scholer LLP GoodSmith Gregg & Unruh LLP
425 Park Avenue 105 West Adams Street, 26th Floor
New York, NY 10022 Chicago, IL 60603
Attention: Emanuel S. Cherney, Esq. Attention: Marilee C. Unruh, Esq.
15.3. Choice of Law, etc.
This Agreement shall be construed and interpreted in accordance with
the internal laws of the State of New York, except with respect to matters of
law concerning the internal affairs of any business entity which is a party to
this Agreement, and as to those matters the law of the jurisdiction under which
the relevant business entity derives its powers shall govern. Each party
irrevocably and unconditionally: (i) agrees that any Action arising out of this
Agreement or any Additional Agreement may be brought in any court having
jurisdiction over the County of New York, New York; (ii) consents to such
jurisdiction; (iii) waives any objection to such venue; and (iv) waives trial by
jury in any Action relating to this Agreement, any Additional Agreements or the
transactions contemplated hereby or thereby.
15.4. Entire Agreement; Amendments and Waivers
This Agreement and the Additional Agreements to which either Buyer or
Seller is a party, together with all exhibits and schedules hereto and thereto
(including the Disclosure Schedule), constitute the entire agreement among the
49
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties with respect thereto. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof, nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided in such waiver.
15.5. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
15.6. Expenses
Except as otherwise specifically provided in this Agreement, each party
shall pay its own legal, accounting, out of pocket and other expenses incident
to the negotiation and execution of, and Closing under, this Agreement;
provided, however, that Buyer shall pay the filing fee pursuant to the HSR Act.
15.7. Invalidity
In the event that any of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then, to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement.
15.8. Cumulative Remedies
Except as otherwise specifically provided in this Agreement (in Section
11.2(e) or otherwise) or any Additional Agreement, all rights and remedies of
any party hereto are cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
15.9. Time; Captions; Exhibits and Schedules
Time is of the essence of this Agreement. The captions contained in
this Agreement in no way define, limit or extend any provision of this
Agreement. The Exhibits and Schedules which are attached to this Agreement are a
part of this Agreement and are incorporated herein by reference.
15.10. No Strict Construction
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any Person.
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15.11. Further Assurances
From time to time after the Closing Date, at the request of the other
party hereto and at the expense of the party so requesting, each party hereto
shall execute and deliver to such requesting party such documents and take such
other action as such requesting party may reasonably request in order to further
document the consummation of the transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
51
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Agreement as of this 19th day of April, 2006.
"BUYER"
INTEGRA LIFESCIENCES CORPORATION
By: /s/ John B. Henneman, III
-----------------------------
Name: John B. Henneman, III
Title: Executive Vice President and
Chief Administrative Officer
"SELLER"
ASP/MILTEX LLC
By: /s/ David Horing
----------------------------
Name: David Horing
Title: ____________________________
SPA (Execution)
SPA (Execution)
Exhibit A
Miltex Subsidiaries
ASP/Miltex Group Holdings, Inc.
ASP/Miltex Holdings, Inc.
Miltex, Inc.
Miltex Technology Corp.
Miltex GmbH
Meisterhand Instrumente GmbH
Miltex Dental, Inc.
Miltex Dental Technologies, Inc.
Miltex Dental Instruments, Inc.
EndoSolutions, Inc.
Exhibit 1.1(a)
Calculation of Working Capital
Working Capital means, as of any date, the sum of certain current assets
categories (as defined below) of the Miltex Companies less the sum of certain
current liabilities categories (as defined below) of the Miltex Companies.
"Current assets" categories are:
(a) Cash
(b) accounts receivable, net of allowance for doubtful accounts, other than
receivables from Affiliates
(c) inventory, net of reserves calculated as set forth below
(d) prepaid expenses and other current assets, excluding any assets associated
with forward currency exchange, interest rate swap, or other hedging
arrangements, and excluding any deferred Tax assets and/or Tax Refunds
"Current liabilities" categories are:
(a) accounts payable, other than payables to Affiliates
(b) accrued expenses, excluding accrual of interest expenses relating to
indebtedness and forward currency exchange, interest rate swap, or other
hedging arrangements but including accrued vacation time and bonus
(including bonuses to be paid to employees of the Miltex Companies in
connection with the consummation of the transactions contemplated hereby)
Except as set forth above, each current assets category and each current
liabilities category are defined consistently with past practices of the Miltex
Companies and in accordance with the Financial Statements.
Any Transaction Fees incurred by the Miltex Companies, to the extent not paid by
Closing, will be reflected in current liabilities as of the Closing.
Notwithstanding the general principles in the definition of Closing Working
Capital, all Tax liabilities related to the Pre-Closing Tax Period ending on the
Closing Date included in current liabilities shall be calculated after giving
effect to the deductions described in the Tax Savings Expenses that can be
claimed during the portion of the Pre-Closing Tax Period that is deemed to end
on the Closing Date. No liabilities shall be included in the current liabilities
for any potential Taxes relating to intercompany transactions between any Miltex
Company and Miltex Technology Corp.
For the avoidance of doubt, excess and obsolete inventory and corresponding
reserves shall be calculated using the following methodology, consistent with
past practices of the Miltex Companies:
An Inventory part is considered obsolete if the part has not
been sold over the last 12 months, and it will be reserved at
100% of fully loaded cost, which includes material, labor, and
overhead allocation costs. Inventory part is considered excess
that which exceeds last 2 years' part sales. Such excess
inventory part is reserved at 50% of the fully loaded cost for
the inventory. Notwithstanding the foregoing, each inventory
part considered obsolete or excess is subject to a special
circumstances test. If such inventory part is considered to
meet a special circumstance, that inventory part is removed
from excess or obsolete category and corresponding inventory
reserves are removed. "Special circumstances" include: (i) a
new part whose sale history is deemed insufficient by Miltex
Companies managers to be used to determine its state of excess
or obsolescence, (ii) private label part that has been
custom-marked for a customer, and for which the customer has
the obligation to purchase, and (iii) other specific
situations as determined at the discretion of certain Miltex
Companies managers. Data used to determine excess and obsolete
inventory parts and corresponding reserves is downloaded from
Miltex Companies' Dataflo database.
Notwithstanding the foregoing, no obligations of the Miltex Companies paid by
Buyer from the Purchase Price at the Closing shall be included as a current
liability in calculating the Closing Working Capital.
The following is an example of the calculation of Working Capital for the Miltex
Companies dated as of December 31, 2005:
As of December 31, 2005
<s> <c>
Cash $ 216,000
Accounts receivable, net of allowance for doubtful
accounts 7,729,000
Inventory, net of reserves 14,711,000
Prepaid expenses and other current assets 872,000
-------
Total current assets: $23,528,000
Accounts payable, other than payables to Affiliates $1,589,000
Accrued expenses 5,040,000
---------
Total current liabilities: $6,629,000
Net Working Capital $16,899,000
Exhibit 2.2(a)(ii)
Certain Obligations to be Paid at Closing
1. Any amounts owing under the Amendment and Restatement of the Amended
and Restated Credit Agreement (the "Credit Agreement"), dated as of
April 30, 2004, by and among Miltex, Inc., Miltex Dental, Inc., the
other credit parties signatory thereto, the lenders signatory thereto
from time to time, Keybank National Association, General Electric
Capital Corporation and GECC Capital Markets Group, Inc., as amended
through December 29, 2005, together with the Collateral Documents (as
such term is defined in the Credit Agreement), including:
a. Term Note C, dated as of April 30, 2004, made by Miltex
Dental, Inc. in favor of General Electric Capital Corporation.
b. Term Note A, dated as of December 29, 2005, made by Miltex,
Inc. in favor of General Electric Capital Corporation.
c. Term Note B, dated as of December 29, 2005, made by Miltex,
Inc. in favor of General Electric Capital Corporation.
d. Term Note C, dated as of December 29, 2005, made by Miltex,
Inc. in favor of General Electric Capital Corporation.
e. Revolving Note, dated as of December 29, 2005, made by Miltex,
Inc. in favor of General Electric Capital Corporation.
f. Swing Line Note, dated as of December 29, 2005, made by
Miltex, Inc. in favor of General Electric Capital Corporation.
2. Revolving Line of Credit Note, dated as of August 18, 2004, made by
Miltex, Inc. in favor of Miltex Technology Corporation in the principal
amount of $60,000,000(1).
3. Promissory Note, dated as of August 18, 2004, made by Miltex, Inc. in
favor of Miltex Technology Corporation in the principal amount of
$60,000,000(1).
4. Intercompany Note, dated as of May 13, 2005, made by Miltex, Inc. in
favor of Miltex Technology Corporation(1).
5. Loan made by the Pennsylvania Industrial Development Authority ("PIDA")
to York County Industrial Development Corporation, as borrower, in the
original principal amount of $990,000.00, as evidenced by that certain
Note dated May 2, 1995. The duties and obligations of York County
Industrial Development Corporation as "maker" thereunder were assumed
by Moyco Industries, Inc. pursuant to that certain Consent,
(1) No payments will be made but the agreement will be terminated.
1
Subordination and Assumption Agreement dated as of May 2, 1995, which
obligations were later assumed by Miltex Dental Technologies, Inc.
pursuant to that certain Assignment and Assumption Agreement dated as
of May 25, 2001.(2)
6. Foreign currency forward contracts (see below).
Miltex, Inc.
Euro Hedging 2005, 2006
Forward Contracts 2006
- ------------------ ---------------- --------------- -----------------
<s> <c> <c> <c>
Value Exchange Rate Euro Amount US$ Amount
- ------------------ ---------------- --------------- -----------------
1/4/2006 1.2842 (euro) 212,500 $272,892.50
- ------------------ ---------------- --------------- -----------------
1/17/2006 1.2845 (euro) 212,500 $272,956.25
- ------------------ ---------------- --------------- -----------------
2/1/2006 1.2847 (euro) 212,500 $272,998.75
- ------------------ ---------------- --------------- -----------------
2/15/2006 1.2849 (euro) 212,500 $273,041.25
- ------------------ ---------------- --------------- -----------------
3/1/2006 1.2851 (euro) 212,500 $273,083.75
- ------------------ ---------------- --------------- -----------------
3/15/2006 1.2854 (euro) 212,500 $273,147.50
- ------------------ ---------------- --------------- -----------------
4/3/2006 1.2857 (euro) 212,500 $273,211.25
- ------------------ ---------------- --------------- -----------------
4/18/2006 1.2860 (euro) 212,500 $273,275.00
- ------------------ ---------------- --------------- -----------------
5/2/2006 1.2862 (euro) 212,500 $273,317.50
- ------------------ ---------------- --------------- -----------------
5/15/2006 1.2864 (euro) 212,500 $273,360.00
- ------------------ ---------------- --------------- -----------------
6/1/2006 1.2868 (euro) 212,500 $273,445.00
- ------------------ ---------------- --------------- -----------------
6/15/2006 1.2870 (euro) 212,500 $273,487.50
- ------------------ ---------------- --------------- -----------------
7/3/2006 1.2873 (euro) 212,500 $273,551.25
- ------------------ ---------------- --------------- -----------------
7/14/2006 1.2875 (euro) 212,500 $273,593.75
- ------------------ ---------------- --------------- -----------------
8/1/2006 1.2878 (euro) 212,500 $273,657.50
- ------------------ ---------------- --------------- -----------------
8/15/2006 1.2881 (euro) 212,500 $273,721.25
- ------------------ ---------------- --------------- -----------------
9/1/2006 1.2883 (euro) 212,500 $273,763.75
- ------------------ ---------------- --------------- -----------------
9/15/2006 1.2886 (euro) 212,500 $273,827.50
- ------------------ ---------------- --------------- -----------------
10/2/2006 1.2889 (euro) 212,500 $273,891.25
- ------------------ ---------------- --------------- -----------------
10/16/2006 1.2892 (euro) 212,500 $273,955.00
- ------------------ ---------------- --------------- -----------------
11/1/2006 1.2894 (euro) 212,500 $273,997.50
- ------------------ ---------------- --------------- -----------------
11/15/2006 1.2899 (euro) 212,500 $274,103.75
- ------------------ ---------------- --------------- -----------------
12/1/2006 1.2901 (euro) 212,500 $274,146.25
- ------------------ ---------------- --------------- -----------------
12/15/2006 1.2904 (euro) 212,500 $274,210.00
- ------------------ ---------------- --------------- -----------------
(2) If not paid prior to Closing
Miltex, Inc.
Euro Hedging 2005, 2006
Participating Forwards 2006
- ----------- ------------ --------------- --------------- -------------- --------------
Maturity Value Put Key Put Call Miltex Call
Date Date Amount Option Strike Amount Option Strike
- ----------- ------------ --------------- --------------- -------------- --------------
<s> <c> <c> <c> <c> <c>
1/9/2006 1/11/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
1/23/2006 1/25/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
2/8/2006 2/10/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
2/23/2006 2/27/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
3/8/2006 3/10/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
3/23/2006 3/27/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
4/10/2006 4/12/2006 (euro) 212,500 1.2300 (euro) 158,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
4/24/2006 4/26/2004 (euro) 212,500 1.2300 (euro) 157,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
5/8/2006 5/10/2006 (euro) 212,500 1.2300 (euro) 157,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
5/23/2006 5/25/2006 (euro) 212,500 1.2300 (euro) 157,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
6/8/2006 6/12/2006 (euro) 212,500 1.2300 (euro) 156,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
6/23/2006 6/27/2006 (euro) 212,500 1.2300 (euro) 156,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
7/10/2006 7/12/2006 (euro) 212,500 1.2300 (euro) 156,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
7/24/2006 7/26/2006 (euro) 212,500 1.2300 (euro) 155,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
8/8/2006 8/10/2006 (euro) 212,500 1.2300 (euro) 155,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
8/23/2006 8/25/2006 (euro) 212,500 1.2300 (euro) 155,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
9/8/2006 9/12/2006 (euro) 212,500 1.2300 (euro) 155,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
9/25/2006 9/27/2006 (euro) 212,500 1.2300 (euro) 155,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
10/10/2006 10/12/2006 (euro) 212,500 1.2300 (euro) 154,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
10/23/2006 10/25/2006 (euro) 212,500 1.2300 (euro) 153,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
11/8/2006 11/10/2006 (euro) 212,500 1.2300 (euro) 153,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
11/24/2006 11/28/2006 (euro) 212,500 1.2300 (euro) 152,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
12/8/2006 12/12/2006 (euro) 212,500 1.2300 (euro) 152,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
12/27/2006 12/29/2006 (euro) 212,500 1.2300 (euro) 152,000 1.3225
- ----------- ------------ --------------- --------------- -------------- ----------
Miltex, Inc.
Yen Hedging 2006
Forward Contracts 2006 - Key Bank
- ----------- ------------ ------------- -------------- ---------
Value Exchange Yen US$
Date Rate Amount Amount Bank
- ----------- ------------ ------------- -------------- ---------
<s> <c> <c> <c> <c>
1/31/2006 108.3800 20,000,000 $184,535.89 Key
- ----------- ------------ ------------- -------------- ---------
1/31/2006 108.8000 15,000,000 $137,867.65 Key
- ----------- ------------ ------------- -------------- ---------
2/28/2006 108.0500 20,000,000 $185,099.49 Key
- ----------- ------------ ------------- -------------- ---------
2/28/2006 108.4500 15,000,000 $138,312.59 Key
- ----------- ------------ ------------- -------------- ---------
3/31/2006 107.6800 20,000,000 $185,735.51 Key
- ----------- ------------ ------------- -------------- ---------
3/31/2006 108.0500 15,000,000 $138,824.62 Key
- ----------- ------------ ------------- -------------- ---------
4/28/2006 107.7000 35,000,000 $324,976.79 Key
- ----------- ------------ ------------- -------------- ---------
5/31/2006 107.2800 35,000,000 $326,249.07 Key
- ----------- ------------ ------------- -------------- ---------
6/30/2006 107.0000 35,000,000 $327,102.80 Key
- ----------- ------------ ------------- -------------- ---------
7/31/2006 109.6100 35,000,000 $319,313.93 Key
- ----------- ------------ ------------- -------------- ---------
8/31/2006 109.1900 35,000,000 $320,542.17 Key
- ----------- ------------ ------------- -------------- ---------
9/29/2006 109.1000 35,000,000 $320,806.60 Key
- ----------- ------------ ------------- -------------- ---------
10/31/2006 113.2600 35,000,000 $309,023.49 Key
- ----------- ------------ ------------- -------------- ---------
11/30/2006 113.0200 35,000,000 $309,679.70 Key
- ----------- ------------ ------------- -------------- ---------
12/29/2006 112.3700 35,000,000 $311,471.03 Key
- ----------- ------------ ------------- -------------- ---------
Miltex, Inc.
Euro Hedging
Forward Contracts 2007 - Key Bank
- -------------- ------------- ----------------- ----------------------
Value Exchange Euro US$
Date Rate Amount Amount
- -------------- ------------- ----------------- ----------------------
<s> <c> <c> <c>
1/31/2007 1.2000 (euro) 950,000 $1,140,000.00
- -------------- ------------- ----------------- ----------------------
2/28/2007 1.2060 (euro) 950,000 $1,145,700.00
- -------------- ------------- ----------------- ----------------------
3/30/2007 1.2070 (euro) 950,000 $1,146,650.00
- -------------- ------------- ----------------- ----------------------
4/30/2007 1.2090 (euro) 950,000 $1,148,550.00
- -------------- ------------- ----------------- ----------------------
5/31/2007 1.2110 (euro) 950,000 $1,150,450.00
- -------------- ------------- ----------------- ----------------------
6/29/2007 1.2130 (euro) 950,000 $1,152,350.00
- -------------- ------------- ----------------- ----------------------
7/31/2007 1.2150 (euro) 950,000 $1,154,250.00
- -------------- ------------- ----------------- ----------------------
8/31/2007 1.2170 (euro) 950,000 $1,156,150.00
- -------------- ------------- ----------------- ----------------------
9/28/2007 1.2190 (euro) 950,000 $1,158,050.00
- -------------- ------------- ----------------- ----------------------
10/31/2007 1.2200 (euro) 950,000 $1,159,000.00
- -------------- ------------- ----------------- ----------------------
11/30/2007 1.2220 (euro) 950,000 $1,160,900.00
- -------------- ------------- ----------------- ----------------------
12/31/2007 1.2240 (euro) 950,000 $1,162,800.00
- -------------- ------------- ----------------- ----------------------
Miltex, Inc.
Yen Hedging 2007
Forward Contracts 2007 - Key Bank
- --------------- ------------- -------------- -------------- -----------
Value Exchange Yen US$
Date Rate Amount Amount Bank
- --------------- ------------- -------------- -------------- -----------
<s> <c> <c> <c> <c>
1/31/2007 111.8700 35,000,000 $312,863.14 Key
- --------------- ------------- -------------- -------------- -----------
2/28/2007 111.4500 35,000,000 $314,042.17 Key
- --------------- ------------- -------------- -------------- -----------
3/30/2007 111.0600 35,000,000 $315,144.97 Key
- --------------- ------------- -------------- -------------- -----------
4/30/2007 110.6500 35,000,000 $316,312.70 Key
- --------------- ------------- -------------- -------------- -----------
5/31/2007 110.2400 35,000,000 $317,489.11 Key
- --------------- ------------- -------------- -------------- -----------
6/29/2007 109.8400 35,000,000 $318,645.30 Key
- --------------- ------------- -------------- -------------- -----------