EXHIBIT 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MONONA HOLDINGS LLC
AND
COMMERCIAL VEHICLE GROUP, INC.
DATED AS OF JUNE 3, 2005
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF STOCK...............................................................................1
1.1 Purchase and Sale......................................................................1
1.2 Purchase Price.........................................................................1
1.3 Closing................................................................................1
1.4 Payment and Cancellation of Intercompany Accounts......................................1
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT......................................................................2
2.1 Payment................................................................................2
2.2 Purchase Price Adjustments.............................................................2
2.3 Seller Representative Committee........................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER.............................................................5
3.1 Organization and Qualification.........................................................6
3.2 Authorization; Enforceability..........................................................6
3.3 Organizational Documents...............................................................6
3.4 Capitalization.........................................................................6
3.5 Limited Operations.....................................................................7
3.6 Options................................................................................7
3.7 Financial Statements...................................................................7
3.8 Taxes..................................................................................8
3.9 Material Contracts.....................................................................9
3.10 Real Property.........................................................................11
3.11 Personal Property.....................................................................12
3.12 Litigation............................................................................12
3.13 Compliance with Applicable Laws.......................................................12
3.14 Intellectual Property.................................................................12
3.15 Bank Accounts; Officers and Directors.................................................13
3.16 No Violation..........................................................................13
3.17 Conduct of Business; Absence of Certain Changes.......................................13
3.18 Insurance Policies....................................................................15
3.19 Licenses and Permits..................................................................15
3.20 Employee Benefit Plans................................................................16
3.21 Environmental, Health and Safety Matters..............................................19
3.22 Labor Matters.........................................................................19
3.23 Customers and Suppliers...............................................................20
3.24 Governmental Approvals and Filings....................................................20
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3.25 Brokers...............................................................................20
3.26 Transactions with Affiliates..........................................................21
3.27 Indebtedness..........................................................................21
3.28 Undisclosed Liabilities...............................................................21
3.29 Inventory.............................................................................21
3.30 Accounts Receivable...................................................................21
3.31 Product Warranty; Product Liability...................................................21
3.32 Closing Date..........................................................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................................................22
4.1 Organization and Standing.............................................................22
4.2 Authorization; Enforceability.........................................................22
4.3 No Violation..........................................................................23
4.4 Investment Representation.............................................................23
4.5 Availability of Funds.................................................................23
4.6 Litigation............................................................................23
4.7 Governmental Approvals and Filings....................................................24
4.8 Brokers...............................................................................24
4.9 Closing Date..........................................................................24
ARTICLE V
COVENANTS OF THE SELLER.................................................................................24
5.1 Conduct of Business...................................................................24
5.2 Filings; Consents; Etc................................................................26
5.3 Schedules Update......................................................................26
5.4 Regulatory Filings....................................................................26
5.5 Exclusivity...........................................................................27
5.6 Access to Books and Records...........................................................27
5.7 Non-Solicitation; Confidentiality.....................................................28
5.8 Real Estate Survey....................................................................29
ARTICLE VI
COVENANTS OF THE BUYER..................................................................................29
6.1 Filings; Consents; Etc................................................................29
6.2 Director and Officer Liability and Indemnification....................................29
6.3 Employee Benefits.....................................................................30
6.4 Regulatory Filing.....................................................................30
ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING.....................................................................30
7.1 Conditions Precedent to Each Party's Obligations......................................30
7.2 Conditions Precedent to Obligations of the Buyer......................................31
7.3 Conditions Precedent to Obligations of the Seller.....................................32
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ARTICLE VIII
CLOSING.................................................................................................33
8.1 Time and Place........................................................................33
8.2 Deliveries by the Seller..............................................................33
8.3 Deliveries by the Buyer...............................................................34
ARTICLE IX
POST CLOSING COVENANTS..................................................................................34
9.1 Tax Covenants.........................................................................34
9.2 Tax Indemnification...................................................................36
9.3 Further Assurances....................................................................37
9.4 Release of Escrow Funds...............................................................37
ARTICLE X
INDEMNIFICATION.........................................................................................37
10.1 Survival of the Seller's Representations and Warranties; Time Limits
on Indemnification Obligations........................................................37
10.2 Survival of the Buyer's Representations and Warranties; Time Limits
on Indemnification Obligations........................................................38
10.3 Indemnification by the Members........................................................38
10.4 Indemnification by the Seller Relating to the Acquired Companies......................38
10.5 Indemnification by the Buyer..........................................................39
10.6 Indemnification Procedure for Third Party Claims......................................39
10.7 Calculation of Losses.................................................................40
10.8 Limitation on Indemnities.............................................................41
10.9 Exclusion of Other Remedies...........................................................43
10.10 Purchase Price Adjustments............................................................43
10.11 Waiver, Release and Discharge.........................................................43
ARTICLE XI
TERMINATION.............................................................................................43
11.1 Termination...........................................................................43
11.2 Effect of Termination.................................................................44
ARTICLE XII
MISCELLANEOUS...........................................................................................44
12.1 Notices, Consents, etc................................................................44
12.2 Severability..........................................................................45
12.3 Successors; Assignment................................................................45
12.4 Counterparts; Facsimile Signatures....................................................45
12.5 Expenses..............................................................................45
12.6 Governing Law.........................................................................46
12.7 Table of Contents and Headings........................................................46
12.8 Definitions...........................................................................46
12.9 Entire Agreement......................................................................51
12.10 Third Parties.........................................................................51
12.11 Disclosure Generally..................................................................51
12.12 Acknowledgment by the Buyer...........................................................52
12.13 Interpretive Matters..................................................................53
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12.14 SUBMISSION TO JURISDICTION............................................................53
12.15 WAIVER OF JURY TRIAL..................................................................53
12.16 Specific Performance..................................................................53
12.17 Public Announcements..................................................................54
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DEFINED TERMS
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Accountants 3
Acquired Companies 47
Acquisition Proposal 27
Act of Acceleration 43
Affiliate 47
Agreement 1
Audited Financial Statements 8
Business 47
Business Day 47
Buyer 1
Buyer Indemnified Party 39
Buyer's Representatives 28
Cap Amount 47
Cash on Hand 47
CERCLA 48
Closing 1
Closing Date 34
Closing Date Balance Sheet 3
Closing Date Cash on Hand 47
Closing Date Net Working Capital 47
Closing Schedule 3
COBRA 17
Code 47
Company 1
Company's Subsidiaries 47
Confidential Information 28
Confidentiality Agreement 52
Consent 47
Contract 47
Current Assets 48
Current Liabilities 48
Deductible Amount 48
Defense Notice 40
Employee Plan 48
Environmental, Health and Safety Requirements 48
Equity Interests 7
ERISA 48
Escrow Agent 48
Escrow Agreement 48
Escrow Funds 48
Estimated Cash on Hand 2
Estimated Deficit 3
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Estimated Net Working Capital 2
Estimated Surplus 3
Exchange Act 48
Exclusivity Period 27
Final Adjustment Amount 4
Financial Statements 8
First Person 51
Foreign Plan 16
FTC 27
Fundamental Buyer Representations 38
Fundamental Seller Representations 38
GAAP 48
Governmental Authority 48
Hazardous Materials 49
HSR Act 49
Indebtedness 49
Indemnified Party 40
Indemnifying Party 40
Insiders 21
Insurance Policies 15
Intellectual Property 49
Intellectual Property Licenses 13
Latest Audited Balance Sheet 2
Latest Balance Sheet 8
Law 49
Leased Property 11
Leases 49
Liability 50
Licenses 16
Lien 50
Loss 39
Losses 39
Material Adverse Change 50
Material Adverse Effect 50
Material Contracts 9
Members 50
Mexican Real Property 43
Net Working Capital 50
Non-Competition and Severance Agreements 32
Non-Solicit Period 28
Operating Company 51
Organizational Documents 51
Outside Date 44
Owned Property 11
Parties 1
Party 1
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Permitted Liens 51
Person 51
Plan Affiliate 51
Post-Closing Tax Period 37
Pre-Closing Returns 35
Prime Rate 51
Protest Notice 3
Purchase Price 2
RCRA 48
Real Property 11
Reasonable Efforts 51
Registered Intellectual Property 13
Release Date 37
SEC 51
Securities Act 51
Seller 1
Seller Indemnified Party 39
Seller Representative Committee 5
Seller Representative Committee Agreement 5
Seller's Knowledge 51
Shares 1
SRC Expenses 5
SRC Fund 5
Straddle Period Return 35
Tail Policy 25
Target Net Working Capital 51
Tax Proceeding 37
Tax Return 52
Taxes 52
Third Party Claim 40
Threshold Amount 52
Transaction Agreements 52
U.S. Employee Plan 16
Unaudited Financial Statements 8
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of June 3, 2005, by and between Monona Holdings LLC, a Delaware limited
liability company (the "SELLER") and Commercial Vehicle Group, Inc., a Delaware
corporation (the "BUYER"). Each of the parties named above may be referred to as
a "PARTY" and collectively as the "Parties." Capitalized terms used, but not
otherwise defined, herein shall have the meaning set forth in SECTION 12.8.
RECITALS
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock (the "SHARES") of Monona Corporation, a Delaware corporation (the
"COMPANY"); and
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer, the Shares, pursuant to the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, at the Closing, the Buyer shall purchase, acquire and accept the
Shares from the Seller, and the Seller shall sell, convey, assign, transfer and
deliver the Shares to the Buyer.
1.2 Purchase Price. The purchase price for the Shares to be purchased
pursuant to SECTION 1.1 shall be the consideration specified in ARTICLE II.
1.3 Closing. The closing of the purchase and sale of the Shares (the
"CLOSING") shall take place as described in ARTICLE VIII, provided that the
closing conditions set forth in ARTICLE VII shall have been satisfied or waived
in writing as provided therein at or prior to the Closing.
1.4 Payment and Cancellation of Intercompany Accounts. Immediately
prior to the Closing, (a) all Liabilities (other than any Liabilities created by
this Agreement or any of the Transaction Agreements) owed by the Seller, any
Member or any of their respective Affiliates (other than the Acquired Companies)
to any Acquired Company, whether or not reflected in the financial statements of
the Acquired Companies, shall be paid in full in cash, and (b) all of the
Liabilities (other than any Liabilities created by this Agreement or any of the
Transaction Agreements) owed by any Acquired Company to the Seller, any Member
or any of their respective Affiliates or any other Acquired Company shall be:
(x) in the case of the Liabilities listed on SCHEDULE 1.4(b), considered
Indebtedness of the Acquired Companies hereunder and the aggregate amount of
such Liabilities shall be deducted from the Purchase Price in accordance
with SECTION 2.1, (y) accrued for on a dollar-for-dollar basis as a Current
Liability on the Closing Date Balance Sheet or (z) to the extent not considered
and treated as Indebtedness in accordance with the preceding clause (x) or as a
Current Liability in the preceding clause (y), canceled without payment, in full
and complete satisfaction of such Liabilities. For purposes of SECTION 1.4(b),
in no event shall Liabilities include any earned but unpaid compensation owed to
any Member who is an employee of any of the Acquired Companies to the extent
such Liabilities are accrued for on a dollar-for-dollar basis as a Current
Liability on the Closing Date Balance Sheet or any benefits owed to any Member
who is an employee of any of the Acquired Companies under the medical, dental,
life, disability or 401(k) plans of the Acquired Companies. Subject to
compliance with the terms and conditions of this Agreement, nothing in this
SECTION 1.4 shall prevent the Seller from satisfying any such Liabilities in
cash between the date hereof and the Closing.
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Payment. On the Closing Date, the consideration to be delivered at
the Closing by the Buyer to the Seller hereunder for all of the Shares will be:
$55,000,000 in cash, less (i) the aggregate amount of Indebtedness of the
Acquired Companies (including the Indebtedness set forth on SCHEDULE 1.4(b) and
SCHEDULE 3.27) outstanding as of the Closing, less (ii) the Escrow Funds, less
(iii) the SRC Fund, plus (iv) the Estimated Cash on Hand as of the Closing, plus
(v) the Estimated Surplus, if any, less (vi) the Estimated Deficit, if any. The
aggregate consideration to be delivered by the Buyer at the Closing for all of
the Shares pursuant to this SECTION 2.1 is referred to herein as the "PURCHASE
PRICE" and shall be subject to adjustment as set forth herein and in SECTION
2.2. The Purchase Price payable to the Seller at Closing shall be paid by wire
transfer of immediately available funds to the bank account(s) specified by the
Seller. The Seller shall specify such account(s) in writing at least two (2)
days prior to the Closing Date.
2.2 Purchase Price Adjustments. The Purchase Price shall be subject to
adjustment (i.e., increased or decreased) on a dollar for dollar basis in
accordance with the provisions of this SECTION 2.2.
(a) Estimated Adjustment. Within ten (10) Business Days prior
to the Closing, but in no event less than two (2) Business Days prior to the
Closing, the Seller shall prepare and deliver, or cause to be prepared and
delivered, to the Buyer, a certificate of the chief financial officer of the
Operating Company that contains his reasonable good faith best estimate of (i)
the Net Working Capital of the Acquired Companies as of immediately prior to the
Closing (the "ESTIMATED NET WORKING CAPITAL") and (ii) the amount of Cash on
Hand of the Acquired Companies as of immediately prior to the Closing
("ESTIMATED CASH ON HAND"), which estimate shall be, in all cases, reasonably
acceptable to the Buyer. In the event that the Parties cannot mutually agree on
any component of Estimated Net Working Capital or Estimated Cash on Hand, the
amount set forth in the "LATEST AUDITED BALANCE SHEET" shall be used for
purposes of calculating such component of Estimated Net Working Capital or
Estimated Cash on Hand, as applicable. As set forth in SECTION 2.1 above (and
without duplication), (A) if the Estimated Net Working Capital is less than the
Target Net Working Capital (such deficiency, the "ESTIMATED DEFICIT"), then the
Purchase Price payable to the Seller at the Closing pursuant to SECTION 2.1
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shall be reduced by the amount of such Estimated Deficit, and (B) if the
Estimated Net Working Capital is greater than the Target Net Working Capital
(such excess, the "ESTIMATED SURPLUS"), then the Purchase Price payable to the
Seller at the Closing pursuant to SECTION 2.1 shall be increased by the amount
of such Estimated Surplus.
(b) Closing Date Balance Sheet. As soon as practicable after
the Closing Date, but no later than the sixtieth (60th) day following the
Closing Date, the Buyer, at its expense, shall prepare and deliver, or cause to
be prepared and delivered, to the Seller Representative Committee (i) a
consolidated balance sheet of the Acquired Companies as of immediately prior to
the Closing (the "CLOSING DATE BALANCE SHEET"), prepared in accordance with
GAAP, applied on a basis consistent with that employed in the preparation of the
Latest Audited Balance Sheet (but only to the extent consistent with GAAP), and
(ii) a schedule (the "CLOSING SCHEDULE") setting forth (A) a calculation of the
Closing Date Net Working Capital, (B) the amount, if any, by which the Closing
Date Net Working Capital is less than or is greater than the Estimated Net
Working Capital, (C) a calculation of the Closing Date Cash on Hand, and (D) the
amount, if any, by which the Closing Date Cash on Hand is less than or is
greater than the Estimated Cash on Hand.
(c) Protest Notice. Within thirty (30) days after the Buyer's
delivery of the Closing Date Balance Sheet and the Closing Schedule to the
Seller Representative Committee, the Seller Representative Committee, on behalf
of the Seller may deliver written notice (the "PROTEST NOTICE") to the Buyer of
any objections, and the basis therefor, which the Seller may have to the Closing
Date Balance Sheet and/or the Closing Schedule. The failure of the Seller
Representative Committee to deliver such Protest Notice within the prescribed
time period will constitute the Seller's acceptance of the Closing Date Balance
Sheet and the Closing Schedule prepared and delivered by the Buyer.
(d) Resolution of Protest. If the Buyer and the Seller
Representative Committee are unable to resolve any disagreement with respect to
the Closing Date Balance Sheet and/or the Closing Schedule within twenty (20)
days following the Seller Representative Committee's delivery of any Protest
Notice, then either the Seller Representative Committee, on behalf of the
Seller, or the Buyer may refer the items in dispute to PricewaterhouseCoopers
LLP (the "ACCOUNTANTS"). Any undisputed amount due from the Seller to the Buyer
or the Buyer to the Seller, as the case may be, shall be paid within five (5)
Business Days after delivery of the Protest Notice as set forth in SECTION
2.2(c). Promptly, but not later than thirty (30) days after acceptance of its
appointment, the Accountants will determine (based solely on presentations to
the Accountants by the Seller Representative Committee and the Buyer and not by
independent review) and will render a report as to the disputes and the
resulting Closing Date Balance Sheet and Closing Schedule, which report will be
conclusive and binding upon the Parties. In resolving any disputed item, the
Accountants may not assign a value to any particular item greater than the
greatest value for such item claimed by either Party or less than the lowest
value for such item claimed by either Party, in each case as presented to the
Accountants. The fees and expenses of the Accountants shall be borne by the
Seller, on the one hand, and the Buyer, on the other hand, based upon the
percentage that the amount not awarded to the Buyer or the Seller bears to the
amount actually contested by such Party. Any amounts not paid when required
under this SECTION 2.2 shall bear interest from the required date of payment to
the date of actual payment at two percent (2%) per year in excess of Prime Rate.
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(e) Payment of Adjustment. Within five (5) Business Days after
the final determination of the Closing Date Balance Sheet and the Closing
Schedule, or the failure of the Seller Representative Committee to submit a
timely Protest Notice, pursuant to the provisions of this SECTION 2.2:
(i) Subject to SECTION 2.2(e)(v), if the Closing Date
Net Working Capital is less than the Estimated Net Working
Capital, the Seller or the Seller Representative Committee, on
behalf of the Seller, as the case may be, shall pay, or cause
to be paid, to the Buyer the amount of such difference by wire
transfer of immediately available funds to the bank account
specified by the Buyer.
(ii) Subject to SECTION 2.2(e)(v), if the Closing
Date Net Working Capital is greater than the Estimated Net
Working Capital, the Buyer shall pay to the Seller
Representative Committee (for the account of the Seller) the
amount of such difference by wire transfer of immediately
available funds to the bank account(s) specified by the Seller
Representative Committee.
(iii) Subject to SECTION 2.2(e)(v), if the Closing
Date Cash on Hand is less than the Estimated Cash on Hand, the
Seller or the Seller Representative Committee, on behalf of
the Seller, as the case may be, shall pay, or cause to be
paid, to the Buyer the amount of such difference by wire
transfer of immediately available funds to the bank account
specified by the Buyer.
(iv) Subject to SECTION 2.2(e)(v), if the Closing
Date Cash on Hand is greater than the Estimated Cash on Hand,
the Buyer shall pay to the Seller Representative Committee
(for the account of the Seller) the amount of such difference
by wire transfer of immediately available funds to the bank
account(s) specified by the Seller Representative Committee.
(v) The cumulative net adjustment to the Purchase
Price pursuant to SECTIONS 2.2(e)(i) through 2.2(e)(iv),
whether positive or negative, is the "FINAL ADJUSTMENT
AMOUNT." If the net effect pursuant to this SECTION 2.2(e) is
an increase in the Purchase Price, the Buyer shall make, or
cause the Acquired Companies to make, a cash payment to the
Seller Representative Committee (for the account of the
Seller) of such Final Adjustment Amount. The Seller
Representative Committee shall provide wire instructions to
the Buyer with respect to such payment at least two (2)
Business Days prior to the payment thereof. If the net effect
pursuant to this SECTION 2.2(e) is a decrease in the Purchase
Price, the Seller or the Seller Representative Committee, on
behalf of the Seller, as the case may be, shall make, or cause
to be made, a cash payment to the Buyer (or at the Buyer's
direction, one of its Affiliates) in an aggregate amount equal
to the Final Adjustment Amount. In the event the Seller fails
to make such payment to the Buyer as provided in this SECTION
2.2(e)(v), all or any portion of the Seller's obligation to
pay such amount may, at the Buyer's election, be satisfied
from the Escrow Funds. The Buyer shall provide wire
instructions to the Seller Representative Committee with
respect to such payment at least two (2) Business Days prior
to the payment thereof. Any payments under this SECTION
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2.2(e) shall be treated as an adjustment to the Purchase Price
for all purposes and no Party shall take a position
inconsistent with the foregoing.
(f) Cooperation. For purposes of complying with the terms set
forth herein, each Party will cooperate with and promptly make available to the
other Party and its auditors and representatives all information, records, data
and supporting papers reasonably relevant to the preparation of the Closing Date
Balance Sheet and the Closing Schedule and any adjustment being disputed, and
will cause the Acquired Companies to permit access to its facilities and
personnel, as may be reasonably required (upon reasonable advance notice) in
connection with the preparation and analysis of the Closing Date Balance Sheet
and the Closing Schedule and the resolution of any disputes thereunder.
2.3 Seller Representative Committee. For purposes of this Agreement,
the "SELLER REPRESENTATIVE COMMITTEE" shall be Ari A. Chaney, Neal A. Kayes, R.
Bruce Layman, Lynn Tilton and Robert Carter. By execution of that certain Seller
Representative Committee Agreement, dated as of the date hereof, by and among
each member of the Seller Representative Committee, the Seller and the Members
set forth therein, a copy of which is attached hereto as EXHIBIT A (the "SELLER
REPRESENTATIVE COMMITTEE AGREEMENT"), the Seller Representative Committee shall
generally act for the Seller and on the Seller's behalf in all matters
contemplated by, or connected with, this Agreement, with the same force and
effect as the Seller might act in person. The Buyer shall be entitled to rely on
the full power and authority of the Seller Representative Committee to act
hereunder on behalf of the Seller. On or prior to the Closing Date, the Buyer
shall deposit an amount in cash equal to One Hundred Thousand Dollars ($100,000)
(the "SRC FUND") to an account as designated in writing by the Seller. The SRC
Fund shall be used by the Seller Representative Committee for the payment of all
expenses, charges and liabilities, including reasonable attorneys' fees,
incurred by the Seller Representative Committee in the performance or discharge
of its rights, duties and obligations under this Agreement, the Escrow Agreement
and the Seller Representative Committee Agreement (the "SRC EXPENSES"). The
Seller agrees to pay, and to indemnify and hold harmless, each of the Buyer
Indemnified Parties from and against any Losses which they may suffer, sustain,
or become subject to, as the result of any claim by any Person that an action
taken by the Seller Representative Committee is not binding on, or enforceable
against, the Seller. In addition, the Seller hereby releases and discharges the
Buyer from and against any Liability arising out of or in connection with the
Seller Representative Committee's failure to distribute any amounts received by
the Seller Representative Committee on the Seller's behalf to the Seller. Upon
any liquidation and dissolution of the Seller after the Closing Date, the Seller
Representative Committee shall have, without any further action on the part of
any Party, the right to act on behalf of the Members in all matters contemplated
by, or connected with, this Agreement, with respect to any action that could be
taken or right that could be exercised by the Seller prior to such liquidation
and dissolution. In such event, the provisions of this SECTION 2.3 shall apply,
mutatis mutandis.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer with respect to the
matters specified in this ARTICLE III as follows:
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3.1 Organization and Qualification. Each of the Acquired Companies is
an entity duly incorporated or organized (as applicable), validly existing and
in good standing under the Laws of its jurisdiction of formation. Each of the
Acquired Companies has the requisite entity power and authority to carry on its
business as it is now being conducted. Each of the Acquired Companies is duly
qualified to conduct business as a foreign entity and is in good standing under
the Laws of the jurisdictions listed on SCHEDULE 3.1, which are all the
jurisdictions where the nature of its business or the ownership or leasing of
its property requires such qualification and where each such Acquired Company is
incorporated or organized (as applicable).
3.2 Authorization; Enforceability. The Seller has the requisite entity
power and authority to execute and deliver the Transaction Agreements to which
it is a party, to perform its obligations under the Transaction Agreements to
which it is a party, and to consummate the transactions contemplated by the
Transaction Agreements to which it is party. The board of managers (or other
governing body) of the Seller has duly approved this Agreement and all other
Transaction Agreements to which it is a party and has duly authorized the
execution and delivery of this Agreement and all other Transaction Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby. No other corporate, member or managerial proceedings on the part of
the Seller are necessary to approve and authorize the execution and delivery of
this Agreement or the other Transaction Agreements to which it is party and the
consummation of the transactions contemplated hereby and thereby. This Agreement
and all other Transaction Agreements to which the Seller is a party have been
duly executed and delivered by the Seller and, assuming the due authorization,
execution and delivery by the other Parties hereto and thereto, will constitute,
upon such execution and delivery in each case thereof, legal, valid and binding
obligation of the Seller enforceable in accordance with their terms and
conditions except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting the enforcement of creditors rights generally, and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in Law or equity).
3.3 Organizational Documents. The Seller has made available to the
Buyer copies of the Organizational Documents of each of the Acquired Companies,
and such copies are correct and complete as of the date hereof. The minute books
containing the records of meetings of the stockholders, members, board of
directors and board of managers (as applicable), the stock certificate books,
and the stock record books and similar organizational records of each Acquired
Company which have been furnished to the Buyer are correct and complete with
respect to actions or meetings of such stockholders, members, board of directors
or board of managers. No Acquired Company is in default under or in violation of
any provision of its Organizational Documents or the general corporate law or
limited liability law of the jurisdiction of its incorporation or organization.
3.4 Capitalization.
(a) The authorized, issued and outstanding capital stock,
limited liability company interests or other indicia of equity ownership (the
"EQUITY INTERESTS") of each Acquired Company is as set forth in SCHEDULE 3.4.
The Shares of the Company are the only Equity Interests of the Company issued
and outstanding. All of the issued and outstanding Equity Interests of the
Acquired Companies have been duly authorized, are validly issued, fully
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paid and, where applicable, non-assessable and are not subject to, nor were they
issued in violation of, any preemptive rights, rights of first refusal or
similar rights, and are owned of record and beneficially as set forth on
SCHEDULE 3.4 (and in the amounts set forth on SCHEDULE 3.4), free and clear of
all options, warrants, rights, Contracts, calls, puts, rights to subscribe,
conversion rights and other Liens. For purposes of the foregoing sentence, a
Person will be deemed to have beneficial ownership of Equity Interests of an
Acquired Company only if such Person has the right to vote or dispose of such
Equity Interests. The Seller will transfer and deliver to the Buyer at the
Closing valid title to the Shares free and clear of any Liens or other
restriction on transfer.
(b) Except as set forth on SCHEDULE 3.4, the Seller does not
directly or indirectly own or have any obligation or right to acquire any Equity
Interests or other ownership interest in or any other security or interest in
any Person. The Equity Interests listed as owned on SCHEDULE 3.4 constitute,
directly or indirectly, 100% of the Equity Interests in the Acquired Companies.
There are no voting trusts, proxies or any other agreements or understandings
with respect to the voting or transfer of the Equity Interests of any Acquired
Company other than obligations to transfer the Shares pursuant to this
Agreement.
(c) The Members own all of issued and outstanding Equity
Interests of the Seller.
3.5 Limited Operations. The Company is a holding company, the only
asset of which is the capital stock of the Operating Company. Except for holding
such capital stock of the Operating Company, the Company has never conducted any
business operations, owned any other assets, or had any employees.
3.6 Options. Except as set forth on SCHEDULE 3.6, there are no
outstanding options, rights (preemptive or otherwise), warrants, calls,
convertible securities or commitments or any other arrangements to which the
Seller or any of the Acquired Companies are a party or which are binding upon
the Seller or any Acquired Company requiring the issuance, sale, transfer or
acquisition of any Equity Interests of such entities, or any securities
convertible directly or indirectly into Equity Interests of such entities, or
evidencing the right to subscribe for any Equity Interests of any of the
Acquired Companies, or giving any Person (other than the Buyer) any rights with
respect to any Equity Interests of any of the Acquired Companies. Except as set
forth on SCHEDULE 3.6, there are no outstanding or authorized stock
appreciation, phantom stock, profits interests, economic interests, or similar
rights with respect to any Acquired Company.
3.7 Financial Statements. SCHEDULE 3.7 attached hereto contains
complete and correct copies of: (a) the audited consolidated balance sheets of
the Acquired Companies as at January 31, 2003, 2004 and 2005 (such balance sheet
as at January 31, 2005, the "LATEST AUDITED BALANCE SHEET"), and the related
audited consolidated statements of income, changes in stockholders' equity and
cash flows of the Company for the fiscal years ended January 31, 2003, January
31, 2004 and January 31, 2005 (collectively, the "AUDITED FINANCIAL
STATEMENTS"); and (b) (i) the unaudited consolidated balance sheet of the
Acquired Companies as at March 31, 2005 (the "LATEST BALANCE SHEET") and the
related unaudited consolidated statement of income, changes in stockholders'
equity and cash flows of the Company the two (2) month fiscal period then ended
and (ii) the unaudited consolidated balance sheet of the Acquired Companies as
at
7
April 30, 2005 and the related unaudited consolidated statement of income,
changes in stockholders' equity and cash flows of the Company the three (3)
month fiscal period then ended (the financial statements described in clauses
(b)(i) and (b)(ii) are collectively referred to as the "UNAUDITED FINANCIAL
STATEMENTS"). The Audited Financial Statements and the Unaudited Financial
Statements are herein sometimes referred to as the "FINANCIAL STATEMENTS." Each
of the Financial Statements is consistent with the books and records of the
Acquired Companies (which, in turn, are accurate and complete) and fairly
presents the financial condition of the Acquired Companies as of its respective
date, and the results of operations of the Acquired Companies, for the periods
related thereto, in each case in accordance with GAAP consistently applied among
the periods which are the subject of the Financial Statements, except in the
case of the Unaudited Financial Statements for the absence of footnote
disclosure and year-end adjustments (none of which are or will be inconsistent
with past practice or material, individually or in the aggregate) and except as
set forth on SCHEDULE 3.7 attached hereto.
3.8 Taxes. Except as set forth on SCHEDULE 3.8:
(a) The Acquired Companies have timely filed (with due regard
to all timely filed extensions), all Federal income and other material Tax
Returns required to be filed by them through the date hereof. Such Tax Returns
are correct and complete in all material respects. The Acquired Companies have
timely paid and discharged all Taxes whether or not required to be reflected on
any Tax Returns. The Taxes of the Acquired Companies accrued but not yet due do
not exceed the amount reserved therefor on the face of the Latest Audited
Balance Sheet (rather than on any notes thereto), as such reserve has been
adjusted for the passage of time through the Closing Date in accordance with
past custom and practice of the Acquired Companies. The Acquired Companies have
withheld, collected and paid over to the appropriate Governmental Authorities or
is properly holding for such payment all Taxes required by Law to be withheld or
collected.
(b) None of the Acquired Companies is the beneficiary of any
extension of time within which to file any Tax Return.
(c) There is no suit, proceeding, investigation, audit, claim
or assessment pending or, to the Seller's Knowledge, proposed with respect to
any Liability for Tax, or with respect to any Tax Return of any of the Acquired
Companies, and none of the Acquired Companies has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency which waiver or extension is still in effect.
(d) None of the Acquired Companies is a party to any Tax
allocation or sharing agreement.
(e) None of the Acquired Companies is or was a member of an
affiliated group within the meaning of Section 1504(a) of the Code (or any
similar group defined under a similar provision of state, local, or foreign Law)
filing a consolidated Federal income Tax Return or has any Liability for the
Taxes of any Person (other than any of the Acquired Companies) under Treasury
Regulation Section 1.1502-6 or any analogous or similar provision of Law.
8
(f) No claim has ever been made by a taxing authority in a
jurisdiction where any of the Acquired Companies does not file Tax Returns that
such Acquired Company is or may be subject to Taxes assessed by such
jurisdiction.
(g) None of the Acquired Companies has made any payments, or
is or shall become obligated (under any contract entered into on or before the
Closing Date) to make any payments, that shall be non-deductible under Section
280G of the Code (or any corresponding provision of state, local or foreign
income Tax law).
(h) None of the Acquired Companies will be required to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a
result of (1) a change in method of accounting made prior to the Closing, (2)
any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law) entered into
prior to the Closing, (3) any installment sale or open transaction disposition
made prior to the Closing, or (4) any prepaid amount received prior to the
Closing.
(i) None of the Acquired Companies has distributed stock of
another Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code.
3.9 Material Contracts. Except as listed or described on SCHEDULE 3.9,
none of the Acquired Companies is a party to or bound by any Contract of a type
described below (such Contracts that are required to be listed on SCHEDULE 3.9,
are herein referred to as the "MATERIAL CONTRACTS"):
(a) any consulting agreement, management agreement, advisory
agreement or employment agreement that provides for annual compensation or
payments exceeding $50,000 per year and which cannot be terminated by the
Acquired Companies without penalty or cost on notice of thirty (30) days or
less, any severance agreements, retention agreements or change-of-control
agreements, and any collective bargaining arrangement or Contract with any labor
union and any such agreements currently in negotiation or proposed;
(b) any bonus, commission, pension, profit sharing, retirement
or any other form of deferred compensation or incentive plan or any stock
purchase, stock option, hospitalization insurance or similar plan or practice;
(c) any Contract for capital expenditures or the acquisition
of fixed assets in excess of $100,000 in the aggregate pursuant to that Contract
or one or more Contracts with the same Person or its Affiliates that are
intended to be a part of the same transaction;
(d) any Contract or group of related Contracts for the
purchase, maintenance or acquisition, or the sale or furnishing of materials,
supplies, merchandise, machinery, equipment, parts or other property or services
requiring remaining aggregate future payments in excess of $50,000, other than
for the purchase or sale of inventory in the ordinary course of business, which
calls for performance over a period of more than six (6) months;
9
(e) any Contract relating to Indebtedness, or the guaranty of
another Person's Indebtedness or other obligation, including, without
limitation, all notes, mortgages, indentures and other obligations, guarantees
of performance, agreements and instruments for or relating to any Indebtedness;
(f) any leases, subleases and other material Contracts
pertaining to any of the Real Property;
(g) any Contract granting any Person a Lien on all or any part
of the assets of the Acquired Companies;
(h) any Contract under which any of the Acquired Companies
have granted or received a License or under which it is obligated to pay or has
the right to receive a royalty, license fee or similar payment in an amount in
excess of $50,000, other than Licenses for commercially available prepackaged
software;
(i) any Contract that restricts the right of any Acquired
Company to engage in any line of business, to compete with any Person or to sell
any product or provide any service;
(j) any Contract relating to ownership of or investments in
any business or enterprise (including minority investments) or any Contract
relating to the acquisition or sale of its business (or any material portion or
assets thereof); or
(k) any joint venture or partnership Contract.
The Seller has made available to the Buyer a correct and complete copy
of each written Material Contract and a true and correct description of all
material terms of each oral Material Contract. Except as set forth on SCHEDULE
3.9, (i) each Material Contract required to be disclosed on SCHEDULE 3.9 is in
full force and effect, represents a legal, valid and binding obligation of the
applicable Acquired Company and, to Seller's Knowledge, each of the other
parties thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally, and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in Law or equity),
(ii) no Material Contract required to be disclosed on SCHEDULE 3.9 has been
breached (except for those breaches that have not resulted in and which will not
result in, either individually or, in the case of a series of related breaches,
in the aggregate, a Liability to the Acquired Companies in excess of $19,166 or
an award of non-monetary relief or penalty) or canceled by any Acquired Company
or, to Seller's Knowledge, any other party, and (iii) each Acquired Company has
performed in all material respects all the obligations required to be performed
by it in connection with the Material Contracts required to be disclosed on
SCHEDULE 3.9 and is not in default under or in breach of any such Material
Contract (except for those defaults that have not resulted in and which will not
result in, either individually or, in the case of a series of related defaults,
in the aggregate, a Liability to the Acquired Companies in excess of $19,166 or
an award of non-monetary relief or penalty), and no event has occurred which
with the passage of time or the giving of notice or both would result in a
default or breach thereunder (other than those defaults and breaches which would
not result in, either individually or, in the case of a series of related
10
breaches or defaults, in the aggregate, a Liability to the Acquired Companies in
excess of $19,166 or an award of non-monetary relief or penalty).
3.10 Real Property.
(a) SCHEDULE 3.10 sets forth a list of all real estate in
which the Acquired Companies have an ownership interest (such real estate owned
by the Acquired Companies is herein referred to as the "OWNED PROPERTY") and all
real property leased by the Acquired Companies or in which the Acquired
Companies otherwise have a leasehold interest (such real property leased by the
Acquired Companies is herein referred to as the "LEASED PROPERTY"). The Owned
Property and the Leased Property are collectively referred to herein as "REAL
PROPERTY."
(b) With respect to the Owned Property: (A) the Acquired
Companies have indefeasible fee simple title to such Owned Property, free and
clear of all Liens, except Permitted Liens, (B) except as set forth in SCHEDULE
3.10, the Acquired Companies have not leased or otherwise granted to any Person
the right to use or occupy such Owned Property or any portion thereof; (C) other
than the right of the Buyer pursuant to this Agreement, there are no outstanding
options, rights of first offer or rights of first refusal to purchase such Owned
Property or any portion thereof or interest therein. None of the Acquired
Companies is a party to any agreement or option to purchase any real property or
interest therein.
(c) SCHEDULE 3.10 sets forth the address of each Leased
Property, and a true and complete list of all Leases (including all amendments,
extensions, renewals, guaranties and other agreements with respect thereto) for
each such Leased Property (including the date and name of the parties to such
Lease document). The Acquired Companies have delivered to the Buyer a true and
complete copy of each such Lease, and in the case of any oral Lease, a written
summary of the material terms of such Lease. Except as set forth in SCHEDULE
3.10, with respect to each of the Leases: (i) such Lease is legal, valid,
binding, enforceable and in full force and effect; (ii) the Acquired Companies'
possession and quiet enjoyment of the Leased Property under such Lease has not
been disturbed, and to the Seller's Knowledge, there are no disputes with
respect to such Lease; (iii) none of the Acquired Companies or any other party
to the Lease is in breach or default under such Lease (other than those defaults
and breaches that have not resulted in and which will not result in, either
individually or, in the case of a series of related breaches or defaults, in the
aggregate, a Liability to the Acquired Companies in excess of $19,166 or an
award of non-monetary relief or penalty), and no event has occurred or
circumstance exists which, with the delivery of notice, the passage of time or
both, would constitute such a breach or default, or permit the termination,
modification or acceleration of rent under such Lease; (iv) no security deposit
or portion thereof deposited with respect such Lease has been applied in respect
of a breach or default under such Lease which has not been redeposited in full;
(v) the other party to such Lease is not an Affiliate of, and otherwise does not
have any economic interest in the Acquired Companies; (vi) the Acquired
Companies have not subleased, licensed or otherwise granted any Person the right
to use or occupy such Leased Property or any portion thereof; and (vii) the
Acquired Companies have not collaterally assigned or granted any other security
interest in such Lease or any interest therein.
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3.11 Personal Property. Except as set forth on SCHEDULE 3.11 or
inventory disposed of in the ordinary course of business, the Acquired Companies
have good and marketable title to (or a valid leasehold interest in) all items
of tangible personal property and assets having a value of not less than $19,166
and reflected on the Financial Statements as owned or leased by the Acquired
Companies or acquired thereafter or used by the Acquired Companies, free and
clear of any Liens, other than Permitted Liens. The assets and properties
(whether real or personal, tangible or intangible) owned or leased by the
Acquired Companies constitute all of the assets and properties necessary to
operate the business of the Acquired Companies as currently conducted and such
assets and properties are in good condition and repair (normal wear and tear
excepted).
3.12 Litigation. Except as set forth on SCHEDULE 3.12, during the
previous twenty-four (24) month period there have not been any actions,
proceedings, investigations, judgments, grievances, arbitrations, suits, claims
or orders pending or, to the Seller's Knowledge, threatened, against the
Acquired Companies, or pending or threatened by any Acquired Company against any
third Person, at law or at equity, nor is any of the Acquired Companies
currently subject to any judgment, order or decree of any court or Governmental
Authority, except in each case for those actions, proceedings, investigations,
judgments, suits, claims, decrees and orders that have not resulted in and which
will not result in, either individually or, in the case of a series of related
actions, proceedings, investigations, judgments, suits, claims, decrees or
orders, in the aggregate, a Liability to the Acquired Companies in excess of
$19,166 or an award of non-monetary relief or penalty. The Acquired Companies
are fully insured with respect to each of the matters set forth on SCHEDULE
3.12.
3.13 Compliance with Applicable Laws. Except as set forth on SCHEDULE
3.13 and except where any such violation or failure to comply has not resulted
in and will not result in, either individually or, in the case of a series of
related violations or failures to comply, in the aggregate, a Liability to the
Acquired Companies in excess of $19,166 or an award of non-monetary relief or
penalty, each of the Acquired Companies (and each of the respective officers,
directors, agents and employees) has complied and is in compliance with all Laws
applicable to it or to the operation of the Business.
3.14 Intellectual Property.
(a) SCHEDULE 3.14 sets forth a list of all (i) trademark and
service mark registrations and pending registration applications, trade names,
and company names, (ii) patents and pending patent applications, (iii) copyright
registrations and registration applications, and (iv) computer software (other
than commercially available prepackaged computer software generally available to
the public pursuant to non-exclusive end-user licenses), that are necessary to
the conduct of the Business as currently conducted by the Acquired Companies and
are owned or used pursuant to a valid license by one or more of the Acquired
Companies (collectively, the "REGISTERED INTELLECTUAL PROPERTY"). SCHEDULE 3.14
additionally sets forth a list of all material license agreements with respect
to any of the Registered Intellectual Property to which any of the Acquired
Companies is a party, whether as licensee, licensor or otherwise (other than
non-exclusive end-user licenses for commercially available prepackaged computer
software generally available to the public) (the "INTELLECTUAL PROPERTY
Licenses"). Each of the Acquired Companies owns and possesses all right, title
and interest in and to or has a valid and enforceable
12
right to use pursuant to a written license agreement, the Registered
Intellectual Property required to be listed on SCHEDULE 3.14 and all other
intellectual property rights necessary to the conduct of the Business as
currently conducted by the Acquired Companies.
(b) Except as set forth on SCHEDULE 3.14, (i) the conduct of
the Business as currently conducted has not infringed or misappropriated and is
not now infringing or misappropriating the intellectual property rights of any
third parties; (ii) there is no claim pending or, to the Seller's Knowledge,
threatened, against any of the Acquired Companies with respect to the alleged
infringement or misappropriation by the Acquired Companies of any intellectual
property rights of others; and (iii) to the Seller's Knowledge, no third party
is infringing or misappropriating the Intellectual Property, and no claim
against a third party with respect to the alleged infringement or
misappropriation of the Intellectual Property is currently pending or
threatened.
3.15 Bank Accounts; Officers and Directors. SCHEDULE 3.15 includes a
list of each bank in which any of the Acquired Companies has an account, lock
box or safe deposit box and the number of each such account or box (and each
authorized signatory with respect thereto). SCHEDULE 3.15 lists all of the
officers and directors of each of the Acquired Companies.
3.16 No Violation. Except as set forth on SCHEDULE 3.16, neither the
execution and delivery of this Agreement or any other Transaction Agreement by
the Seller or any Acquired Company, nor the performance by the Seller or any
Acquired Company of the transactions contemplated hereby or thereby does or will
(a) constitute a default or violation under the Organizational Documents of the
Seller or any Acquired Company, (b) result in a breach of or default, give rise
to any right of termination, cancellation or acceleration, or require any
Consent under any of the terms, conditions or provisions of any Contract,
License, agreement, lease or other instrument or obligation to which the Seller
or any Acquired Company is a party or bound or affected, or (c) result in the
creation of any Lien or conflict with or violate any Laws, judgments, orders or
decrees applicable to the Seller or any Acquired Company or by which any of its
respective properties or assets is bound, except, with respect to clauses (b)
and (c), for those defaults and breaches which will not result in, either
individually or, in the case of a series of related defaults or breaches, in the
aggregate, a Liability to the Acquired Companies in excess of $19,166 or an
award of non-monetary relief or penalty.
3.17 Conduct of Business; Absence of Certain Changes. Except as set
forth on SCHEDULE 3.17, since the date of the Latest Audited Balance Sheet, the
Acquired Companies have conducted the business in the ordinary course consistent
with past practices. Without limitation of the generality of the foregoing, and
except as set forth on SCHEDULE 3.17 or as expressly required by this Agreement,
since the date of the Latest Audited Balance Sheet, there has not been any:
(a) any Material Adverse Effect or incident of damage,
destruction or loss of any property owned by the Acquired Companies or used in
the operation of the Business, whether or not covered by insurance, having a
replacement cost or fair market value in excess of $19,166 in the aggregate;
13
(b) voluntary or involuntary sale, transfer, surrender,
abandonment, waiver, release or other disposition of any kind by any of the
Acquired Companies of any right, power, claim, debt, asset or property (having a
replacement cost or fair market value in excess of $19,166 in the aggregate),
except the sale of inventory and product the ordinary course of business
consistent with past custom and practices to unaffiliated third Persons on an
arm's length basis;
(c) loan, guarantee or advance by any of the Acquired
Companies to any Person, other than advances to employees for business expenses
to be incurred in the ordinary course of business consistent with past practice
or sales to customers on credit in the ordinary course of business consistent
with past practice;
(d) declaration, setting aside, or payment of any dividend or
other distribution in respect of any of the Acquired Companies' Equity Interests
or any direct or indirect redemption, purchase, or other acquisition of such
Equity Interests, or the payment of principal or interest on any note, bond,
debt instrument or debt to any Affiliate of the Acquired Companies (including
any Member);
(e) issuance by the Acquired Companies of any notes, bonds, or
other debt securities or any Equity Interests or securities convertible into or
exchangeable for any Equity Interests or any profits interests, economic
interests or similar rights;
(f) borrowing of any amount or incurrence or becoming subject
to any Liens, Indebtedness or other Liabilities, except Current Liabilities
incurred in the ordinary course of business and not constituting Indebtedness;
(g) cancellation, waiver or release by the Acquired Companies
of any material debts, rights or claims, whether or not in the ordinary course
of business consistent with past practices;
(h) change in accounting principles, methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) utilized by the Acquired Companies or any change in the cash
management customs and practices of the Acquired Companies (including, without
limitation, with respect to maintenance of working capital balances and
inventory levels, collection of accounts receivable and payment of accounts
payable);
(i) capital expenditures or commitments therefor by the
Acquired Companies in excess of $100,000 in the aggregate;
(j) adoption, amendment or termination of any Employee Plan or
increase in the benefits provided under any Employee Plan, or granting, promise
or payment of any bonus, severance, incentive or profit sharing payments except
as required by applicable Law;
(k) sale, assignment, transfer or license of any rights under
or with respect to any Intellectual Property;
14
(l) settlement or compromise of any litigation involving the
payment of, or an agreement to pay over time, or the receipt of, in cash, notes
or other property, in the aggregate, an amount exceeding $100,000 or the
institution or settlement of any claim or lawsuit involving equitable or
injunctive or other non-monetary relief;
(m) increase of $20,000 or more in any manner of compensation
of any employee of any Acquired Company earning $100,000 or more per year;
(n) other change in the employment terms for any employees of
the Acquired Companies outside of the ordinary course of business;
(o) discharging or satisfaction of any Lien or payment of any
Lien, other than Current Liabilities paid in the ordinary course of business, or
prepayment of any amount of Indebtedness;
(p) acquisition of any other business or Person (or any
significant portion or division thereof), whether by merger, consolidation or
reorganization or by purchase of its assets or stock or acquisition of any other
material assets; or
(q) entering into, amendment or termination of any
Organizational Document, Material Contract or Intellectual Property License.
3.18 Insurance Policies. SCHEDULE 3.18 lists and briefly describes each
insurance policy maintained by or on behalf of each Acquired Company, including
without limitation, general liability policies, product liability, comprehensive
general liability and umbrella insurance policies (the "INSURANCE POLICIES"),
together with descriptions of "self-insurance" programs. All Insurance Policies
are in full force and effect (and will be in full force and effect as of the
Closing) and all premiums due under such Insurance Policies have been paid, and
neither the Seller nor any Acquired Company is or ever has been in material
default with respect to its Liabilities under any such insurance policies. The
Seller has made available to the Buyer correct and complete copies of all
Insurance Policies. SCHEDULE 3.18 lists each claim made under an Insurance
Policy at any time during the five (5) year period prior to the date hereof.
None of the Acquired Companies has received written notice under any Insurance
Policy denying or disputing any claim (or coverage with respect thereto) made by
an Acquired Company or regarding the termination, cancellation or material
amendment of, or material premium increase with respect to, any Insurance
Policy, in each case, at any time during the five (5) year period prior to the
date hereof. The reserves set forth on the Latest Balance Sheet are adequate to
cover all anticipated Liabilities with respect to the any "self-insurance"
programs maintained by or on behalf of any Acquired Company.
3.19 Licenses and Permits. SCHEDULE 3.19 sets forth a list of all
licenses, sublicenses, permits (including, without limitation, construction and
operation permits and environmental permits), franchises, certificates,
approvals, exemptions, classifications and registrations (collectively, the
"LICENSES") held by the Acquired Companies or otherwise used by the Acquired
Companies in the conduct of the Business and issued by, or submitted by any of
the Acquired Companies to, any Governmental Authority or other Person, that are
necessary to the conduct of the Business as currently conducted by the Acquired
Companies. Each of the
15
Acquired Companies owns or possesses all right, title and interest in and to all
of the Licenses which are necessary to enable the Acquired Companies to carry on
the Business as presently conducted by it, except where the failure of the
Acquired Companies to hold any such License(s) would not result in, either
individually or, in the case of a series of related failures, in the aggregate,
a Liability to the Acquired Companies in excess of $19,166 or an award of
non-monetary relief or penalty. Each Acquired Company is in compliance with the
terms and conditions of such License, except to the extent such failure to be in
compliance has resulted in or could result in, either individually or, in the
case of a series of related failures, in the aggregate, a Liability to the
Acquired Companies in excess of $19,166 or an award of non-monetary relief or
penalty). No loss or expiration of any License is pending or, to the Seller's
Knowledge, threatened or reasonably foreseeable (including, without limitation,
as a result of the transactions contemplated hereby) other than expiration in
accordance with the terms thereof, which terms do not expire as a result of the
consummation of the transactions contemplated hereby.
3.20 Employee Benefit Plans.
(a) SCHEDULE 3.20 lists: (i) each "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, including, but not limited to, any
medical plan, life insurance plan, short-term or long-term disability plan or
dental plan; (ii) each "employee pension benefit plan," as defined in Section
3(2) of ERISA, including, but not limited to, any excess benefit plan, top hat
plan or deferred compensation plan or arrangement, nonqualified retirement plan
or arrangement, qualified defined contribution or defined benefit arrangement;
and (iii) each other bonus or incentive plan, stock option, restricted stock,
stock bonus, vacation pay, bonus program, service award, moving expense,
deferred compensation plan, salary reduction agreement, change-of-control
agreement, employment agreement, consulting agreement, or material benefit plan,
policy, program, arrangement or agreement which in all cases, is sponsored,
contributed to or maintained by the Acquired Companies or with respect to which
the Acquired Companies have any Liability or obligation. Each employee benefit
plan, program or arrangement listed on SCHEDULE 3.20 relating to current or
former employees, officers or directors of the Acquired Companies located in the
United States shall be hereinafter referred to as a "U.S. EMPLOYEE PLAN," and
each employee benefit plan, program or arrangement listed on SCHEDULE 3.20
relating to current or former employees, officers or directors of the Acquired
Companies located outside of the United States shall be hereinafter referred to
as a "FOREIGN PLAN." Each Foreign Plan shall be designated as such on SCHEDULE
3.20.
(b) The Seller has made available to the Buyer: (i) a correct
and complete copy of each written Employee Plan and summary plan description as
in effect on the date hereof; (ii) a copy of each trust agreement, insurance
contract and other funding vehicle with respect to each such Employee Plan;
(iii) a copy of the most recently received determination letter, if any, and any
and all currently effective rulings or notices issued by a Governmental
Authority, with respect to each such Employee Plan; and (iv) a copy of the Form
5500 Annual Report, if any, for the most recent plan year for each such Employee
Plan.
(c) Except as set forth on SCHEDULE 3.20, each U.S. Employee
Plan (and each related trust, insurance contract and fund) (i) has been
operated, maintained, funded and administered in compliance with its terms
(except as otherwise required by Law), except to the
16
extent such failure to comply has not resulted in and will not result in, either
individually or, in the case of a series of related failures, in the aggregate,
a Liability to the Acquired Companies in excess of $19,166, or an award of
non-monetary relief or penalty, and (ii) complies in form and operation with all
applicable requirements of ERISA, the Code, other applicable laws, any
applicable collective bargaining agreements, and with any applicable reporting
and disclosure requirements, including but not limited to the requirement of
Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code except to
the extent such failure to comply has not resulted in and will not result in,
either individually or, in the case of a series of related failures, in the
aggregate, a Liability to the Acquired Companies in excess of $19,166, or an
award of non-monetary relief or penalty. Each Employee Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and nothing has occurred
since the date of such determination that could reasonably be expected to
adversely affect the qualified status of any U.S. Employee Plan. All such U.S.
Employee Plans have been timely, and in good faith, amended for the requirements
of the Tax legislation commonly known as "GUST" and "EGTRRA" and have been
submitted to the Internal Revenue Service for a favorable determination letter
on the GUST requirements within the remedial amendment period prescribed by GUST
and the guidance issued by the Internal Revenue Service.
(d) Except as set forth on SCHEDULE 3.20, neither of the
Acquired Companies nor any Plan Affiliate maintains, contributes to, is required
to contribute to, has any actual or contingent Liability (including withdrawal
liability as defined in Section 4201 of ERISA) under or with respect to any
employee benefit plan, program or arrangement which (i) is a "multiemployer
plan" as defined in Section 4001 of ERISA, (ii) is a "multiemployer plan" within
the meaning of Section 3(37) of ERISA, (iii) is a "multiple employer plan"
within the meaning of Code Section 413(c), (iv) is a "multiple employer welfare
arrangement" within the meaning of Section 3(40) of ERISA, (v) is subject to the
funding requirements of Section 412 of the Code or Title IV of ERISA, or (vi)
provides for post-retirement medical, life insurance or other welfare-type
benefits for current, future, retired or terminated directors, officers or
employees of the Acquired Companies or any other Person (other than as required
by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code or
under a similar state law ("COBRA")). No asset of the Acquired Companies is
subject to any Lien arising under ERISA or Section 412 of the Code.
(e) Except as has not resulted in and will not result in,
either individually or in the aggregate, a Liability to the Acquired Companies
in excess of $19,166 or an award of non-monetary relief or penalty, there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Code Section 4975, with respect to any U.S. Employee Plan or any
employee benefit plan, program, or arrangement of any kind maintained by a Plan
Affiliate. No fiduciary has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration or
investment of the assets of any U.S. Employee Plan. Except as has not resulted
in and will not result in, either individually or, in the case of a series of
related breaches or failures, in the aggregate, a Liability to the Acquired
Companies in excess of $19,166 or an award of non-monetary relief or penalty, no
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any U.S. Employee Plan (other
than routine claims for benefits) is pending or, to the Seller's Knowledge,
threatened. The Seller and the directors and officers (and employees with
responsibility for
17
employee benefits matters) of the Acquired Companies have no knowledge of any
basis for any such action, suit, proceeding, hearing, or investigation.
(f) Except as has not resulted in and will not result in,
either individually or in the aggregate, a Liability to the Acquired Companies
in excess of $19,166 or an award of non-monetary relief or penalty, the Acquired
Companies have, for purposes of each relevant Employee Plan, correctly
classified those individuals performing services for the Acquired Companies as
common law employees, leased employees, independent contractors or agents of the
Acquired Companies.
(g) The Acquired Companies have not, since October 3, 2004,
(A) granted to any Person an interest in a nonqualified deferred compensation
plan (as defined in Code Section 409A(d)(1)) which interest has been or, upon
the lapse of a substantial risk of forfeiture with respect to such interest,
will be subject to the tax imposed by Code Sections 409A(a)(1)(B) or (b)(4)(A),
or (B) modified the terms of any nonqualified deferred compensation plan in a
manner that could cause an interest previously granted under such plan to become
subject to the tax imposed by Code Sections 409A(a)(1)(B) or (b)(4).
(h) Except as has not resulted in and will not result in,
either individually or in the aggregate, a Liability to the Acquired Companies
in excess of $19,166 or an award of non-monetary relief or penalty, all required
reports and descriptions (including Form 5500 annual reports, summary annual
reports, and summary plan descriptions) have been timely filed and/or
distributed in accordance with the applicable requirements of ERISA and the Code
with respect to each U.S. Employee Plan. The requirements of COBRA have been met
with respect to each U.S. Employee Plan and any employee benefit plan, program,
or arrangement maintained by a Plan Affiliate that is an "employee welfare
benefit plan" subject to COBRA.
(i) Except as has not resulted in and will not result in,
either individually or in the aggregate, a Liability to the Acquired Companies
in excess of $19,166 or an award of non-monetary relief or penalty, all
contributions and premium payments (including all employer contributions and
employee salary reduction contributions) that are due have been made within the
time periods prescribed by ERISA and the Code to each U.S. Employee Plan and all
contributions and premium payments for any period ending on or before the
Closing Date that are not yet due have been made to each U.S. Employee Plan or
accrued in accordance with the past custom and practice of the Acquired
Companies.
(j) Except as has not resulted in and will not result in,
either individually or in the aggregate, a Liability to the Acquired Companies
in excess of $19,166 or an award of non-monetary relief or penalty, each Foreign
Plan has been maintained, funded and administered in compliance with its terms,
applicable collective bargaining agreements, and the requirements of applicable
laws. Except as has not resulted in and will not result in, either individually
or in the aggregate, a Liability to the Acquired Companies in excess of $19,166
or an award of non-monetary relief or penalty, no Foreign Plan has any unfunded
or underfunded Liabilities.
18
3.21 Environmental, Health and Safety Matters. Except as set forth in
SCHEDULE 3.21:
(a) (i) No Hazardous Materials are present on, in or under the
Real Property, other than in compliance with Environmental, Health and Safety
Requirements and as would not result in Liability of any of the Acquired
Companies pursuant to any Environmental, Health and Safety Requirement, and (ii)
no release, spill or discharge of any Hazardous Material have occurred on, in or
under the Real Properties or at any other location which would require
reporting, investigation or remediation by the Acquired Companies or would give
rise to any Liabilities or investigatory, remedial or corrective obligations
under any Environmental, Health and Safety Requirement.
(b) The Acquired Companies are and have been during the five
year period preceding the date of this Agreement in compliance with all
Environmental, Health and Safety Requirements.
(c) The Acquired Companies have not received any notice of
violation or notice of any Liability or to the Seller's Knowledge are the
subject of any investigation or inquiry arising under Environmental, Health and
Safety Requirements, including any investigatory, remedial or corrective
obligation, relating to the Acquired Companies or the Real Property.
(d) None of the following exists at any of the Real Property:
(i) underground storage tanks; (ii) groundwater monitoring wells; or (iii)
landfills, surface impoundments, or disposal areas.
(e) None of the Acquired Companies nor any of their respective
predecessors or Affiliates have treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released, or exposed any
person to, any substance, including without limitation any Hazardous Materials,
or owned or operated any property or facility (and no property or facility owned
or operated by any of the Acquired Companies is contaminated by any Hazardous
Materials) so as to give rise to any current or future Liabilities of any of the
Acquired Companies pursuant to any Environmental, Health and Safety
Requirements.
(f) The Acquired Companies have not assumed, undertaken, or
otherwise become subject to any Liability, including without limitation any
obligation for investigatory, corrective or remedial action, of any other person
relating to Environmental, Health and Safety Requirements.
(g) The Acquired Companies have not manufactured, sold,
marketed, installed or distributed products or items containing asbestos, have
no Liability (contingent or otherwise) with respect to the presence or alleged
presence of asbestos or asbestos-containing in any product or item or at or upon
any property or facility.
(h) The Seller has furnished to the Buyer all environmental
audits, reports and other material environmental documents relating to the
Acquired Companies' past or current properties, facilities or operations which
are in the Seller's possession or under the Seller's reasonable control.
3.22 Labor Matters. No current officer or management-level employee of
any of the Acquired Companies has provided written notice of termination of
employment with any of the
19
Acquired Companies, and to Seller's Knowledge, no such officer or employee has
any plans to terminate his or her employment relationship with the Acquired
Companies. Except as set forth on SCHEDULE 3.22, there is no, and within the
three (3) year period prior to the date hereof, none of the Acquired Companies
has experienced any, strike, labor dispute, allegation, charge, grievance or
complaint of unfair labor practice, employment discrimination that has resulted
in or could result in, either individually or in the aggregate, a Liability to
the Acquired Companies in excess of $19,166 or a material award of non-monetary
relief or penalty or, to the Seller's Knowledge, union organizational activity;
nor, to the Seller's Knowledge, is any such action threatened against any of the
Acquired Companies. None of the Acquired Companies is a party to or bound by any
collective bargaining agreement and, to the Seller's Knowledge, there is no
organizational effort presently being made on behalf of any labor union with
respect to the Business. Except as set forth on SCHEDULE 3.22, within the past
three (3) years, no Acquired Company has implemented any plant closing or layoff
of employees that could implicate the Worker Adjustment and Retraining
Notification Act of 1988, as amended, or any similar foreign, state or local
Law.
3.23 Customers and Suppliers. SCHEDULE 3.23 sets forth a list of the
Acquired Companies' top ten (10) customers and suppliers (determined by the
amount of total purchases or sales, as applicable, during the twelve months
ended as of January 31, 2004 and January 31, 2005). In the last twelve (12)
months, no customer or supplier listed on SCHEDULE 3.23 has canceled or
otherwise terminated its relationship or, to the Seller's Knowledge, taken any
action (or omitted to take any action as required under the terms of a contract)
that is reasonably likely to have a material adverse effect on its relationship
with any of the Acquired Companies, or threatened in writing to do any of the
foregoing. Except as set forth on SCHEDULE 3.23, none of the Acquired Companies
has received a written notice that any such customer or supplier listed on
SCHEDULE 3.23 intends to cancel or otherwise materially modify its relationship
with any of the Acquired Companies. To the Seller's Knowledge, except as set
forth on SCHEDULE 3.23, none of the Acquired Companies has been notified,
whether in writing or orally, at any time during the past twelve (12) months
that any of the customers listed on SCHEDULE 3.23 intends to materially reduce
the aggregate volume of products it purchases from the Acquired Companies or
cancel or otherwise terminate its relationship with the Acquired Companies. The
Seller has no knowledge (which includes the knowledge of Ari A. Chaney and
Robert L. Carter) of any reason that the email attached hereto as EXHIBIT B from
Mike Ioerger of Caterpillar, Inc. does not reflect the intent of Caterpillar,
Inc. with respect to Caterpillar's purchase of engine harnesses from the
Acquired Companies.
3.24 Governmental Approvals and Filings. Except as required by the HSR
Act, no Consent or filing with or notice to any Governmental Authority is
required to be obtained or delivered by the Seller or any Acquired Company in
connection with the execution, delivery and performance by any of them of this
Agreement and the other Transaction Agreements to which any of them is a party.
3.25 Brokers. Except as set forth on SCHEDULE 3.25, no broker, finder
or agent is entitled to, and no Acquired Company has or will have any Liability
for, any brokerage fees, finder's fees or commissions in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller or any of the Acquired Companies.
20
3.26 Transactions with Affiliates. Except as set forth on SCHEDULE 3.26
and except for normal advances to employees consistent with past practices and
payment of compensation for employment to employees consistent with past
practices, no Acquired Company has purchased, acquired or leased any property or
services from, or sold, transferred or leased any property or services to, or
loaned or advanced money to, or borrowed any money from or entered into or been
subject to any management, consulting or Contract or other transaction with, the
Seller, any Member or any employee, officer, director, shareholder or other
Affiliate of any Acquired Company or any individual related by marriage or
adoption to any such individual or any entity in which any such Person owns any
beneficial interest (collectively, the "INSIDERS").
3.27 Indebtedness. SCHEDULE 3.27 is a correct and complete list of the
Acquired Companies' outstanding Indebtedness as of the date hereof.
3.28 Undisclosed Liabilities. No Acquired Company has any Liability
except (a) Liabilities under the Material Contracts set forth in SCHEDULE 3.9 or
the Intellectual Property Licenses set forth in SCHEDULE 3.14 or under Contracts
which are not required to be disclosed thereon, (b) Liabilities reflected on the
face of the Latest Balance Sheet, (c) Liabilities that are included as "Current
Liabilities" in the Closing Date Net Working Capital and (d) Liabilities
disclosed on SCHEDULE 3.28 or any other Schedule attached hereto, in each case,
none of which is a Liability for breach of contract, breach of warranty, tort or
infringement or a claim or lawsuit or an environmental Liability.
3.29 Inventory. All Inventory of the Acquired Companies as of the date
hereof and as of the Closing Date, whether or not reflected on the Financial
Statements or the accounting records of the Company, consists of a quantity and
quality useable and saleable in the ordinary course of business consistent with
past customs and practice without discount, subject to any applicable reserves
therefor reflected on the Latest Balance Sheet.
3.30 Accounts Receivable. All accounts receivable of the Acquired
Companies as of the date hereof and as of the Closing Date that are reflected on
the Latest Balance Sheet or on the accounting records of the Acquired Companies
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business consistent with past
customs and practice subject to no setoffs or counterclaims, net of the reserves
for bad debts reflected in the Latest Balance Sheet.
3.31 Product Warranty; Product Liability.
(a) All products and goods developed, sold, licensed or
delivered by the Acquired Companies and all services rendered by the Acquired
Companies in the five (5) year period prior to the date hereof have been in
conformity with all applicable contractual commitments, other than to the extent
otherwise waived or cured, and all applicable express and implied warranties and
there are no Liabilities of the Acquired Companies with respect thereto except
for any Liability to the extent (i) the Acquired Companies are insured for
Losses relating to such Liability under insurance policies maintained by or for
the benefit of by the Acquired Companies, (ii) specifically reserved for on a
dollar-for-dollar basis on the Closing Date Balance Sheet, or (iii) the Acquired
Companies would have been insured for Losses relating to such Liability under
the insurance policies maintained by or for the benefit of the Acquired
21
Companies as of the Closing Date. With respect to products developed, sold,
licensed or delivered by the Acquired Companies and services rendered by the
Acquired Companies, the Acquired Companies have not given any guaranty, warranty
or other indemnity beyond the applicable standard terms and conditions of such
sale, license or service. The Acquired Companies have not been notified of any
claims for (and to the Sellers' Knowledge, no claims have been threatened for)
any extraordinary product returns, extraordinary warranty obligations or product
services relating to any of its products or services.
(b) Except as set forth on SCHEDULE 3.31, since January 1,
2000 there have been no product recalls, withdrawals or seizures with respect to
any products developed, sold, licensed or delivered by the Acquired Companies or
with respect to any services rendered by the Acquired Companies.
(c) The Acquired Companies have no Liability arising out of
any injury to individuals or property as a result of the ownership, possession,
or use of any product that has been manufactured, sold, leased, or delivered by
the Acquired Companies prior to the Closing Date, except for any Liability to
the extent (i) the Acquired Companies are fully insured for Losses relating to
such Liability under insurance policies maintained by or for the benefit of the
Acquired Companies, or (ii) the Acquired Companies would have been insured for
Losses relating to such Liability under the insurance policies maintained by or
for the benefit of the Acquired Companies as of the Closing Date.
3.32 Closing Date. All of the representations and warranties of the
Seller contained in this ARTICLE III and elsewhere in this Agreement and all
information delivered in any schedule, attachment or exhibit hereto or in any
writing delivered to the Buyer are true and correct on the date of this
Agreement and will be true and correct on the Closing Date, except to the extent
that the Seller or the Seller Representative Committee, on behalf of the Seller,
has advised the Buyer otherwise in writing prior to the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
4.1 Organization and Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware.
4.2 Authorization; Enforceability. The Buyer has the requisite entity
power and authority to execute and deliver the Transaction Agreements to which
it is a party, to perform its obligations under the Transaction Agreements to
which it is a party, and to the consummate transactions contemplated by the
Transaction Agreements to which it is a party. The board of directors of the
Buyer has duly approved this Agreement and all other Transaction Agreements to
which the Buyer is a party and has duly authorized the execution and delivery of
this Agreement and all other Transaction Agreements to which the Buyer is a
party and the consummation of the transactions contemplated hereby and thereby.
No other corporate or stockholder proceedings on the part of the Buyer are
necessary to approve and authorize the
22
execution and delivery of this Agreement or the other Transaction Agreements to
which the Buyer is party and the consummation of the transactions contemplated
hereby and thereby. This Agreement and all other Transaction Agreements to which
the Buyer is a party have been duly executed and delivered by the Buyer and,
assuming the due authorization, execution and delivery by the other Parties
hereto and thereto, will constitute, upon such execution and delivery in each
case thereof, legal, valid and binding obligations of the Buyer, enforceable in
accordance with their terms and conditions, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting the enforcement of creditors rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in Law or equity).
4.3 No Violation. Except as set forth on SCHEDULE 4.3, neither the
execution and delivery of this Agreement or any other Transaction Agreement by
the Buyer, nor the performance by the Buyer of the transactions contemplated
hereby or thereby does or will (a) constitute a default or violation under the
Organizational Documents of the Buyer, or (b) to the Buyer's knowledge, result
in a breach of or default, give rise to any right of termination, cancellation
or acceleration, or require any Consent under any of the terms, conditions or
provisions of any Contract, License, agreement, lease or other instrument or
obligation to which the Buyer is a party or bound or affected, or (c) conflict
with or violate any Laws, judgments, orders or decrees applicable to the Buyer
or by which any of its properties or assets is bound, except, with respect to
clauses (b) and (c), for those defaults and breaches which could not result in,
either individually or, in the case of a series of related defaults or breaches,
in the aggregate, a Liability to the Buyer in excess of $19,166.
4.4 Investment Representation. The Buyer is purchasing the Shares for
its own account with the present intention of holding such securities for
investment purposes and not with a view to or for sale in connection with any
public distribution of such securities in violation of any Federal or state
securities Laws. The Buyer is an "accredited investor" as defined in Regulation
D promulgated by the Securities and Exchange Commission under the Securities
Act. The Buyer acknowledges that the Shares have not been registered under the
Securities Act or the Exchange Act or any state or foreign securities Laws and
that the Shares may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of unless such sale, transfer, offer, pledge,
hypothecation or other disposition is pursuant to the terms of an effective
registration statement under the Securities Act and are registered under any
applicable state or foreign securities Laws or pursuant to an exemption from
registration under the Securities Act or the Exchange Act and any applicable
state or foreign securities Laws.
4.5 Availability of Funds. The Buyer has sufficient immediately
available funds, in cash, to pay the Purchase Price and to pay any other amounts
required to be paid at Closing under this Agreement by the Buyer, together with
all fees and expenses of the Buyer, and to effect the transactions contemplated
by this Agreement, all without any third-party consent or approval required
(except for those consents and approvals set forth on SCHEDULE 4.3 and SCHEDULE
4.7 and those required by the HSR Act).
4.6 Litigation. There are no suits, actions, proceedings,
investigations, judgments, claims or orders pending, or to the Buyer's
knowledge, threatened, against the Buyer, at law or at equity, nor is the Buyer
subject to any judgment, order or decree of any court or Governmental
23
Authority which, in each case, would seek to prevent any of the transactions
contemplated by this Agreement.
4.7 Governmental Approvals and Filings. Except as required by the HSR
Act or as set forth on SCHEDULE 4.7, no Consent or filing with or notice to any
Governmental Authority is required to be obtained or delivered by the Buyer in
connection with the execution, delivery and performance by Buyer of this
Agreement and the other Transaction Agreements to which the Buyer is a party
4.8 Brokers. No broker, finder or agent is entitled to any brokerage
fees, finder's fees or commissions in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Buyer.
4.9 Closing Date. All of the representations and warranties of the
Buyer contained in this ARTICLE IV and elsewhere in this Agreement and all
information delivered in any schedule, attachment or exhibit hereto or in any
writing delivered to the Seller are true and correct on the date of this
Agreement and will be true and correct on the Closing Date, except to the extent
that the Buyer has advised the Seller Representative Committee or the Seller
otherwise in writing prior to the Closing.
ARTICLE V
COVENANTS OF THE SELLER
5.1 Conduct of Business. Except as contemplated by this Agreement, set
forth on SCHEDULE 5.1 or as otherwise consented to in writing by the Buyer, from
the date hereof through the Closing, the Seller covenants and agrees that it
will cause each Acquired Company to (and in the case of SECTIONS 5.1(i), the
Seller also shall):
(a) not (i) increase in any manner the compensation of any of
its employees (except in accordance with pre-existing contractual obligations
under Material Contract set forth on SCHEDULE 3.9), or enter into any new bonus
or incentive agreement or arrangement with any of its employees, (ii) enter into
any new employment, severance, consulting, or other compensation agreement with
any of its existing employees, (iii) amend or enter into an Employee Plan
(except as required by Law), or (iv) make or agree to make any bonus or profit
sharing payments to any employee;
(b) subject to the terms and conditions of this Agreement, use
Reasonable Efforts to keep available the services of their present employees and
preserve the goodwill, reputation and present relationships of the Business with
suppliers, customers, licensors and others having business relations with them;
(c) conduct the Business in the ordinary course of business in
substantially the same manner as heretofore conducted, consistent with past
practices, and use Reasonable Efforts to preserve the value of the Business
(provided that the Seller may cause the Company to obtain and fully fund (prior
to Closing) a tail insurance policy to provide director and officer liability
insurance coverage with respect to pre-Closing periods for the individuals who
were officers and directors of the Acquired Companies prior to the Closing (the
"TAIL POLICY"));
24
(d) not issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of capital stock of any class or other
Equity Interests of, or any securities convertible into, or any rights,
warrants, calls, subscriptions or options to acquire, any such shares, Equity
Interests, or convertible securities;
(e) not amend any of their Organizational Documents;
(f) not sell, lease, license, encumber or otherwise dispose
of, or agree to sell, lease, license, encumber or otherwise dispose of, any of
its assets (having a replacement cost or fair market value in excess of $19,166
in the aggregate), except the sale of inventory and product in the ordinary
course of business consistent with past custom and practices to unaffiliated
third Persons on an arm's length basis;
(g) not incur any Indebtedness, or guarantee any such
Indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or guarantee any debt securities of
others;
(h) not make or change any Tax election, adopt or change any
accounting method, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax that would
materially effect the Tax Liability of the Acquired Companies for any taxable
period (or portion thereof) beginning after the Closing Date;
(i) promptly (once the Seller or any Acquired Company obtains
knowledge thereof) inform the Buyer in writing of any breach of the
representations and warranties contained in ARTICLE III hereof or any breach of
any covenant hereunder by the Seller (including any breach arising from any
matter which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in any Schedule
hereto or which is necessary to correct any information in any such Schedule
which has been rendered inaccurate by an event occurring after the date hereof);
(j) comply with all material legal requirements and
contractual Liabilities applicable to the operations and business of the
Acquired Companies and timely pay all applicable Taxes when due and payable;
(k) not to, or not to agree to, offer any discounts on any of
its products or any promotions, rebates, coupons or special offers with respect
to any of its products or services with terms or conditions that are outside of
the ordinary course of business consistent with past practice;
(l) not to, or not to agree to, change any of the terms and
conditions with respect to the pricing of any of its products (including,
without limitation, any terms and conditions that are ancillary to, or otherwise
affect, the aggregate price paid for any of its products) that are outside of
the ordinary course of business consistent with past practice;
25
(m) not take any action (or agree or commit to take any
action) that, if taken prior to the date of this Agreement, would require
disclosure under SECTION 3.17; or
5.2 Filings; Consents; Etc. The Seller shall use Reasonable Efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable in compliance with applicable Laws to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the Seller shall, and shall cause the Acquired Company to, if
applicable, give all notices and make all required filings with or applications
to Governmental Authorities required to be made by the Seller or any Acquired
Company, and use Reasonable Efforts to obtain all Consents of all third parties,
including Governmental Authorities, that are necessary for the parties to
consummate the transactions contemplated hereby. To the extent any documentation
is prepared by the Seller or the Acquired Companies or their counsel related to
such Consents, the Seller will provide copies of all documentation to the Buyer
for its review and approval prior to submitting such documentation to the
appropriate Persons. In addition, the Seller agrees to use Reasonable Efforts to
(a) oppose, lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, and (b) cause the conditions set forth in SECTION 7.1 and
SECTION 7.2 to be satisfied and to consummate the transactions contemplated
hereby.
5.3 Schedules Update. Prior to the Closing, the Seller may supplement
or amend its Schedules to this Agreement if the Seller becomes aware of any
matter heretofore existing or hereafter arising which, if existing, occurring or
known at the date of this Agreement, would have been required to be set forth or
described in such Schedules or which is otherwise necessary to correct or update
any information in such Schedules which has been rendered inaccurate thereby.
For purposes of determining the accuracy of the representations and warranties
of the Seller contained in ARTICLE III or elsewhere herein for purposes of
determining satisfaction of the conditions set forth in SECTION 7.2(a), the
Schedules delivered by the Seller shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude any information contained in any subsequent supplement or amendment
thereto and such supplements and updates (whether pursuant to this SECTION 5.3
or pursuant to SECTION 5.1(i) above) shall not be deemed to cure any breach of
any representation or warranty made by the Seller hereunder or any breach of the
covenants of the Seller hereunder; provided, however, in the event the Buyer
shall close the transactions contemplated hereby, the Buyer will be deemed to
have waived any and all breaches of representations, warranties and covenants of
this Agreement disclosed pursuant to the supplements or amendments to the
Schedules provided pursuant to this SECTION 5.3 or SECTION 5.1(i) above to the
extent the information disclosed in any such supplement or update relates to
events or facts that arose subsequent to the date hereof and the Buyer
accordingly shall not be entitled to indemnification pursuant to ARTICLE X for
any such matters.
5.4 Regulatory Filings. The Seller shall, and shall cause its
Affiliates to, as applicable, (a) make any filings required of any of them or
any of their respective Affiliates under the HSR Act and other antitrust or
anti-competition Laws applicable to the transactions contemplated hereby as
promptly as practicable following the date hereof, (b) comply at the earliest
reasonable practicable date with any request under the HSR Act or other
antitrust or anti-competition Laws for additional information, documents, or
other materials received by each of
26
them or any of their respective Affiliates from the Federal Trade Commission
(the "FTC"), or any other Governmental Authority in respect of such filings or
such transactions, and (c) cooperate with the Buyer in connection with any such
filing or application (including, to the extent permitted by applicable Law,
providing copies of all such documents to the non-filing parties (including, in
any event, the Buyer) prior to filing and considering all reasonable additions,
deletions or changes suggested in connection therewith) and in connection with
resolving any investigation or other inquiry of any of the FTC, or other
Governmental Authority under any antitrust or anti-competition Laws with respect
to any such filing or such transaction. The Seller shall furnish to the Buyer
all information required for any application or other filing to be made pursuant
to any applicable Law in connection with the transactions contemplated by this
Agreement. The Seller shall promptly inform the Buyer of any oral communication
with, and provide copies of written communications with, any Governmental
Authority regarding any such filings or any such transaction.
5.5 Exclusivity.
(a) The Seller agrees that, commencing on the date of this
Agreement and until the earlier of the Closing or the date on which this
Agreement has been terminated by its terms (the "EXCLUSIVITY PERIOD"), the Buyer
shall have the exclusive right to consummate the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, the Seller
agrees that, unless this Agreement is terminated by its terms, the Seller shall
not (and the Seller shall not cause or permit any Affiliate (including any
Member), Insider, agent or representative or any other Person acting on its
behalf to), directly or indirectly, through any officer, director, shareholder,
member, partner, Affiliate, employee, agent, investment banker, attorney,
accountant or other representative or otherwise, (i) solicit, initiate or
encourage the submission of any proposal or offer (an "ACQUISITION PROPOSAL")
from any Person (including any of its officers, directors, partners, members,
shareholders, Affiliates, employees, agents and other representatives) relating
to any direct or indirect liquidation, dissolution, recapitalization of, merger
or consolidation with or into, or acquisition or purchase of all or any portion
of the Shares of, or any material asset of, or any capital stock or other Equity
Interest of, the Seller or any Acquired Company or any other similar
transactions or business combination involving the Seller or any Acquired
Company, or (ii) participate in any discussions or negotiations regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage
any effort or attempt by any other Person to do or seek to do any of the
foregoing.
(b) The Seller represents that it has suspended (and has
caused its officers, directors, shareholders, partners, Affiliates (including
each Member), employees, agents, investment bankers, attorneys, accountants or
other representatives to suspend), and shall cease for the duration of the
Exclusivity Period, all contacts, discussions and negotiations with third
parties (other than the Buyer and its Affiliates, agents and representatives)
regarding any Acquisition Proposal. The Seller shall promptly notify the Buyer
if any such Acquisition Proposal, or any inquiry or contact with any Person with
respect thereto (including any Person with whom the Seller or any Acquired
Company has already had such discussions), is made.
5.6 Access to Books and Records. From the date hereof until the Closing
Date, the Seller shall provide the Buyer and it's lenders and accounting, legal,
and other authorized
27
representatives ("BUYER'S REPRESENTATIVES") with full access at all reasonable
times and upon reasonable notice to the offices, properties, personnel, books
and records, consultants, attorneys, accountants of the Acquired Companies in
order for the Buyer to have the opportunity to make such investigation as it
shall reasonably desire to make of the affairs of the Acquired Companies;
provided, however, that the activities of the Buyer and Buyer's Representatives
shall be conducted in a manner as not to interfere unreasonably with the
operation of the business of the Company and its Subsidiaries. In addition, the
Buyer shall, upon reasonable advance notice and pursuant to procedures to be
agreed upon between the Buyer and the Seller Representative Committee, be
allowed access to the key customers and suppliers of the Acquired Companies for
purposes of making its investigation into the affairs of the Business.
5.7 Non-Solicitation; Confidentiality.
(a) Non-Solicitation. In consideration of the Buyer's
agreement to enter into this Agreement, and as a condition thereto, from and
after the Closing, the Seller covenants and agrees that during the period
beginning on the Closing Date and ending on the third anniversary of the Closing
Date (the "NON-SOLICIT PERIOD"), the Seller (i) will not, directly or
indirectly, contact or solicit for the purpose of offering employment to or
hiring (whether as an employee, consultant, agent, independent contractor or
otherwise) or actually hire any Person employed by the Company or any of its
Subsidiaries at any time prior to the Closing Date or during the Non-Solicit
Period, without the prior written consent of the Buyer, and (ii) will not induce
or attempt to induce any customer or other business relation of any Acquired
Company into any business relationship which might materially harm any Acquired
Company or disparage the Buyer, any Acquired Company or any of their Affiliates.
The Buyer acknowledges that these obligations are unique to the Seller and that
the Members will not assume the obligations of Seller under this SECTION 5.7(a)
upon any liquidation of the Seller.
(b) Confidentiality and Non-Disclosure. From and after the
Closing, the Seller shall (and shall cause its Affiliates to) treat and hold as
confidential any information concerning the business and affairs of the Acquired
Companies and/or the Business that is not already generally available to the
public ("CONFIDENTIAL INFORMATION"), refrain from using any of the Confidential
Information except in connection with this Agreement and any of the other
Transaction Agreements. In the event that the Seller or any of its Affiliates
are requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, the Seller
shall notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the provisions
of this SECTION 5.7(b). If, in the absence of a protective order or the receipt
of a waiver hereunder, such Person is, on the written advice of counsel, legally
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, such Person may disclose the Confidential Information to
the tribunal; provided that such disclosing Person shall use its best efforts to
obtain, at the request of the Buyer, an order or other assurance that
confidential treatment shall be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate.
(c) Non-disclosure. Subject to SECTION 12.17, the Parties
shall keep confidential the subject matter described herein and the fact that
negotiations are taking place
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until the content and timing of a public announcement are mutually agreed upon
or until the Closing, whichever is earlier, and, in such case such public
announcement shall be made only pursuant to SECTION 12.17.
(d) Enforcement. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this SECTION 5.7 is invalid
or unenforceable, the Parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(e) Remedy. The Seller acknowledges and agrees that in the
event of a breach by the Seller (or any of its Affiliates, as applicable) of any
of the provisions of this SECTION 5.7, monetary damages will not constitute a
sufficient remedy. Consequently, in the event of any such breach, the Buyer
and/or its Affiliates, successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof,
in each case without the requirement of posting a bond or proving actual
damages.
5.8 Real Estate Survey. The Seller shall use Reasonable Efforts, at its
expense, to obtain as soon as practicable an ALTA survey from a national survey
company reasonably acceptable to the Buyer with respect to each Owned Real
Property.
ARTICLE VI
COVENANTS OF THE BUYER
6.1 Filings; Consents; Etc. The Buyer shall use Reasonable Efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable in compliance with applicable Laws to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the Buyer shall give all notices and make all material required
filings with or applications to Governmental Authorities required to be made by
the Buyer, and use Reasonable Efforts to obtain all material Consents of all
third parties required to be obtained by the Buyer, including Governmental
Authorities, necessary for the Parties to consummate the transactions
contemplated herein. In addition, the Buyer agrees to use Reasonable Efforts to
cooperate with the Seller in connection with the foregoing, including using
Reasonable Efforts to (a) oppose, lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby, and (b) to cause the conditions
set forth in SECTION 7.1 and SECTION 7.3 to be satisfied and to consummate the
transactions contemplated herein.
6.2 Director and Officer Liability and Indemnification. (a) For a
period of six (6) years after the Closing, the Buyer shall not, and shall not
permit any of the Acquired Companies to,
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amend, alter, repeal or modify any provision in any of the Acquired Companies'
Organizational Documents relating to the exculpation or indemnification of any
officers and directors in any way that diminishes or adversely affects in a
material manner the exculpation or indemnification provided therein (unless
required by Law), it being the intent of the parties that the officers and
directors of any of the Acquired Companies who were officers and directors prior
to the Closing shall continue to be entitled to such exculpation and
indemnification to the full extent provided for under applicable Law (subject to
the terms and provision of this Agreement, including SECTION 10.11 hereof).
6.3 Employee Benefits. During the period from the Closing Date through
December 31, 2005, the Buyer shall cause the Acquired Companies to provide
employees of the Acquired Companies as of the Closing Date with benefits,
benefit plans and programs (other than stock option, incentive or other equity
programs) that in the aggregate are, in the Buyer's discretion, either (a)
substantially comparable to those in effect immediately prior to the Closing
Date, or (b) substantially comparable to those benefits, benefit plans and
programs that are provided to the Buyer's other similarly situated employees.
6.4 Regulatory Filing. The Buyer shall (a) make any filings required by
the Buyer or its Affiliates under the HSR Act and other antitrust or
anti-competition Laws applicable to the transactions contemplated hereby as
promptly as practicable following the date hereof, (b) comply at the earliest
reasonable practicable date with any request under the HSR Act or other
antitrust or anti-competition Laws for additional information, documents, or
other materials received by the Buyer from the FTC, or any other Governmental
Authority in respect of such filings or such transactions, and (c) cooperate
with the Acquired Companies in connection with any such filing (including, to
the extent permitted by applicable Law, providing copies of all such documents
to the non-filing parties prior to filing and considering all reasonable
additions, deletions or changes suggested in connection therewith) and in
connection with resolving any investigation or other inquiry of any of the FTC
or other Governmental Authority under any antitrust or anti-competition Laws
with respect to any such filing or any such transaction. Except as required by
applicable Law or regulation, the Buyer shall furnish to the Acquired Companies
all information required for any application or other filing to be made pursuant
to any applicable Law in connection with the transactions contemplated by this
Agreement. The Buyer shall promptly inform the Seller of any oral communication
with, and provide copies of written communications with, any Governmental
Authority regarding any such filings or any such transaction.
ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions Precedent to Each Party's Obligations. The respective
obligations of each Party to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived in writing at the
option of the affected Party:
(a) No Legal Prohibition. No statute, rule, regulation,
ruling, consent, decree, judgment, injunction or order shall be enacted,
promulgated, entered or enforced by any court or
30
Governmental Authority which would prohibit the consummation of the transactions
contemplated hereby.
(b) No Injunction. Such Party shall not be prohibited by any
order, ruling, consent, decree, judgment or injunction of a court or regulatory
agency of competent jurisdiction from consummating the transactions contemplated
hereby.
(c) HSR Act. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated.
(d) Escrow Agreement. The Escrow Agent shall have duly
executed the Escrow Agreement.
7.2 Conditions Precedent to Obligations of the Buyer. The obligations
of the Buyer under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
of the following conditions, any one or more of which may be waived in writing
at the option of the Buyer:
(a) Accuracy of Representations and Warranties; Performance of
Covenants. The representations and warranties contained in ARTICLE III shall be
true and correct in all material respects (except those which are qualified by a
"materiality" or Material Adverse Effect qualification or exception contained
therein, which shall be true and correct in all respects) as of the Closing with
the same force and effect as though made on and as of the Closing (other than
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need
only be true and correct as of such date or with respect to such period),
without giving effect to any disclosure made to the Buyer pursuant to SECTION
5.1(i) or SECTION 5.3. The Seller and the Acquired Companies shall have
performed and complied with, in all material respects, all covenants and
agreements required by this Agreement to be performed or complied with by them
on or prior to the Closing, without giving effect to any disclosure made to the
Buyer pursuant to SECTION 5.1(i) or SECTION 5.3. The Buyer shall receive at the
Closing a certificate, dated as of the Closing Date and executed by an executive
officer of the Seller certifying the fulfillment of the conditions set forth in
this SECTION 7.2(a).
(b) No Material Adverse Change. No change, effect, event,
occurrence, state of facts or development shall have occurred since the date of
the Latest Audited Balance Sheet which individually or in the aggregate
constitutes a Material Adverse Change.
(c) Third Party Consents. All consents by third parties
(including Governmental Authorities) that are required for the transfer of the
Shares to the Buyer or that are listed as required on SCHEDULE 7.2(c) for the
consummation of the transactions contemplated hereby will have been obtained on
terms reasonably satisfactory to the Buyer.
(d) Closing Deliverables. The Seller, the Seller
Representative Committee (on behalf of the Seller) and the Members, as
applicable, shall have delivered to the Buyer each of the following:
(i) the Escrow Agreement and each other Transaction
Agreement to which any such Person is a party, duly executed
by each such Party;
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(ii) all minute books, stock books, ledgers and
registers, if any, and other records relating to the
organization, ownership and maintenance of the Acquired
Companies, if not already located on the premises of the
Acquired Companies.
(iii) a copy of the certificate of incorporation (or
equivalent organizational documents) of each Acquired Company,
certified by the Secretary of State of the jurisdiction of its
incorporation or formation (or similar certifying Governmental
Authority).
(iv) certified copies of the resolutions duly adopted
by the Seller's board of managers or similar governing body
and members authorizing the execution, delivery and
performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions
contemplated hereby and thereby.
(v) at the Seller's expense, lien waivers with
respect to the Leased Real Property listed on SCHEDULE 7.2(d),
in each case in form and substance reasonably satisfactory to
the Buyer.
(vi) pay-off letters from all lenders with respect to
outstanding Indebtedness of the Acquired Companies, together
with releases of all Liens associated with such Indebtedness
or an agreement to so release such Liens upon payment of such
Indebtedness.
(vii) such other documents or instruments required to
be delivered at Closing pursuant to SECTION 8.2 hereof.
(e) Non-Competition and Severance Agreement. Each individual
set forth on SCHEDULE 7.2(e) shall have executed and delivered to the Buyer the
Non-Competition and Severance Agreement in form and substance attached as
EXHIBIT C attached hereto (collectively, the "NON-COMPETITION AND SEVERANCE
AGREEMENTS") and each Non-Competition and Severance Agreement shall be in full
force and effect as of the Closing.
(f) Seller Representative Committee Agreement. The Seller,
each member of the Seller Representative Committee and each Member shall have
executed and delivered to Buyer the Seller Representative Committee Agreement,
attached hereto as EXHIBIT A and the Seller Representative Committee Agreement
shall be in full force and effect as of the Closing.
7.3 Conditions Precedent to Obligations of the Seller. The obligations
of the Seller under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
the following conditions, any one or more of which may be waived in writing at
the option of the Seller:
(a) Accuracy of Representations and Warranties; Performance of
Covenants. The representations and warranties contained in ARTICLE IV shall be
true and correct in all material respects (except those which are qualified by a
"materiality" or Material Adverse Effect qualification or exception contained
therein, which shall be true and correct in all respects) as of
32
the Closing with the same force and effect as though made on and as of the
Closing (other than those representations and warranties that address matters
only as of a particular date or only with respect to a specific period of time,
which need only be true and correct as of such date or with respect to such
period). The Buyer shall have performed and complied with, in all material
respects, all covenants and agreements required by this Agreement to be
performed or complied with by the Buyer on or prior to the Closing. The Seller
shall receive at the Closing a certificate dated as of the Closing Date and
executed by an executive officer of the Buyer, certifying the fulfillment of the
conditions set forth in this SECTION 7.3(a) with respect to the Buyer.
(b) Closing Deliverables. The Buyer shall have delivered to
the Seller each of the following:
(i) the Escrow Agreement and each other Transaction
Agreement to which the Buyer is a party, duly executed by the
Buyer.
(ii) certified copies of the resolutions duly adopted
by the Buyer's board of directors authorizing the execution,
delivery and performance of this Agreement and the other
agreements contemplated hereby, and the consummation of all
transactions contemplated hereby and thereby.
(iii) a copy of the certificate of incorporation of
the Buyer, certified by the Secretary of State of the State of
Delaware.
(iv) such other documents or instruments required to
be delivered by Buyer at Closing pursuant to SECTION 8.3
hereof.
ARTICLE VIII
CLOSING
8.1 Time and Place. The Closing shall take place at the offices of
Katten Muchin Rosenman, LLP, 525 West Monroe Street, Chicago, Illinois on the
date which is two (2) Business Days after the satisfaction or waiver in writing
of the conditions set forth in ARTICLE VII (other than those conditions that by
their terms shall be or must necessarily be satisfied at the Closing), or such
other date as the Buyer and the Seller mutually agree. The "CLOSING DATE" shall
be the date on which the Closing shall occur.
8.2 Deliveries by the Seller. At the Closing, the Seller shall deliver
or cause to be delivered to the Buyer:
(a) Stock Certificate(s). Certificate(s) representing the
Shares, duly endorsed in blank or accompanied by duly executed stock power(s)
transferring the Shares to the Buyer;
(b) Certificates. The certificates required by SECTION 7.2(a);
(c) Resignations. Resignations effective as of the Closing
Date of those directors and officers of the Acquired Companies as the Buyer may
request to resign;
33
(d) Good Standing Certificates. Certificates of good standing
with respect to the Acquired Companies and the Seller, issued by the Secretary
of State of the jurisdiction of formation of the Seller or such Acquired
Company, as applicable, and a certificate of good standing from each
jurisdiction in which such Acquired Company is duly qualified to transact
business, in each case, dated within fifteen days of the Closing Date;
(e) Seller Representative Committee Agreement. A copy of the
Seller Representative Committee Agreement, duly executed by each of the members
of the Seller Representative Committee, the Seller and a majority of the
Members;
(f) FIRPTA Affidavit. The Seller (or, if the Seller is a
disregarded entity for income Tax purposes, each direct or indirect owners of
the Seller who or that is not a disregarded entity for income Tax purposes)
shall deliver to the Buyer a non-foreign affidavit dated as of the Closing Date,
sworn under penalty of perjury and in form and substance required under the
Treasury Regulations issued pursuant to Section 1445 of the Code stating that
such Seller (or direct or indirect owner of the Seller, if applicable) is not a
"foreign person" as defined in Section 1445 of the Code; and
(g) Other Documents. Such other documents and instruments as
the Buyer or its counsel shall deem reasonably necessary to consummate the
transactions contemplated hereby.
8.3 Deliveries by the Buyer. The Buyer will deliver or cause to be
delivered to the Seller:
(a) The Purchase Price. Payment of the Purchase Price
(including delivery of the SRC Fund to the Seller Representative Committee and
the Escrow Funds to the Escrow Agent);
(b) The Buyer Certificates. The certificates required by
SECTION 7.3(a);
(c) Good Standing Certificate. Certificate of good standing
with respect to the Buyer, issued by the Secretary of State of the jurisdiction
of formation of the Buyer; and
(d) Other Documents. Such other documents and instruments as
the Seller or its counsel shall deem reasonably necessary to consummate the
transactions contemplated hereby.
ARTICLE IX
POST CLOSING COVENANTS
9.1 Tax Covenants.
(a) No Section 338 Election. The Parties agree that no
election will be made under Section 338 of the Code (or any comparable provision
of foreign, state or local Law) in respect of the transactions contemplated
under this Agreement.
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(b) Pre-Closing Returns. The Seller shall prepare, or cause to
be prepared, all income Tax Returns (including any application for a quick
refund) that are required to be filed by, or with respect to, the Acquired
Companies for taxable periods ending on or before the Closing Date which are not
due on or before the Closing Date (the "PRE-CLOSING RETURNS"). All Pre-Closing
Returns shall be prepared, and all elections with respect to such Pre-Closing
Returns shall be made in a manner that complies with applicable Law and
accurately reflects the Tax Liability of the Acquired Companies for the period
for which such Tax Return is to be filed, and the Seller shall, or shall cause,
a copy of each such Tax Return to be delivered to the Buyer no later than the
date that is forty-five (45) days before the date such Tax Return is required to
be filed (taking into account applicable extensions). The Buyer shall timely
file the Pre-Closing Returns and pay the Tax shown as due thereon; provided
that; the Seller shall pay the Buyer any income taxes due pursuant to any
Pre-Closing Return no later than five (5) days before the due date (including
extensions) for such Pre-Closing Return.
(c) Straddle Period Returns. The Buyer shall prepare and
timely file, or cause to be prepared or timely filed, all Tax Returns that are
required to be filed by, or with respect to, the Acquired Companies for all
taxable periods beginning on or before the Closing Date and ending after the
Closing Date (a "STRADDLE PERIOD RETURN") and pay the tax shown as due thereon.
All Straddle Period Returns shall be prepared, and all elections with respect to
such Straddle Period Returns shall be made in a manner that complies with
applicable Law and accurately reflects the Tax Liability of the Acquired
Companies for the period for which such Tax Return is to be filed. The Seller
shall pay the Buyer any income taxes due pursuant to any Straddle Period Return
that are allocated to the Seller pursuant to SECTION 9.1(e) no later than five
(5) days before the due date (including extensions) for such Straddle Period
Return.
(d) Post-Closing Actions. The Buyer shall not permit any of
the Acquired Companies' to take any action on the Closing Date outside of the
ordinary course of business that could increase the Seller's liability for Taxes
(including any liability of the Seller to indemnify the Buyer for Taxes pursuant
to this Agreement) and neither the Buyer nor any affiliate of the Buyer shall
(or shall cause or permit any of the Acquired Companies), unless required by
applicable law or pursuant to a closing agreement as defined in Section 7121 of
the Code (or any corresponding provision of foreign, state or local law), amend,
re-file or otherwise modify any Tax Return relating in whole or in part to any
of the Acquired Companies, with respect to any period (or portion thereof)
ending on or before the Closing Date or any Straddle Period Return, without the
prior written permission of the Seller Representative Committee, which
permission shall not be unreasonably withheld. The Seller shall be entitled to
retain, or receive reasonably prompt payment from the Buyer or any of the
Acquired Companies of, any refund or the benefit of any credit (when actually
realized) with respect to Taxes of the Acquired Companies (including, without
limitation, refunds and credits arising by reason of amended Tax Returns filed
after the Closing Date or otherwise) with respect to any Tax period (or portion
thereof) ending on or prior to the Closing Date (except to the extent such
refund or credit is attributable to the carryback of any net operating loss,
capital loss, credit, or similar tax attribute, arising in a taxable period (or
portion thereof) beginning after the Closing Date), actually received by the
Buyer or any of its Affiliates (including, without limitation, the Acquired
Companies). The Buyer and its Affiliates shall reasonably cooperate with the
Seller in obtaining any refund to which the Seller is entitled under this
Section.
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9.2 Tax Indemnification. Seller agrees to be responsible for and to
indemnify Buyer, Buyer's Affiliates, and the Acquired Companies and hold each of
them harmless from and against all Taxes (or the non-payment thereof) of the
Acquired Companies for all taxable periods ending on or before the Closing Date
and the period through the end of the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (as determined in accordance
with SECTION 9.1(e)); provided, however, that with respect to Taxes other than
income Taxes Seller shall be liable only to the extent such Taxes are in excess
of the amount, if any accrued for (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) in the
Closing Date Net Working Capital. Seller shall reimburse Buyer for any Taxes of
the Acquired Companies which are the responsibility of Sellers pursuant to this
SECTION 9.1(e) within ten (10) business days of the due date of the Taxes
payable.
(a) Computation of Tax Liabilities. To the extent permitted or
required, (i) the taxable year of each Acquired Company that includes the
Closing Date shall be treated as closing on (and including) the Closing Date,
and, notwithstanding the foregoing, (ii) all transactions not in the ordinary
course of business occurring after the Closing shall be reported on the Tax
Returns of the Buyer or its affiliates to the extent permitted or required.
(b) Cooperation and Records Retention. The Seller and the
Buyer shall (i) each provide the other, and the Buyer shall cause the Acquired
Companies to provide the Seller, with such assistance as may be reasonably
requested by any of them in connection with the preparation of any Tax Return,
audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes and (ii) each retain
and provide the other, and the Buyer shall cause the Acquired Companies to
retain and provide the Seller with, any records or other information that may be
relevant to such Tax Return, audit or examination, proceeding, or determination,
and (iii) each provide the other with any final determination of any such audit
or examination, proceeding, or determination that affects any amount required to
be shown on any Tax Return of the other or the Acquired Companies for any period
ending before, or including, the Closing Date. Without limiting the generality
of the foregoing, the Buyer shall retain, and shall cause the Acquired Companies
to retain, and the Seller shall retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all Tax Returns,
supporting work schedules, and other records or information that may be relevant
to such returns for all Tax periods or portions thereof ending before or
including the Closing Date and shall not destroy or otherwise dispose of any
such records without first providing the other party with a reasonable
opportunity to review and copy the same. Each party shall bear its own expenses
in complying with the foregoing provisions.
(c) Tax Proceedings. If, subsequent to the Closing, any Party
or their Affiliates receives notice of a Tax Proceeding with respect to any Tax
Return of any Acquired Company for periods or portions thereof beginning on or
prior to the Closing Date, then within fifteen (15) days after receipt of such
notice, the receiving Party shall notify the non-receiving Party of such notice.
The Seller shall have the right to control the conduct and resolution of such
Tax Proceeding, provided, however, that the Seller employs counsel reasonably
acceptable to the Buyer, and provided further that that if any of the issues
raised in such Tax Proceeding could reasonably be expected to have a material
adverse impact on Taxes of any of the Acquired Companies for a Tax period or
portion thereof beginning on or after the Closing Date (a "POST-CLOSING TAX
PERIOD"), then the Seller shall afford the Buyer the opportunity to control
jointly,
36
with each Party bearing its own expenses, the conduct and resolution of the
portion of such Tax Proceeding with respect to such issues which could
reasonably be expected to have a material adverse impact on Taxes of such
Acquired Company in any Post-Closing Tax Period. If the Seller shall have the
right to control the conduct and resolution of such Tax Proceeding but elects in
writing not to do so, then the Buyer shall have the right to control the conduct
and resolution of such Tax Proceeding, provided that the Buyer shall keep the
Seller informed of all developments on a timely basis and the Buyer shall not
resolve such Tax Proceeding in a manner that could reasonably be expected to
have an adverse impact on the Seller's indemnification obligations under this
Agreement without the Seller's written consent, which shall not be unreasonably
withheld. Each Party shall bear its own costs for participating in such Tax
Proceeding. "TAX PROCEEDING" means any audit, other administrative proceeding or
inquiry or judicial proceeding involving Taxes.
9.3 Further Assurances. At any time or from time to time from and after
the Closing Date, each of the Parties shall, at the request of the other Parties
hereto and at such requesting party's expense, execute and deliver any further
instruments or documents and take all such further actions as are reasonably
requested of it in order to consummate and make effective the transactions
contemplated by this Agreement.
9.4 Release of Escrow Funds. On the 15-month anniversary of the Closing
(the "RELEASE DATE"), the Parties shall direct the Escrow Agent to release to
the Seller Representative Committee (on behalf of the Seller) a portion of the
Escrow Funds equal to the excess, if any, of $3,830,000 plus the amount of
earnings on the Escrow Funds less the sum of (a) all amounts theretofore
distributed or disbursed by the Escrow Agent, and (b) the aggregate amount of
Losses specified in any then unresolved indemnification claims made by the Buyer
Indemnified Parties pursuant to ARTICLE X. To the extent that on the Release
Date, any amount has been reserved and withheld from distribution from the
Escrow Funds on such date on account of an unresolved claim for indemnification
and, subsequent to the Release Date, such claim is resolved, the Parties shall
immediately direct the Escrow Agent to release (i) to the Buyer Indemnified
Parties the amount of Losses, if any, due in respect of such claim as finally
determined, and (ii) to the Seller Representative Committee (on behalf of the
Seller) an amount equal to the excess, if any, of the amount theretofore
reserved and withheld from distribution in respect of such claim over the
payment, if any, made pursuant to the foregoing clause (i).
ARTICLE X
INDEMNIFICATION
10.1 Survival of the Seller's Representations and Warranties; Time
Limits on Indemnification Obligations. All representations and warranties of the
Seller, and all covenants and agreements of the Seller required to be performed
prior to Closing, contained in this Agreement shall survive the Closing
hereunder for a period of fifteen (15) months after the Closing Date; provided,
however, that (a) all covenants and agreements required to performed on or
following the Closing shall survive indefinitely, (b) the representations and
warranties set forth in SECTIONS 3.1, 3.2, 3.3, 3.4, 3.6, 3.8, 3.12, 3.13, 3.16,
3.25, 3.27 and 3.31 and 3.32 (with respect to claims relating to SECTIONS 3.1,
3.2, 3.3, 3.4, 3.6, 3.8, 3.12, 3.13, 3.16, 3.25, 3.27 and 3.31 only)
(collectively, the "FUNDAMENTAL SELLER REPRESENTATIONS") shall survive the
Closing Date until the date that is thirty (30) days after the applicable
statute of limitations, and (c) the
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representations and warranties set forth in SECTION 3.21 shall survive the
Closing Date until the three year anniversary of the Closing. The Seller shall
have no Liability under this ARTICLE X for a breach of any representation or
warranty or any covenant required to be performed prior to the Closing Date
unless the Seller Representative Committee or Seller is given notice from such
Buyer Indemnified Party asserting a claim on or before the expiration of the
applicable survival period relating to or giving rise to such claim as set forth
in the preceding sentence. Notwithstanding anything in this ARTICLE X to the
contrary, the foregoing limitations shall not apply in the event of any breach
by the Seller that constitutes fraud or intentional misrepresentation.
10.2 Survival of the Buyer's Representations and Warranties; Time
Limits on Indemnification Obligations. All of the representations and warranties
of the Buyer, and all covenants and agreements of the Buyer required to be
performed prior to Closing, contained in this Agreement shall survive the
Closing hereunder for a period of fifteen (15) months after the Closing Date;
provided, however, that (a) all covenants and agreements required to performed
on or following the Closing shall survive indefinitely and (b) the
representations and warranties set forth in SECTIONS 4.1, 4.2, 4.3, 4.6 and 4.8
and 4.9 (with respect to claims relating to SECTIONS 4.1, 4.2, 4.3, 4.6 and 4.8
only) (collectively, the "FUNDAMENTAL BUYER REPRESENTATIONS") shall survive the
Closing Date until the date that is thirty (30) days after the applicable
statute of limitations. The Buyer shall have no Liability under this ARTICLE X
for a breach of any representation or warranty or any covenant required to be
performed prior to the Closing Date unless the Buyer is given notice from the
Seller Representative Committee asserting a claim on or before the expiration of
the applicable survival period relating to or giving rise to such claim as set
forth in the preceding sentence. Notwithstanding anything in this ARTICLE X to
the contrary, the foregoing limitations shall not apply in the event of any
breach by the Buyer that constitutes fraud or intentional misrepresentation.
10.3 Indemnification by the Members. The Parties acknowledge and agree
that upon the dissolution or liquidation of the Seller after the Closing or if
Seller is at any time unable to or otherwise fails to promptly satisfy any of
its indemnity obligations SECTION 10.4 below (whether as a result of a
distribution of net proceeds from the transactions contemplated hereby or
otherwise), the Members shall indemnify, defend and save the Buyer Indemnified
Parties harmless from and against, and shall promptly pay to the Buyer
Indemnified Parties or reimburse the Buyer Indemnified Parties for, any and all
such Losses sustained or incurred by any such Buyer Indemnified Parties relating
to the Seller's obligations under SECTION 10.4 in accordance with the Members'
indemnity obligations under the terms and provisions of the Seller
Representative Committee Agreement.
10.4 Indemnification by the Seller Relating to the Acquired Companies.
From and after the Closing, the Seller shall indemnify and in accordance with
and subject to the limitations set forth in this ARTICLE X, indemnify, defend
and save the Buyer and each of its officers, directors, employees, stockholders,
Affiliates (including the Acquired Companies if the Closing occurs), agents,
representatives, successors and permitted assigns (each, a "BUYER INDEMNIFIED
PARTY"), harmless from and against, any and all Liabilities, obligations,
damages (including reasonably foreseeable indirect or consequential damages),
deficiencies, demands, claims, suits, actions, or causes of action, assessments,
losses, costs and expenses, whether or not arising out of third party claims
(including reasonable attorneys' fees) (hereinafter, a "LOSS" or the "LOSSES"),
38
sustained or incurred by any Buyer Indemnified Party, resulting from any breach
of or inaccuracy in any representation or warranty of the Seller contained in
this Agreement or any certificate delivered by or on behalf of the Seller
hereunder or any breach or nonfulfillment of any covenant or agreement made or
to be performed by the Seller pursuant to this Agreement or any certificate
delivered by or on behalf of the Seller hereunder (provided, however, that the
Buyer Indemnified Party shall have asserted its claim for indemnification in
writing with reasonable supporting details before the expiration of any
applicable survival period specified in SECTION 10.1). In addition,
notwithstanding anything to the contrary contained herein, for purposes of
determining whether there has been a breach under SECTION 10.3 and SECTION 10.4
hereof and the amount of any Losses that are the subject matter of a claim for
indemnification hereunder with respect thereto by the Buyer Indemnified Parties
against the Seller and/or the Members arising out of or related to SECTION 3.21,
each representation and warranty in SECTION 3.21 shall be read without regard
and without giving effect to any disclosure set forth in items (f) - (h) of
SCHEDULE 3.21 related to Hazardous Materials which may be present in soil or
groundwater (i.e., as if such disclosure items were deleted from SCHEDULE 3.21).
10.5 Indemnification by the Buyer. From and after the Closing, the
Buyer shall indemnify, defend and save the Seller, and its officers, directors,
employees, members, agents, representatives, successors and permitted assigns
(but excluding, in all cases, the Acquired Companies in the event that the
Closing occurs) (each, a "SELLER INDEMNIFIED PARTY") harmless from and against,
any and all Losses sustained or incurred by any Seller Indemnified Party,
resulting from any breach of or inaccuracy in any representation or warranty of
the Buyer contained in this Agreement or any certificate delivered by the Buyer
hereunder or any breach or nonfulfillment of any covenant or agreement made or
to be performed by the Buyer pursuant to this Agreement or any certificate
delivered by the Buyer hereunder (provided, however, that the Seller
Representative Committee shall have asserted its claim for indemnification in
writing with reasonable supporting details before the expiration of any
applicable survival period specified in SECTION 10.2).
10.6 Indemnification Procedure for Third Party Claims. Other than a
claim involving Taxes which procedure is set forth in, and which shall be
governed exclusively by ARTICLE IX, in the event that any Person that is or may
be entitled to indemnification under this Agreement (an "INDEMNIFIED PARTY")
receives notice of the assertion of any claim, issuance of any order or the
commencement of any action or proceeding by any Person who is not a party to
this Agreement or an Affiliate of a party, including, without limitation, any
domestic or foreign court or Governmental Authority (a "THIRD PARTY CLAIM"),
against such Indemnified Party, against which a party to this Agreement is or
may be required to provide indemnification under this Agreement (an
"INDEMNIFYING PARTY"), the Indemnified Party shall give prompt written notice
thereof together with a statement of any available information regarding such
claim to the Indemnifying Party; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party is materially prejudiced thereby. Subject to the
limitations set forth herein, the Indemnifying Party shall have the right upon
written notice to the Indemnified Party (the "DEFENSE NOTICE") within thirty
(30) days after receipt from the Indemnified Party of notice of such claim, to
conduct at its expense the defense against such claim in its own name, or if
necessary in the name of the Indemnified Party; provided, however, that the
Indemnifying Party may not so elect to defend any such Third Party
39
Claim without the Indemnified Party's prior written consent unless (i) the
Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party for the entire amount of any Loss relating thereto, subject to
the limitations in SECTION 10.8 (if applicable), and (ii) the Indemnifying Party
provides reasonable evidence to the Indemnified Party of its financial ability
to satisfy its indemnification obligations. Without limiting the foregoing and
notwithstanding any provision herein to the contrary, the Indemnifying Party
shall not be entitled to control, and the Indemnified Party shall be entitled to
have sole control over, the defense or settlement of any Third Party Claim (w)
to which the Indemnifying Party is also a party and the Indemnified Party
reasonably believes (based upon the advice of outside legal counsel) that a
material conflict exists as a result of the Indemnifying Party's control over
such proceedings, (x) if such Third Party Claim seeks to impose upon the
Indemnified Party or the Business any Liability other than for monetary damages
(i.e., injunctive, equitable or other non-monetary relief), (y) if the
Indemnified Party reasonably believes the outcome of the proceedings will have
an adverse affect on the Acquired Companies' relationship with any of its
customers, suppliers or employees, or (z) involves a claim which, upon petition
by the Indemnified Party, the appropriate court rules that the Indemnifying
Party failed or is failing to vigorously prosecute or defend. In the event that
the Indemnifying Party is permitted to conduct the defense of a Third Party
Claim hereunder and does elect to conduct the defense of the subject claim
(subject to the conditions set forth herein), the Indemnified Party will
cooperate with and make available to the Indemnifying Party such assistance and
materials as may be reasonably requested by it (at the Indemnifying Party's
cost), and the Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own choosing. If the
Indemnifying Party shall control the defense of any such Third Party Claim, the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party before entering into any settlement of a claim or ceasing to defend such
claim, if pursuant to or as a result of such settlement or cessation,
injunctive, equitable or other non-monetary relief will be imposed against the
Indemnified Party, or if such settlement does not expressly unconditionally
release the Indemnified Party from all Liabilities with respect to such claim
and all other claims arising out of the same or similar facts and circumstances,
with prejudice; it being understood and agreed that Indemnifying Party shall be
entitled to settle, without the Indemnified Party's consent, any such other
Third Party Claim, the defense of which it is entitled to and has elected to
control (subject to the conditions and limitations set forth in this SECTION
10.6) so long as such settlement would not result in injunctive, equitable or
other non-monetary relief being imposed against the Indemnified Party and such
settlement expressly unconditionally releases the Indemnified Party from all
Liabilities with respect to such claim and all other claims arising out of the
same or similar facts and circumstances, with prejudice.
10.7 Calculation of Losses.
(a) The amount of any Losses payable under this ARTICLE X by
the Indemnifying Party shall be net of any (i) net proceeds realized by and paid
to the Indemnified Party under its applicable insurance policies (determined
after giving effect to the net present value (utilizing a discount rate equal to
the short-term applicable federal rate as set forth in Section 1274(d) of the
Code for the month in which any such payment of insurance proceeds is received
the Indemnified Party), as determined by the Indemnified Party, of the aggregate
future incremental premium costs incurred by the Acquired Companies as a
consequence of any such Loss and/or of any such payment of insurance proceeds
related to any such Loss) or from any
40
other Person alleged to be responsible therefor (determined after giving effect
to any increased costs to the Indemnified Party resulting therefrom), and (ii)
the Tax benefit as and when realized by the Indemnified Party arising from the
incurrence or payment of any such Losses. If the Indemnified Party receives any
amounts under applicable insurance policies, or from any other Person alleged to
be responsible for any Losses described in clause (i) of the preceding sentence,
subsequent to an indemnification payment by the Indemnifying Party, then such
Indemnified Party shall promptly reimburse the Indemnifying Party for any
payment made or expense incurred by such Indemnifying Party in connection with
providing such indemnification payment up to the amount received by the
Indemnified Party, net of any expenses reasonably incurred by such Indemnified
Party in collecting such amount. The Indemnified party shall use Reasonable
Efforts to collect any amounts available under such insurance coverage or from
such other party reasonably alleged to have responsibility therefor (so long as
the Indemnified Party has a direct cause of action against such other party).
(b) The Indemnifying Party shall not be liable under this
ARTICLE X for any (i) Losses relating to any matter to the extent (but only to
the extent) that (A) there is included in the Closing Date Balance Sheet (as
finally determined pursuant to SECTION 2.2) a specific liability or specific
reserve relating to such specific type of indemnifiable Loss (but only for such
Losses to the extent of the amount of any such specific liability or specific
reserve on the Closing Date Balance Sheet (as finally determined pursuant to
SECTION 2.2)), or (B) the Indemnified Party has otherwise been compensated (on a
dollar-for-dollar basis) for such matter pursuant to the Purchase Price
adjustment under SECTION 2.2 by virtue of such Loss being included as a Current
Liability, or specifically included in an applicable reserve, in the calculation
of Closing Date Net Working Capital, or (ii) Losses for lost profits resulting
from business interruptions.
(c) The Indemnified Parties shall take, and shall cause their
respective Affiliates to take, all reasonable steps to mitigate and otherwise
minimize their Losses to the maximum extent reasonably possible upon and after
becoming aware of any event which would reasonably be expected to give rise to
any Losses.
(d) If the Indemnified Party receives any payment from an
Indemnifying Party in respect of any Losses and the Indemnified Party could have
recovered all or a part of such Losses from a third party based on the
underlying claim asserted against the Indemnifying Party, the Indemnified Party
shall assign such of its rights to proceed against such third party as are
necessary to permit the Indemnifying Party to recover from such third party the
amount of such indemnification payment.
10.8 Limitation on Indemnities.
(a) Notwithstanding anything to the contrary set forth in this
Agreement (but subject to the limitations set forth in the second sentence of
this SECTION 10.8(a)), the Seller pursuant to SECTION 10.4 shall not be liable
hereunder to the Buyer Indemnified Parties with respect to claims for breaches
of representations and warranties referred to in SECTION 10.4 above (i) if the
Losses incurred by the Buyer Indemnified Parties as a result of such breach or
series of related breaches do not exceed the Threshold Amount, (ii) except to
the extent that the aggregate Losses incurred by the Buyer Indemnified Parties
as a result of such breaches (other than individual breaches for which the
Losses do not exceed the Threshold Amount), shall exceed in
41
the aggregate the Deductible Amount, and then only to the extent of the excess
above the Deductible Amount, and (iii) to the extent the aggregate amount of
Losses incurred by the Buyer Indemnified Parties as a result of such breaches
exceeds the Cap Amount; provided that the Cap Amount shall be reduced on the
fifteen month anniversary of the Closing Date to the greater of (but only if the
amount so determined under this proviso is less than the Cap Amount) (1) the sum
of (A) $2,300,000 plus (B) the aggregate amount of Losses specified in any then
unresolved indemnification claims made by the Buyer Indemnified Parties pursuant
to this ARTICLE X, and (2) the sum of (A) the aggregate amount of Losses paid to
the Buyer Indemnified Parties by or on behalf of the Seller or the Members
pursuant to this ARTICLE X in respect of indemnification claims made by the
Buyer Indemnified Parties prior to such date and (B) the aggregate amount of
Losses specified in any then unresolved indemnification claims made by the Buyer
Indemnified Parties pursuant to this ARTICLE X. Notwithstanding any provision
herein to the contrary, the foregoing limitations on indemnity recovery shall
not apply in respect of any Loss with respect to any breach of (x) any covenant
of the Seller or any Member, or (y) any Fundamental Seller Representation. In
pursuing the collection of any indemnification claim under SECTION 10.4 against
the Seller, the Buyer Indemnified Parties shall, except as provided under
SECTION 2.2, proceed first against the Escrow Funds prior to pursuing any other
monetary right or remedy available to the Buyer Indemnified Parties hereunder or
otherwise.
(b) Notwithstanding anything to the contrary set forth in this
Agreement (but subject to the limitations set forth in the last sentence of this
SECTION 10.8(b)), the Buyer shall not be liable hereunder to the Seller
Indemnified Parties with respect to claims for breaches of representations and
warranties referred to in SECTION 10.5 above (i) if the Losses incurred by the
Seller Indemnified Parties as a result of such breach or series of related
breaches do not exceed the Threshold Amount, (ii) except to the extent that the
aggregate Losses incurred by the Seller Indemnified Parties as a result of such
breaches (other than individual breaches for which the Losses do not exceed the
Threshold Amount), shall exceed in the aggregate the Deductible Amount, and then
only to the extent of the excess above the Deductible Amount, and (iii) to the
extent the aggregate amount of Losses incurred by the Seller Indemnified Parties
as a result of such breaches exceeds the Cap Amount. Notwithstanding any
provision herein to the contrary, the foregoing limitations on indemnity
recovery shall not apply in respect of any Loss with respect to any breach of
(x) any covenant of the Buyer, or (y) any Fundamental Buyer Representation.
(c) On or prior to the three (3) year anniversary of the
Closing, the Buyer shall not undertake or allow environmental investigations,
testing or any other action to identify, discover or assess adverse Hazardous
Materials that may be present in soil or groundwater at any of the Real Property
located in Mexico ("MEXICAN REAL PROPERTY") that would reasonably be expected to
accelerate the timing of a claim arising from or in connection with the presence
of Hazardous Materials in soil or groundwater at the Mexican Real Property ("ACT
OF ACCELERATION") except where such investigation or testing is: (i)
affirmatively required by applicable Environmental, Health and Safety
Requirements, (ii) affirmatively required by an order or directive of a
Governmental Authority; (iii) required by the owner of such property, (iv)
reasonably necessary to defend against a third party claim, or (v) reasonably
necessary to address circumstances that suggest an imminent and substantial
endangerment to health or the environment. Acts of Acceleration are prohibited
under this SECTION 10.8(c) that shall include, without limitation, soliciting or
contacting a Governmental Authority to obtain or request the
42
issuance of an order or directive regarding the investigation or remediation of
Hazardous Materials and/or soliciting the property owner to request or require
an investigation or testing for Hazardous Materials. The Seller shall have no
duty to indemnify or defend any Buyer Indemnified Party to the extent a Loss
results from or in connection with an Act of Acceleration or any condition
discovered as a result thereof.
10.9 Exclusion of Other Remedies. Except for fraud and intentional
misrepresentation and the right to seek specific performance or other equitable
relief, the remedies set forth in this ARTICLE X constitute the sole and
exclusive remedies for recovery of Losses arising out of or relating to this
Agreement and any transaction contemplated hereby, other than as provided in
SECTIONS 2.2, 9.1, or 12.16.
10.10 Purchase Price Adjustments. Amounts paid to or on behalf of the
Seller, any Member or the Buyer as indemnification shall be treated as
adjustments to the Purchase Price.
10.11 Waiver, Release and Discharge. Effective upon the Closing, the
Seller hereby irrevocably waives, releases and discharges the Acquired Companies
from any and all Liabilities to the Seller of any kind or nature whatsoever,
whether in its capacity as the Seller hereunder, as a stockholder, member or
manager of any of the Acquired Companies or otherwise (including, without
limitation, in respect of rights of contribution or indemnification) as to
facts, conditions, transactions, events or circumstances prior to the Closing
Date, in each case whether absolute or contingent, liquidated or unliquidated,
known or unknown, and whether arising hereunder or under any other agreement or
understanding or otherwise at law or equity, and the Seller shall not seek to
recover any amounts in connection therewith or thereunder from any Acquired
Company; provided that the foregoing shall not apply to rights of
indemnification from the Acquired Companies under the Acquired Companies'
Organizational Documents as provided in SECTION 6.2 hereof held by the Seller
unless, in any such case, such indemnification, obligation or Liability arises
from or relates to a breach by the Seller or any Acquired Company of, or is
otherwise covered by, a representation, warranty, covenant, agreement or
indemnity under this Agreement (without regard to time limitations set forth
herein).
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of the Buyer and the Seller;
(b) by the Buyer in writing, without liability of the Buyer on
account of such termination (provided the Buyer is not otherwise in material
default or in material breach of this Agreement), if the Closing shall not have
occurred on or before June 15, 2005 (the "OUTSIDE DATE");
(c) by the Seller in writing, without liability of the Seller
on account of such termination (provided the Seller is not otherwise in material
default or in material breach of this Agreement), if the Closing has not
occurred on or before the Outside Date;
43
(d) by the Buyer in writing, if any of the conditions in
SECTION 7.1 or SECTION 7.2 is or becomes impossible (unless the Buyer's breach
of this Agreement has caused such condition to be unsatisfied) and the Buyer has
not waived in writing such condition on or before the Closing; or
(e) by the Seller in writing, if any of the conditions in
SECTION 7.1 or SECTION 7.3 is or becomes impossible (unless the Seller's breach
of this Agreement has caused such condition to be unsatisfied) and the Seller
has not waived in writing such condition on or before the Closing.
11.2 Effect of Termination. In the event of termination of this
Agreement pursuant to SECTION 11.1, all obligations under this Agreement (other
than those provisions set forth in SECTION 11.2 and ARTICLE XII) shall terminate
and shall be of no further force or effect; provided, however, no termination of
this Agreement shall release, or be construed as releasing, any Party from any
liability to any other Party which may have arisen under this Agreement. A
Party's right to terminate this Agreement is in addition to, and not in lieu of,
any other legal or equitable rights or remedies which such Party may have.
ARTICLE XII
MISCELLANEOUS
12.1 Notices, Consents, etc. Any notices, consents or other
communications required to be sent or given hereunder by any of the Parties
shall in every case be in writing and shall be deemed properly served if and
when (a) delivered by hand, (b) transmitted by facsimile with confirmation of
transmission or (c) delivered by Federal Express or other express overnight
delivery service, or registered or certified mail, return receipt requested, to
the Parties at the addresses as set forth below or at such other addresses as
may be furnished in writing.
(a) If to the Seller or the Seller Representative Committee:
Seller Representative Committee
c/o Ari Chaney
137 Mystic Lane
Jupiter, Florida 33458
Tel: (561) 747-2376
Fax: (561) 747-9689
with a copy to (which shall not constitute notice):
Katten Muchin Rosenman, LLP
525 West Monroe Street, Suite 1900
Chicago, Illinois 60661
Attention: Jeffrey Patt, Esq.
Tel: (312) 902-5200
Fax: (312) 902-1061
44
(b) If to the Buyer:
Commercial Vehicle Group, Inc.
4508 IDS Center
Minneapolis, Minnesota 54402
Attention: Scott Rued, Chairman
Tel:
Fax:
with a copy to (which shall not constitute notice):
Kirkland & Ellis, LLP
200 East Randolph Dr.
Chicago, Illinois 60601
Attention: John A. Schoenfeld
Tel: 312-861-3400
Fax: (312) 861-2200
Date of service of such notice shall be (x) the date such notice is delivered by
hand, (y) one (1) Business Day following the delivery by facsimile or by express
overnight delivery service, or (z) three (3) days after the date of mailing if
sent by certified or registered mail.
12.2 Severability. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any other
provision.
12.3 Successors; Assignment. This Agreement will be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns. No Party may assign this Agreement or any of such Party's
rights, interests, or obligations hereunder without the prior written approval
of the other Parties. Notwithstanding the immediately preceding sentence,
without the prior written consent of any other Party hereto, each of the Buyer
and its permitted assigns may at any time, in its sole discretion, assign, in
whole or in part, (a) its rights and obligations pursuant to this Agreement and
the other agreements contemplated hereby to one or more of its Affiliates
(provided that no such assignment to an Affiliate shall relieve the assigning
party of its obligations hereunder), and (b) its rights under this Agreement and
the other agreements contemplated hereby for collateral security purposes to any
lender to the Buyer or any of the Acquired Companies, such permitted assign or
any of their Affiliates and any such subsequent purchaser and lender may
exercise all of the rights and remedies of the Buyer or such permitted assign
hereunder and thereunder.
12.4 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
This Agreement, any and all agreements and instruments executed and delivered in
accordance herewith, along with any amendments hereto or thereto, to the extent
signed and delivered by means of a facsimile machine or other means of
electronic transmission, shall be treated in all manner and respects and for all
purposes as an original signature, agreement or instrument and shall be
considered to
45
have the same binding legal effect as if it were the original signed version
thereof delivered in person.
12.5 Expenses. The Seller shall pay for all costs and expenses incurred
or to be incurred by (a) the Seller through and after the Closing, (b) the
Seller Representative Committee through and after the Closing, and (c) the
Acquired Companies solely until and through the Closing, in each case in
negotiating and preparing this Agreement and in closing and carrying out or
otherwise related to the transactions contemplated by this Agreement, including,
without limitation, the fees owed by the Acquired Companies to Robert W. Baird &
Co. pursuant to the terms of a letter agreement dated October 20, 2004 (a true
and correct copy of which is attached). The Buyer (or, the Acquired Companies,
following the Closing) shall pay for all costs and expenses incurred or to be
incurred by the Buyer through and after the Closing in negotiating and preparing
this Agreement and in closing and carrying out or otherwise related to the
transactions contemplated by this Agreement). Without limiting the generality of
the foregoing, the Seller, on the one hand, and the Buyer, on the other hand,
shall each pay fifty percent (50%) of any transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with the consummation of the transactions contemplated by
this Agreement. Notwithstanding any provision herein to the contrary, the Seller
shall bear 100% of the fees, costs and expenses related to the Tail Policy, all
of which shall be paid prior to Closing.
12.6 Governing Law. This Agreement shall be construed and governed in
accordance with the Laws of the State of Illinois, without regard to its Laws
regarding conflicts of Law.
12.7 Table of Contents and Headings. The table of contents and section
headings of this Agreement are included for reference purposes only and shall
not affect the construction or interpretation of any of the provisions of this
Agreement.
12.8 Definitions. As used in this Agreement,
"ACQUIRED COMPANIES" means, collectively, the Company and the Company's
Subsidiaries.
"AFFILIATE" shall have the meaning given for that term in Rule 405
under the Securities Act, as amended, and shall include each past and present
Affiliate of a Person and the members of such Affiliate's immediate family or
their spouses or children and any trust the beneficiaries of which are such
individuals or relatives.
"BUSINESS" means the business of designing, engineering, manufacturing,
selling and distributing electronic wire harnesses and related assemblies or any
other business in which any Acquired Company has engaged or is currently
engaged.
"BUSINESS DAY" means any day that is not a Saturday or a Sunday or a
day on which banks located in Chicago, Illinois are authorized or required to be
closed.
"CAP AMOUNT" means an amount equal to $3,830,000.
46
"CASH ON HAND" means, with respect to the Acquired Companies, all cash
on hand held without limitation or restriction of any kind, net of any bank
overdrafts and cash equivalents of the Acquired Companies, all as determined in
accordance with GAAP. For avoidance of doubt, Cash on Hand shall (a) be
calculated net of issued but uncleared checks and drafts, and (b) include checks
and drafts deposited for the account of the Acquired Companies, to the extent
consistent with GAAP.
"CLOSING DATE CASH ON HAND" means the Cash on Hand of the Acquired
Companies as of immediately prior to the Closing, derived from the Closing Date
Balance Sheet and prepared in accordance with SECTION 2.2(b) and the definition
of Cash on Hand.
"CLOSING DATE NET WORKING CAPITAL" means the Net Working Capital of the
Acquired Companies as of immediately prior to the Closing, derived from the
Closing Date Balance Sheet and prepared in accordance with SECTION 2.2(b) and
the definition of Net Working Capital.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY'S SUBSIDIARIES" means any Person more than fifty percent (50%)
of outstanding voting or equity securities of which; or any partnership, joint
venture or other entity more than fifty percent (50%) of the total equity or the
economic interest to which, is directly or indirectly owned by the Company.
"CONSENT" means any approval, consent, ratification, waiver, or other
authorization.
"CONTRACT" means any written or oral agreement, note, mortgage,
indenture, lease, deed of trust, license, plan, instrument or other contract.
"CURRENT ASSETS" means the current assets of the Acquired Companies as
of any given date of determination calculated in accordance with the definition
of "Net Working Capital."
"CURRENT LIABILITIES" means the current liabilities of the Acquired
Companies as of any given date of determination calculated in accordance with
the definition of "Net Working Capital."
"DEDUCTIBLE AMOUNT" means an amount equal to $383,000.
"EMPLOYEE PLAN" shall mean any plan, policy, program, arrangement or
agreement described in SECTION 3.20(a).
"ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS" shall mean all federal,
state, provincial and local statutes, codes, regulations, rules, ordinances,
judgments, orders and other Laws and common law relating to the protection,
preservation or conservation of the environment and to public or worker health
and safety, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et
seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6901 et seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe
47
Drinking Water Act, 42 U.S.C. Section 300f et seq., and the Occupational Safety
and Health Act, 29 U.S.C. Section 651 et seq.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENT" means the Escrow Agreement in the form of EXHIBIT D
hereto.
"ESCROW AGENT" means the Escrow Agent under the Escrow Agreement.
"ESCROW FUNDS" means Three Million Eight Hundred Thirty Thousand
Dollars ($3,830,000) deposited into escrow under the Escrow Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean the United States or any state,
provincial, local or foreign government, or any subdivision, agency, bureau,
department or authority of any thereof having jurisdiction over any of the
Acquired Companies, the Buyer, the Seller, any of the Members or the
transactions contemplated by this Agreement, as applicable.
"HAZARDOUS MATERIALS" shall mean (a) hazardous substances or hazardous
wastes, as defined under Environmental, Health and Safety Requirements; (b)
petroleum, including without limitation, crude oil or any fraction thereof; (c)
any radioactive material, including, without limitation, any source, special
nuclear, or by-product material as defined in 42 U.S.C. Section 2011 et seq.;
(d) asbestos in any form or condition; (e) polychlorinated biphenyls; and (f)
any other material, substance or waste to which liability or standards of
conduct may be imposed under any Environmental, Health and Safety Requirement.
"HSR ACT" means collectively, if and as applicable, Section 7A of the
Clayton Act (Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder).
"INDEBTEDNESS" means the aggregate amount (including the current
portions thereof) of (a) all indebtedness or other obligation of any of the
Acquired Companies for borrowed money (whether current, short-term, or
long-term, secured or unsecured), (b) any indebtedness evidenced by any note,
bond, debenture or other debt security, (c) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise, (d) all lease obligations of
the Acquired Companies under leases which are capital leases in accordance with
GAAP, (e) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement Liability with respect
to letters of credit), (f) any off-balance sheet financing of any Acquired
Company including, without limitation, project financing, (g) any liability of
any Acquired Company with respect to interest rate swaps, collars, caps and
similar hedging obligations, (h) any amounts owed to any Person under any
noncompetition or consulting arrangements, (i) any change of control or similar
payment or increased cost which is triggered
48
in whole or in part by the transactions contemplated by this Agreement, (j) any
indebtedness referred to in clauses (a) through (i) above of any Person which is
either guaranteed by, or secured by Lien upon any property owned by, any
Acquired Company and (k) accrued and unpaid interest of, and prepayment
premiums, penalties or similar contractual charges arising (or which would
arise) as result of the discharge at Closing of, any such foregoing obligation.
"INTELLECTUAL PROPERTY" means all Registered Intellectual Property,
unregistered trademarks and service marks, inventions, unregistered copyrights,
domain names, data, databases, and know how, trade secrets, manufacturing
processes, formulae, technical information, specifications, data, technology,
plans and drawings, confidential information and other intellectual property
owned or used by the Acquired Companies;
"LAW" means each provision of any applicable Federal, state, local or
foreign law, statute, common law, ordinance, order, code, rule or regulation,
promulgated or issued by any Governmental Authority.
"LEASES" means all leases, subleases, licenses, concessions and other
agreements (written or oral) pursuant to which the Acquired Companies hold any
Leased Property, including the right to all security deposits and other amounts
and instruments deposited by or on behalf of the Acquired Companies thereunder.
"LIABILITY" means any liability, debt, obligation, deficiency, Tax,
penalty, fine, claim, cause of action or other loss, cost or expense of any kind
or nature whatsoever, whether asserted or unasserted, absolute or contingent,
known or unknown, accrued or unaccrued, liquidated or unliquidated, and whether
due or to become due and regardless of when asserted.
"LIEN" means any mortgage, pledge, hypothecation, hypothec, right of
others, claim, security interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, title retention agreement, voting trust
agreement, interest, equity, option, lien, right of first refusal, charge or
other restrictions or limitations of any nature whatsoever, other than (a)
restrictions on the offer and sale of securities under Federal and state
securities Laws, and (b) any Permitted Liens.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means any
change, effect, event, occurrence, state of facts or development that,
individually or in the aggregate with any other change, effect, event,
occurrence, state of facts or development, is materially adverse to the
business, assets, liabilities, financial condition, results of operations, cash
flows or employee, customer or supplier relations of the Acquired Companies
taken as a whole; provided, however, that none of the following shall be deemed
in itself to constitute a Material Adverse Effect or Material Adverse Change:
(a) any adverse change, effect, event, occurrence, state of facts or development
attributable to conditions affecting United States economy as a whole or the
capital markets in general; or (b) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to the
commencement, continuation or escalation of a war, material armed hostilities or
other material international or national calamity or act of terrorism directly
or indirectly involving the United States of America.
49
"MEMBERS" shall mean, collectively, the holders of 100% of the Equity
Interests of the Seller as of the Closing Date. Attached hereto is a true and
correct copy (including all amendments and supplements thereto) of that certain
Members Agreement, dated as of September 20, 2002, as amended, by and among the
Seller and each of the Members.
"NET WORKING CAPITAL" shall mean Current Assets minus Current
Liabilities. In no event will the determination of Net Working Capital include
(a) any asset or liability for income Taxes, (b) any intercompany accounts, (c)
Cash on Hand, (d) any amounts due from any Seller, (e) the current portion of
any Indebtedness, (f) any accrued restructuring charges, or (g) any trade
accounts payable or accrued expenses owing by any of the Acquired Companies to
any of its Affiliates to the extent such amounts are canceled without payment
immediately prior to Closing in accordance with SECTION 1.4. In computing Net
Working Capital, all accounting entries will be taken into account regardless of
their amount, all known errors and omissions will be corrected and all known
proper adjustments will be made. Subject to the foregoing, Net Working Capital
will be calculated in accordance with GAAP, applied on a basis consistent with
that employed in the preparation of the Latest Audited Balance Sheet (but only
to the extent consistent with GAAP).
"OPERATING COMPANY" means Monona Wire Corporation, an Iowa Corporation.
"ORGANIZATIONAL DOCUMENTS" means (a) with respect to a corporation, the
certificate or articles of incorporation and bylaws; (b) with respect to any
other entity, any charter or similar document adopted or filed in connection
with the creation, formation or organization of a Person; and (c) any amendment
to any of the foregoing.
"PERMITTED LIENS" means (a) Liens for taxes not yet due and payable,
(b) statutory Liens of landlords for amounts not yet due and payable, (c) Liens
of carriers, warehousemen, mechanics and materialmen incurred in the ordinary
course of business for amounts not yet due and payable, (d) Liens attaching to
inventory held by consignees in the ordinary course of business, and (e) any
easement, covenant, encroachment, burden, title defect, title retention
agreement, or other exception to title to any of the Real Property which do not
collectively impair the use or occupancy of the applicable Real Property for the
purposes for which it is currently used in connection with the Business.
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated association, corporation, limited liability
company, entity or government (whether Federal, state, county, city or
otherwise, including, without limitation, any instrumentality, division, agency
or department thereof).
"PLAN AFFILIATE" with respect to any Person ("FIRST PERSON") shall mean
any other Person who, together with the First Person, constitutes all or part of
a controlled group, or which would be treated with the First Person as under
common control or whose employees would be treated as employed by the First
Person, under Section 414 of the Code or Section 4001(b) of ERISA and any
regulations, administrative rulings and case Law interpreting the foregoing.
"PRIME RATE" means the prime rate of interest, as publicly announced
from time to time, of Citibank N.A.
50
"REASONABLE EFFORTS:" shall mean the good faith efforts that a
reasonably prudent Person desirous of achieving a result would use in similar
circumstances to ensure that such result is achieved as reasonably expeditiously
as possible.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Federal Securities Act of 1933, as amended.
"SELLER'S KNOWLEDGE" shall mean the actual knowledge (after due
inquiry) of Bob Carter, Steve McConnell, Joe Grote and Roger Malatt.
"TARGET NET WORKING CAPITAL" shall mean an amount equal to $10,000,000.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXES" shall include all taxes, charges, withholdings, fees, levies,
penalties, additions, interest or other assessments imposed by any United States
Federal, state, local and foreign or other taxing authority, and including, but
not limited to, those related to income, gross receipts, gross income, payroll,
sales, use, excise, services, valuation, transfer or franchise.
"THRESHOLD AMOUNT" means an amount equal to $19,166.
"TRANSACTION AGREEMENTS" means this Agreement, the Escrow Agreement and
any other agreement contemplated hereby to be entered into at Closing to which
the Seller, any Member of any Acquired Company is a party.
12.9 Entire Agreement. This Agreement, the Recitals, the Schedules and
the Exhibits and other Transaction Agreements attached to or referred to in this
Agreement (all of which shall be deemed incorporated in this Agreement and made
a part hereof), along with the Confidentiality Agreement (the "CONFIDENTIALITY
AGREEMENT") among Seller and Buyer, dated November 10, 2004 set forth the entire
understanding of the Parties with respect to the transactions contemplated
hereby, supercedes all prior discussions, understandings, agreements and
representations and shall not be modified or affected by any offer, proposal,
statement or representation, oral or written, made by or for any Party in
connection with the negotiation of the terms hereof. The Confidentiality
Agreement shall automatically terminate effective as of the Closing. This
Agreement may be modified only by subsequent instruments signed by the Parties
hereto.
12.10 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any Person, other than the Parties
to this Agreement, the Buyer Indemnified Parties or the Seller Indemnified
Parties, any rights or remedies under or by reason of this Agreement.
12.11 Disclosure Generally. All Schedules attached hereto are
incorporated herein and expressly made a part of this Agreement as though
completely set forth herein. All references to this Agreement herein or in any
of the Schedules shall be deemed to refer to this entire
51
Agreement, including all Schedules; provided, however, that information
furnished in any particular Schedule shall be deemed to be included in another
Schedule if such information can reasonably be interpreted as having application
to such other Schedule notwithstanding the absence of a cross-reference
contained therein. Notwithstanding the foregoing, nothing in the Schedules
hereto shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant. Application of SECTION 2.2 shall not prevent or mitigate
the rights of any Party to bring any claim for indemnification hereunder.
12.12 Acknowledgment by the Buyer. The Buyer acknowledges that it has
conducted to its satisfaction an independent investigation and verification of
the financial condition, operations, assets, liabilities and properties of the
Acquired Companies and, in making its determination to proceed with the
transactions contemplated by this Agreement, the Buyer has relied, and will
rely, on the results of its own independent investigation and verification in
addition to the representations and warranties of the Acquired Companies and the
Seller expressly and specifically set forth in this Agreement, including the
Schedules (and updated Schedules). The Buyer further acknowledges that, except
as set forth herein, no promise or inducement for this Agreement was offered by
the Seller, the Acquired Companies or any of their respective representatives or
relied upon by the Buyer. EXCEPT WITH RESPECT TO FRAUD AND INTENTIONAL
MISREPRESENTATIONS, SUCH REPRESENTATIONS AND WARRANTIES BY THE SELLER CONSTITUTE
THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE SELLER TO THE BUYER
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND THE BUYER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESS OR IMPLIED (INCLUDING, BUT NOT LIMITED
TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF
OPERATIONS, ASSETS OR LIABILITIES OR PROSPECTS OF ANY OF THE ACQUIRED COMPANIES
TO THE EXTENT NOT PROVIDED BY THE SELLER HEREUNDER) ARE SPECIFICALLY DISCLAIMED
BY THE SELLER. THE BUYER ACKNOWLEDGES THAT IT DID NOT RELY ON ANY REPRESENTATION
OR WARRANTY NOT CONTAINED IN THIS AGREEMENT WHEN MAKING ITS DECISION TO ENTER
INTO THIS AGREEMENT AND WILL NOT RELY ON ANY SUCH REPRESENTATION OR WARRANTY IN
DECIDING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. With
respect to all materials that are described as having been made available or
delivered to the Buyer, such materials shall be deemed to have been delivered or
made available to the Buyer if the Buyer or its legal counsel have been granted
access to an electronic data room or website in which such materials are
available or by transmitting such materials to
52
the Buyer or its legal counsel by any other electronic means, in each case only
to the extent that any such delivery can be reasonably demonstrated.
12.13 Interpretive Matters. Unless the context otherwise requires, (a)
all references to articles, sections, schedules or exhibits are to Articles,
Sections, Schedules or Exhibits in this Agreement, (b) each accounting term not
otherwise defined in this Agreement has the meaning assigned for it in
accordance with GAAP, (c) words in the singular or plural include the singular
and plural, and pronouns stated in either the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter, and (d) the term
"including" shall mean by way of example and not by way of limitation. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent arises, this
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
12.14 SUBMISSION TO JURISDICTION. EACH OF THE PARTIES SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN CHICAGO,
ILLINOIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND AGREES NOT TO BRING ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH
OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY OR OTHER
SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. EACH
PARTY AGREES THAT SERVICE OF SUMMONS AND COMPLAINT OR ANY OTHER PROCESS THAT
MIGHT BE SERVED IN ANY ACTION OR PROCEEDING MAY BE MADE ON SUCH PARTY BY SENDING
OR DELIVERING A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS OF
THE PARTY AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 12.1.
NOTHING IN THIS SECTION, HOWEVER, SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY AGREES THAT A
FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
12.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
12.16 Specific Performance. The Parties agree that if any provision of
this Agreement is not performed in accordance with its terms or is otherwise
breached, irreparable harm would occur, no adequate remedy at law would exist,
and damages would be difficult to determine, and the Party or Parties not in
breach shall be entitled to the remedy of specific performance, injunctive
relief and/or other equitable relief in addition to any other remedies that may
be available at law or in equity by reason of such breach.
53
12.17 Public Announcements. Prior to the Closing, the Parties will not
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby, except
that the Buyer, on the one hand, and the Acquired Companies and/or the Seller,
on the other hand, may issue a joint press release if mutually considered
appropriate; provided, however, that nothing herein shall prohibit any Party
from issuing or causing publication of any such press release or public
announcement to the extent that such Party determines such action to be required
by Law, in which case the Party making such determination will, if practicable
in the circumstances, use Reasonable Efforts to allow the other Parties
reasonable time to comment on such release or announcement in advance of its
issuance. Prior to the Closing, to the extent feasible, all press releases or
other announcements or notices regarding the transactions contemplated by this
Agreement shall be made jointly by the Parties.
[SIGNATURE PAGES FOLLOW]
54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
SELLER:
MONONA HOLDINGS LLC
By: /s/ Robert Carter
--------------------------------
Name: Robert Carter
------------------------------
Title: President & CEO
-----------------------------
BUYER:
COMMERCIAL VEHICLE GROUP, INC.
By: /s/ Daniel F. Moorse
--------------------------------
Name: Daniel F. Moorse
------------------------------
Title: Vice President and Assistant
-----------------------------
Secretary
-----------------------------
EXHIBIT
AND SCHEDULES
EXHIBITS
Exhibit A - Seller Representative Committee Agreement
Exhibit B - Caterpillar, Inc. Email Correspondence
Exhibit C - Form of Non-Competition and Severance Agreement
Exhibit D - Escrow Agreement
SCHEDULES
Schedule 1.4(b) - Acquired Company Liabilities - Intercompany
Accounts
Schedule 3.1 - Organization and Qualifications
Schedule 3.4 - Capitalization - Operating Company
Schedule 3.6 - Options
Schedule 3.7 - Financial Statements
Schedule 3.8 - Taxes
Schedule 3.9 - Material Contracts
Schedule 3.10 - Real Property
Schedule 3.11 - Title
Schedule 3.12 - Litigation
Schedule 3.13 - Compliance with Laws
Schedule 3.14 - Registered Intellectual Property
Schedule 3.15 - Bank Accounts, Officers and Directors
Schedule 3.16 - No Violation of Seller
Schedule 3.17 - Absences of Certain Changes
Schedule 3.18 - Insurance Policies
Schedule 3.19 - Licenses and Permits
Schedule 3.20 - Employee Benefit Plans
Schedule 3.21 - Environmental, Health and Safety Matters
Schedule 3.22 - Labor Matters
Schedule 3.23 - Customers and Suppliers
Schedule 3.25 - Brokers
Schedule 3.26 - Affiliates
Schedule 3.27 - Indebtedness
Schedule 3.28 - Undisclosed Liabilities
Schedule 3.31 - Product Warranty; Product Liability
Schedule 4.3 - No Violation of Buyer
Schedule 4.7 - Governmental Approvals and Filings
Schedule 5.1 - Conduct of Business
Schedule 7.2(c) - Third Party Consents
Schedule 7.2(d) - Leased Real Property
Schedule 7.2(e) - List of Individuals Executing
Non-Competition and Severance Agreement or
Non-Competition Agreement