EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
GLOBE MANUFACTURING CO.
and
GLOBE ACQUISITION COMPANY
TABLE OF CONTENTS
Articles Page
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ARTICLE I
THE MERGER.............................................................................. 1
1.01 The Merger..................................................................... 1
1.02 Effective Time................................................................. 2
1.03 Closing........................................................................ 2
1.04 Articles of Organization; By-Laws.............................................. 2
1.05 Directors and Officers of the Surviving Corporation............................ 2
ARTICLE II
CONVERSION OF SHARES.................................................................... 3
2.01 Conversion of Capital Stock.................................................... 3
2.02 Exchange of Certificates....................................................... 5
2.03 Options and Warrants........................................................... 6
2.04 Dissenting Shares.............................................................. 7
2.05 Escrow......................................................................... 7
2.06 Closing Adjustment............................................................. 8
2.07 Stockholders Representatives.................................................. 10
ARTICLE III
REPRESENTATIONS OF THE COMPANY......................................................... 12
3.01 Organization.................................................................. 12
3.02 Capitalization................................................................ 13
3.03 Authorization................................................................. 14
3.04 Noncontravention.............................................................. 14
3.05 Subsidiaries, Investments..................................................... 15
3.06 Financial Statements; Indebtedness............................................ 15
3.07 Absence of Certain Changes.................................................... 16
3.08 Undisclosed Liabilities....................................................... 18
3.09 Tax Matters................................................................... 18
3.10 Tangible Assets............................................................... 19
3.11 Leased and Owned Real Property................................................ 20
3.12 Intellectual Property......................................................... 21
3.13 Contracts..................................................................... 21
3.14 Litigation.................................................................... 23
3.15 Labor Matters................................................................. 23
3.16 Employee Benefits............................................................. 23
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Article Page
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3.17 Environmental Matters......................................................... 25
3.18 Legal Compliance.............................................................. 26
3.19 Permits....................................................................... 26
3.20 Insurance..................................................................... 27
3.21 Brokers' Fees................................................................. 27
3.22 Indebtedness to and from Officers, Directors and Stockholders:
Other Affiliate Transactions.................................................. 27
3.23 Notes and Accounts Receivable................................................. 27
3.24 Powers of Attorney; Guaranties................................................ 27
3.25 Product Warranty and Returns.................................................. 27
3.26 Customer and Supplier Relations............................................... 28
3.27 Teoh ▇▇▇▇ ▇▇▇▇................................................................ 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGERCO............................................. 28
4.01 Organization.................................................................. 28
4.02 Authorization................................................................. 28
4.03 Noncontravention.............................................................. 29
4.04 Broker's Fees................................................................. 29
4.05 Litigation.................................................................... 29
4.06 Financing..................................................................... 30
4.07 Formation of MergerCo; No Prior Activities.................................... 30
ARTICLE V
PRE-CLOSING COVENANTS.................................................................. 30
5.01 Efforts....................................................................... 30
5.02 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act......................................................... 30
5.03 Operation of Business......................................................... 31
5.04 Access........................................................................ 31
5.05 Notification.................................................................. 32
5.06 Exclusivity................................................................... 32
5.07 Bakrie Sale and Release....................................................... 32
5.08 Authorization of Class C Stock................................................ 33
ARTICLE VI
TRANSFER OF ASSETS..................................................................... 33
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Article Page
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6.01 Asset Transfer................................................................ 33
6.02 Covenant of Company........................................................... 33
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF MERGERCO AND
THE COMPANY............................................................................ 34
7.01 Conditions to Obligations of MergerCo......................................... 34
7.02 Conditions to Obligations of the Company...................................... 36
ARTICLE VIII
PRESS RELEASES AND ANNOUNCEMENTS....................................................... 38
ARTICLE IX
TERMINATION............................................................................ 38
9.01 Termination of Agreement...................................................... 38
9.02 Effect of Termination......................................................... 39
ARTICLE X
FURTHER AGREEMENTS..................................................................... 39
10.01 Director and Officer Indemnification.......................................... 39
10.02 Disclosure Generally.......................................................... 39
10.03 Further Assurances............................................................ 40
ARTICLE XI
INDEMNIFICATION........................................................................ 40
11.01 By the Stockholders........................................................... 40
11.02 Method of Asserting Claims.................................................... 41
11.03 Survival...................................................................... 43
11.04 Limitations................................................................... 43
11.05 Dispute Resolution............................................................ 44
11.06 Indemnification for Pre-Closing Taxes......................................... 45
ARTICLE XII
MISCELLANEOUS.......................................................................... 45
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Article Page
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12.01 Third Party Beneficiaries..................................................... 45
12.02 Action to be Taken by Affiliates.............................................. 45
12.03 Entire Agreement.............................................................. 45
12.04 Succession and Assignment..................................................... 46
12.05 Counterparts.................................................................. 46
12.06 Headings...................................................................... 46
12.07 Notices....................................................................... 46
12.08 Governing Law................................................................. 48
12.09 Amendments and Waivers........................................................ 48
12.10 Severability.................................................................. 49
12.11 Expenses...................................................................... 49
12.12 Specific Performance.......................................................... 49
12.13 Submission to Jurisdiction.................................................... 49
12.14 Construction.................................................................. 49
12.15 Acknowledgements by MergerCo.................................................. 50
12.16 Incorporation of Exhibits and Schedules....................................... 50
12.17 Facsimile Signature........................................................... 50
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Schedules and Exhibits
Schedule I Stockholders
Schedule II Outstanding Options and Warrants
Exhibit A Articles of Organization of the Surviving Corporation
Exhibit B Escrow Agreement
Exhibit C Form of Noncompetition and Confidentiality Agreement
for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attachment 5.04 MergerCo's Representatives
Disclosure Schedule
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Definition Section
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Adjustment Escrow Fund Section 2.05(a)
Affiliate Section 3.13(a)(7)
Affiliates Section 3.13(a)(7)
Alabama Facility Section 3.11
Arbitrator Section 11.05(b)
Articles of Merger Section 1.02
Asset Transfer ARTICLE VI
Bank Commitment Letter Section 4.06
Basket Section 11.04
BRI Section 11.01(d)
Bring-Down Certificate Section 7.01(d)
British Subsidiary Section 7.01(l)
Business Day Section 2.06(c)
Cash Merger Consideration Section 2.01(c)
CERCLA Section 3.17(e)
Certificate of Merger Section 1.02
Certificates Section 2.02(a)
Class A Stock Section 2.01
Class B Stock Section 2.01
Class C Merger Consideration Section 2.01(c)
Closing Section 1.03
Closing Balance Sheet Section 2.06(a)
Closing Date Section 1.03
Closing Net Asset Value Section 2.06(a)
Code Section 3.16(a)
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Company Introduction
Company Common Stock Section 2.01
Company Intellectual Property Section 3.12(a)
Company Material Adverse Effect Section 3.01(a)
Company Plans Section 3.16(a)
Company Stock Option Section 2.03(b)
Company Stock Options Section 2.03(b)
Company Warrant Section 2.03(a)
Company Warrants Section 2.03(a)
Confidentiality Agreement Section 5.04
Construction Section 3.11
Contingent Merger Consideration Section 2.01(c)
Current Balance Sheet Section 3.06(a)
Damages Section 11.01
Delaware Secretary of State Section 1.02
Disclosure Schedule ARTICLE III
Dissenting Shares Section 2.04
DGCL Introduction
Effective Time Section 1.02
Elastic Section 3.01(b)
Employee Benefit Plan Section 3.16(a)
Environmental Law Section 3.17(e)
Environmental Matters Section 3.17(g)
ERISA Section 3.16(a)
ERISA Affiliate Section 3.16(a)
Escrow Agreement Section 2.05(a)
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Escrow Fund Section 2.05(a)
Estimated Closing Net Asset Value Section 2.01(c)
Final Closing Net Asset Value Section 2.06(a)
Financial Statements Section 3.06(a)
Financing Section 7.01(h)
Fund Introduction
GAAP Section 3.06(a)
Governmental Entity Section 3.04
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Section 3.04
Indebtedness Section 3.06(b)
Indemnification Dispute Section 11.05(a)
Indemnification Escrow Fund Section 2.05(a)
Indemnified Persons Section 11.01
Knowing Breach Section 5.05(a)
Leased Real Property Section 3.11
Massachusetts Secretary of State Section 1.02
Material Customers Section 3.26
Material Suppliers Section 3.26
Materials of Environmental Concern Section 3.17(f)
MBCL Introduction
Merger Section 1.01
Merger Consideration Section 2.01(c)
MergerCo Introduction
MergerCo Common Stock Section 2.01
MIP Section 2.03(b)
Most Recent Fiscal Year End Section 3.06(a)
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Optional Termination Date Section 9.01(f)
Ordinary Course of Business Section 3.04
Other Subsidiaries Section 3.01(b)
Owned Real Proper Section 3.11
Permits Section 3.19(a)
Person Section 3.05
Prime Rate Section 2.06(c)
Proposed Closing Net Asset Value Section 2.06(a)
RCRA Section 3.17(f)
Recapitalized Common Stock Section 2.01(b)
Release Section 5.07
Second Request Section 5.02
Securities Act Section 3.02(a)
Security Interest Section 3.04
Shares Section 2.01
Stockholders Section 2.05(a)
Stockholders Representatives Section 2.07(a)
Subsidiary Section 3.01(b)
Surviving Corporation Section 1.01
Tax Returns Section 3.09
Taxes Section 3.09
Third Party Claim Section 11.02(b)
Transfer Related Breach ARTICLE VI
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 23, 1998, by and between
Globe Manufacturing Co., a Massachusetts corporation (the "Company"), and Globe
Acquisition Company, a Delaware corporation ("MergerCo") formed by Code ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ III, L.P. ("Fund").
WHEREAS, the Board of Directors of MergerCo has approved, and deems it
advisable and in the best interests of the stockholders of MergerCo to
participate in the recapitalization of the Company, upon the terms and subject
to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company and the members of the Board
of Directors of the Company who are not employees of the Company have approved,
and deem it advisable and in the best interests of the shareholders of the
Company to consummate, the recapitalization of the Company, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such recapitalization, the Board of Directors of
MergerCo and the Board of Directors of the Company have each approved this
Agreement and the merger of MergerCo with and into the Company in accordance
with the terms of this Agreement, the Business Corporation Law of The
Commonwealth of Massachusetts (the "MBCL") and the Delaware General Corporation
Law (the "DGCL");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. (a) Upon the terms and subject to the conditions
of this Agreement and in accordance with the applicable provisions of the MBCL,
at the Effective Time (as defined in Section 1.02 hereof), MergerCo shall be
merged (the "Merger") with and into the Company and the separate corporate
existence of MergerCo shall cease. After the Merger, the Company shall continue
as the surviving corporation (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
Commonwealth of Massachusetts. The Merger shall have the effect as provided in
the applicable provisions of the MBCL and the DGCL. Without limiting the
generality of the foregoing, upon the Merger, all the rights, privileges,
immunities, powers and franchises of the Company and MergerCo shall vest in the
Surviving Corporation and all restrictions, obligations, duties, debts and
liabilities of the Company and MergerCo shall be the restrictions, obligations,
duties, debts and liabilities of the Surviving Corporation.
1.02 Effective Time. On or as promptly as practicable following the
Closing (as defined in Section 1.03), MergerCo and the Company will cause the
appropriate articles of merger (the "Articles of Merger") to be executed and
filed with the Secretary of State of the Commonwealth of Massachusetts (the
"Massachusetts Secretary of State") in such form and executed as provided in
Section 79 of the MBCL and the appropriate certificate of merger (the
"Certificate of Merger") to be executed and filed with the Secretary of State of
the State of Delaware (the "Delaware Secretary of State") in such form and
executed as provided in Section 252(c) of the DGCL. The Merger shall become
effective on the date on which the Articles of Merger and the Certificate of
Merger have been duly filed with the Massachusetts Secretary of State and the
Delaware Secretary of State, respectively, or such time as is agreed upon by the
parties and specified in the Articles of Merger and the Certificate of Merger,
but not later than 30 days after such filings, and such time is hereinafter
referred to as the "Effective Time."
1.03 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Boston time, on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VII hereof (the "Closing
Date"), at the offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to by the parties
hereto.
1.04 Articles of Organization; By-Laws. Pursuant to the Merger,
(x) the articles of organization, as amended, of the Company in the form
attached as Exhibit A hereto, shall be the articles of organization of the
Surviving Corporation until thereafter amended as provided by applicable law and
such articles of organization and (y) the By-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by applicable law, the articles
of organization of the Surviving Corporation and such By-laws.
1.05 Directors and Officers of the Surviving Corporation.
(a) The directors of MergerCo immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's articles of organization and By-
laws.
(b) The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES
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2.01 Conversion of Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holders of any shares of
(i) Class A Common Stock, par value $0.01 per share, of the Company ("Class A
Stock"), (ii) Class B Common Stock, par value $0.01 per share, of the Company
("Class B Stock") (the Class A Stock and the Class B Stock are referred to
herein as the "Shares" or "Company Common Stock"), (iii) Class C Common Stock,
par value $0.01 per share, of the Company ("Class C Stock") that the Company
anticipates authorizing and issuing in exchange for certain shares of Company
Common Stock prior to the Effective Time or (iv) or the Common Stock, par value
$.01 per share, of MergerCo (the "MergerCo Common Stock"):
(a) Each issued and outstanding share of Company Common Stock (other
than (i) Shares to be cancelled in accordance with Section 2.01(c) and (ii)
Dissenting Shares covered by Section 2.04) shall be converted into the right to
receive the Merger Consideration (as defined below), of which the Cash Merger
Consideration (as defined below) shall be payable in cash to the holder thereof,
without interest, upon surrender of the certificate formerly representing such
share of Company Common Stock in the manner provided in and otherwise in
accordance with Section 2.02. Each share of Class C Stock that is issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive the Merger Consideration, of which the Class C Merger
Consideration (as defined below) shall be delivered to the holder thereof upon
surrender of the certificate formerly representing such share of Class C Stock
in the manner provided and otherwise in accordance with Section 2.02. All such
shares of Company Common Stock and Class C Stock, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in the
manner provided in and in accordance with Section 2.02.
(b) Each issued and outstanding share of MergerCo Common Stock shall
be converted into and become one fully paid and nonassessable share of common
stock, $0.01 par value per share, of the Surviving Corporation (the
"Recapitalized Common Stock").
(c) All shares of Company Common Stock that are held by the Company as
treasury stock shall be cancelled and retired and shall cease to exist and no
Merger Consideration shall be delivered in exchange therefor.
For purposes of this Agreement "Cash Merger Consideration" shall equal the
amount per share determined as of the Closing Date in accordance with the
following formula:
($330,000,000-$15,000,000-Debt-ECNAVA-SHFEES)
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Cash Merger Consideration = OSCS
where:
Debt equals the Indebtedness (as defined in Section 3.06(b) below) of the
Company as of the opening of business on the Closing Date plus all
accrued interest thereon and
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any prepayment premiums or penalties associated therewith (assuming
such Indebtedness is repaid as of the Closing Date);
ECNAVA equals $100,000,000 minus an estimate of the Final Closing Net Asset
Value (as defined below) as determined by the Company five days prior
to the Closing Date and subject to approval by MergerCo; provided,
however, that if MergerCo and the Company do not agree on the ECNAVA
by the close of business on the date prior to the Closing Date, ECNAVA
shall be equal to $100,000,000 minus the Closing Net Asset Value based
on the balance sheet as of June 30, 1998 as prepared by the Company;
SHFEES equals the sum of all fees and expenses incurred by the Company on
behalf of the Stockholders, including without limitation the amounts
payable to each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇ and ▇▇▇▇ LLP and Ernst &
Young, LLP, any transaction bonuses paid or to be paid to officers of
the Company and one-half of audit fees payable to Ernst & Young, LLP
for the preparation of the Closing Balance Sheet, in connection with
this Agreement and the transactions contemplated hereby other than
amounts payable in connection with the transfer of assets and
liabilities from the Company to one of its Subsidiaries which shall be
the obligation of the Surviving Corporation; and
OSCS equals the number of shares of Company Common Stock and Class C Stock
issued and outstanding immediately prior to the Closing.
For purposes of this Agreement, "Merger Consideration" shall equal (i) with
respect to the Company Common Stock, the Cash Merger Consideration plus the
Contingent Merger Consideration, and (ii) with respect to the Class C Stock, the
Class C Merger Consideration plus the Contingent Merger Consideration. For
purposes of this Agreement, "Contingent Merger Consideration" shall equal (i)
any amounts when, as and if released from the Escrow Fund (as defined below), or
paid by the Surviving Corporation pursuant to Section 2.06(c) below, to the
Stockholders Representatives for distribution to the Stockholders divided by
(ii) OSCS. For purposes of this Agreement, "Class C Merger Consideration" shall
equal 100 shares of Recapitalized Common Stock and a junior subordinated note in
an aggregate principal amount equal to the product of (i) the Cash Merger
Consideration and (ii) a fraction, the numerator of which is 35 and the
denominator of which is 55 and with terms and conditions identical to the junior
subordinated notes issued immediately prior to the Effective Time by MergerCo to
the Fund (it being understood that the securities constituting the Class C
Merger Consideration will be issued at the same price and in the same proportion
or "strip" as the comparable securities are issued to the Fund). For purposes of
this Agreement, "Estimated Closing Net Asset Value" shall equal the estimate of
the Final Closing Net Asset Value used to determine ECNAVA.
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2.02 Exchange of Certificates.
(a) With respect to any certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock or Class C Stock (other than Dissenting Shares and shares
held by the Company) (the "Certificates") and are delivered at the Closing, the
Surviving Corporation will, with respect to Certificates representing shares of
Company Common Stock, pay by check or by wire transfer immediately after the
Effective Time the Cash Merger Consideration per share to the holder thereof
and, with respect to Certificates representing shares of Class C Stock, deliver
the Class C Merger Consideration per share. With respect to any Certificates not
delivered at the Closing, the Surviving Corporation will promptly, and in any
event not later than one business day following the Effective Time, mail (and to
make available for collection by hand) to each holder of record of such
Certificate, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Surviving Corporation and shall be
in such form and have such other provisions as MergerCo and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration (which shall provide
that at the election of the surrendering holder, Certificates may be
surrendered, and payment therefor collected, by hand delivery). Upon surrender
of a Certificate for cancellation to the Surviving Corporation or to such other
agent or agents as may be appointed by the Surviving Corporation, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly represented by such Certificate, with the
Cash Merger Consideration or the Class C Merger Consideration (as the case may
be) to be mailed (or made available for collection by hand if so elected by the
surrendering holder) within three business days of receipt thereof, and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer. Until surrendered as contemplated by
this Section 2.02, each Certificate (other than Certificates representing
Dissenting Shares) shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration as contemplated by
this Section 2.02.
(b) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Surviving Corporation will
issue in exchange for such lost, stolen or destroyed Certificate the Cash Merger
Consideration or the Class C Merger Consideration (as the case may be)
deliverable in respect thereof as determined in accordance with this Article II,
provided that the Person (as defined below) to whom the Cash Merger
Consideration or the Class C Merger Consideration (as the case may be) is paid
shall, as a condition precedent to the payment thereof, indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
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(c) After the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no transfers on the stock transfer books of
the Surviving Corporation of shares of Company Common Stock or Class C Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration as provided in
this Article II.
(d) None of MergerCo, the Company, the Surviving Corporation, or any
other person shall be liable to any former holder of shares of Company Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) Any payment made pursuant to this Section 2.02 shall be subject
to and made net of applicable withholding taxes.
2.03 Options and Warrants.
(a) The Company shall take all actions necessary or appropriate
to cause all of the warrants to purchase Company Common Stock (individually, a
"Company Warrant" and collectively, the "Company Warrants") to be exercised
prior to the Closing Date by the respective holder of the Company Warrants set
forth on Schedule II attached hereto. Any Company Warrants not so exercised
prior to the Closing will represent the right to receive the Merger
Consideration upon exercise and will be included for the purposes of determining
OSCS.
(b) The Company shall cause all of the options to purchase Company
Common Stock (individually, a "Company Stock Option" and collectively, the
"Company Stock Options") granted to any current employee of the Company under
the Company's Management Incentive Plan not assumed by the Surviving Corporation
with the consent of MergerCo to be exercised prior to the Closing Date by the
respective holder of the Company Stock Options set forth on Schedule II attached
hereto. With the consent of MergerCo and the affected optionees, prior to the
Effective Time, the Company anticipates amending certain of the Company Stock
Options to provide for the issuance of Class C Stock in lieu of Class B Stock.
Any Company Stock Options so amended shall not be exercised prior to the Closing
and, upon exercise thereof, shall represent the right to receive the Merger
Consideration otherwise payable to a holder of Class C Stock immediately prior
to the Effective Time. Shares of Class C Stock issuable upon exercise of
Company Stock Options shall be included for the purposes of determining OSCS.
To the extent any Contingent Merger Consideration is distributed by the
Stockholders Representatives with respect to any such shares after the Effective
Time, such amount shall be delivered by the Surviving Corporation until the
exercise of such Company Stock Option, at which time such amounts shall be
delivered to the person exercising such Company Stock Option.
2.04 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and
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which are held by shareholders who have validly demanded payment of the fair
value for such shareholders' shares as determined by appraisal in accordance
with the MBCL (the "Dissenting Shares"), shall not be converted into or be
exchangeable for the right to receive the Merger Consideration provided in
Section 2.01(a) of this Agreement, unless and until such holder shall have
failed to perfect or shall have effectively withdrawn or lost such holder's
right to appraisal and payment under the MBCL. If such holder shall have so
failed to perfect or shall have effectively withdrawn or lost such right, such
holder's Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, at the Effective Time, the right to receive the
consideration provided for in Section 2.01 of this Agreement, without any
interest thereon.
2.05 Escrow
(a) At the Closing the Surviving Corporation, the Stockholders
Representatives (as defined below) and the Escrow Agent (as defined therein)
shall execute and deliver the Escrow Agreement attached hereto as Exhibit B (the
"Escrow Agreement"). At the Effective Time the Surviving Corporation shall
deposit with the Escrow Agent $15,000,000 (the "Escrow Fund"), of which
$5,000,000 shall be for the purpose of securing the obligations of the holders
of capital stock of the Company or Company Stock Options immediately prior to
the Effective Time (the "Stockholders") set forth in Section 2.06 below with
respect to the post-closing adjustment (the "Adjustment Escrow Fund") and
$10,000,000 of which shall be for the purpose of satisfying indemnification
obligations of the Stockholders under Article XI hereof (the "Indemnification
Escrow Fund"). Amounts in the Adjustment Escrow Fund shall only be available
for the purpose of satisfying the Stockholders' obligations set forth in Section
2.06 below and amounts in the Indemnification Escrow Fund shall only be
available for the purpose of satisfying the Stockholders' indemnification
obligations under Article XI hereof. The Escrow Fund shall be held by the
Escrow Agent under the Escrow Agreement pursuant to the terms thereof. The
Escrow Fund shall be held as a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party, and shall be held and disbursed solely for the purpose and in accordance
with the terms of the Escrow Agreement.
(b) The adoption of this Agreement and the approval of the
Merger by the Stockholders entitled to vote thereon shall constitute approval of
the Escrow Agreement and of all of the arrangements relating thereto, including
without limitation the establishment of the Escrow Fund, the indemnification
obligations of Article XI hereof and the appointment of the Stockholders
Representatives.
2.06 Closing Adjustment.
(a) Promptly following the Effective Time, but in no event later
than 60 days after the Effective Time, the Stockholders Representatives (as
defined below) shall with the cooperation of the Surviving Corporation prepare
and submit to the Surviving Corporation an audited consolidated balance sheet of
the Company and its subsidiaries as of the close of business on the date prior
to the Closing Date (the "Closing Balance Sheet") and a certificate
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setting forth, in reasonable detail, the Stockholders Representatives'
calculation of the Closing Net Asset Value (as defined below) of the Company and
its Subsidiaries as of the close of business on the date prior to the Closing
Date (the "Proposed Closing Net Asset Value"). In the event the Surviving
Corporation disputes the correctness of the Proposed Closing Net Asset Value,
the Surviving Corporation shall notify the Stockholders Representatives of its
objections within 20 days after receipt of the calculation of the Proposed
Closing Net Asset Value and shall set forth, in writing and reasonable detail,
the reasons for the Surviving Corporation's objections. To the extent the
Surviving Corporation does not object, in writing and in reasonable detail as
required and within the time period contemplated by this Section 2.06(a), the
Surviving Corporation shall be deemed to have accepted the Proposed Closing Net
Asset Value and the matter shall not be considered to be in dispute. If the
Surviving Corporation submits a notice of objection, the Stockholders
Representatives and the Surviving Corporation shall discuss in good faith the
matters in dispute. If the Surviving Corporation and the Stockholders
Representatives are unable to resolve such disputes within 20 days after the
submission of the Surviving Corporation's notice of objection, the Stockholders
Representatives and the Surviving Corporation shall select a nationally known
independent accounting firm (other than Ernst & Young LLP) to resolve the
matters in dispute (in a manner consistent with Section 2.06(b)), and the
determination of such firm in respect of the correctness of each matter
remaining in dispute shall be conclusive and binding on the Stockholders, the
Stockholders Representatives and the Surviving Corporation. If the Stockholders
Representatives and the Surviving Corporation are unable to agree on such an
accounting firm, a "Big Six" firm (other than Ernst & Young LLP) will be
selected by lot. The Closing Net Asset Value of the Company as of the close of
business on the day prior to the Closing Date, as finally determined pursuant to
this Section 2.06(a) (whether by failure of the Surviving Corporation to deliver
notice of objection, by agreement of the Stockholders Representatives and the
Surviving Corporation or by determination of the independent accountants
selected as set forth above) and as adjusted, if applicable, in accordance with
Section 2.06(e) below, is referred to herein as the "Final Closing Net Asset
Value." For purposes hereof "Closing Net Asset Value" shall mean the assets of
the Company on the Closing Balance Sheet less the liabilities of the Company on
the Closing Balance Sheet (other than the Indebtedness (as defined in Section
3.06(b) below) of the Company on the Closing Balance Sheet).
(b) The Proposed Closing Net Asset Value, the Final Closing Net Asset
Value and the Closing Balance Sheet shall be determined in accordance with
generally accepted accounting principles, applied in a manner consistent with
those used in the preparation of the audited financial statements of the Company
and its subsidiaries for the year ended December 31, 1997, as disclosed in the
notes thereto.
(c) If the Final Closing Net Asset Value is greater than the
Estimated Closing Net Asset Value, the excess shall be paid by the Surviving
Corporation to the Stockholders Representatives (for distribution to the
Stockholders in accordance with Schedule I) with simple interest thereon from
the Closing Date to the date of payment at a floating rate per annum equal to
the per annum interest rate announced from time to time by BankBoston, N.A. as
its prime rate in effect ("Prime Rate"). If the Final Closing Net Asset Value is
less than the Estimated Closing Net Asset Value, the difference shall be paid to
the Surviving Corporation by
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the Stockholders with simple interest thereon from the Closing Date to the date
of payment at the Prime Rate; provided that such amount shall, to the extent of
available funds in the Adjustment Escrow Fund, be paid to the Surviving
Corporation by the Escrow Agent from the Adjustment Escrow Fund. Any payment
required under this Section 2.06(c) shall be made in immediately available funds
not later than six Business Days after the determination of the Final Closing
Net Asset Value by wire transfer to a bank account designated in writing by the
party entitled to receive the payment. Not later than three Business Days after
determination of the Final Closing Net Asset Value, the Surviving Corporation
and the Stockholders Representatives shall jointly instruct the Escrow Agent in
writing to make any payment from the Adjustment Escrow Fund required to be made
to the Surviving Corporation pursuant to this Section 2.06(c) and distribute the
balance of the Adjustment Escrow Fund (including interest thereon), if any, to
the Stockholders Representatives for distribution to the Stockholders in
accordance with Schedule I. "Business Day" shall mean any day except a Saturday,
Sunday or other day on which the New York Stock Exchange is authorized by law to
close.
(d) The Stockholders Representatives and the Surviving
Corporation shall make available and shall cause Ernst & Young LLP to make
available, in accordance with reasonable and customary practices and
professional standards, the books, records, documents and work papers underlying
the preparation and review of the financial statements of the Company for the
year ended December 31, 1997 and the calculation of the Proposed Closing Net
Asset Value. The Surviving Corporation shall make available and shall cause its
independent accountants to make available, in accordance with reasonable and
customary practices and professional standards, the books, records, documents
and work papers created or prepared by or for MergerCo in connection with the
review of the Proposed Closing Net Asset Value and the other matters
contemplated by Section 2.06(a).
(e) The fees and expenses, if any, of the accounting firm
selected to resolve any disputes between the Stockholders Representatives and
the Surviving Corporation in accordance with Section 2.06(a) shall be paid by
the Surviving Corporation and one-half of such amount shall be deducted from the
Final Closing Net Asset Value.
2.07 Stockholders Representatives.
(a) In order to efficiently administer or effect the waiver of
any condition to the obligations of the Stockholders to consummate the
transactions contemplated hereby, the preparation of the Proposed Closing Net
Asset Value and Final Closing Net Asset Value, and any amendment to this
Agreement, the Stockholders hereby designate ▇▇▇▇ Bu and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
as their representatives (the "Stockholders Representatives").
(b) The Stockholders hereby authorize the Stockholders
Representatives acting jointly but not singly (i) to take all action necessary
in connection with the waiver of any condition to the obligations of the
Stockholders to consummate the transactions contemplated hereby, (ii) to give
and receive all notices required to be given under the Agreement, and (iii) to
take any and all additional action as is contemplated to be taken by or on
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behalf of the Stockholders by the terms of this Agreement, including, without
limitation, Article XI hereof.
(c) In the event that a Stockholders Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such position,
Stockholders holding, prior to the Closing, a majority of the Company Shares as
set forth on Schedule I attached hereto shall select another representative to
fill such vacancy and such substituted representative shall be deemed to be a
Stockholders Representative for all purposes of this Agreement.
(d) All decisions and actions by the Stockholders Representatives
hereunder shall be binding upon all of the Stockholders, and no Stockholder
shall have the right to object, dissent, protest or otherwise contest the same.
(e) By their adoption of this Agreement and the approval of the
Merger, the Stockholders agree that:
(i) the Surviving Corporation shall be able to rely
conclusively on the instructions and decisions of the Stockholders
Representatives as to any actions required to be taken by the Stockholders
Representatives hereunder, and no party hereunder shall have any cause of action
against the Surviving Corporation for any action taken by the Surviving
Corporation in reliance upon the instructions or decisions of the Stockholders
Representatives;
(ii) all actions, decisions and instructions of the
Stockholders Representatives shall be conclusive and binding upon all of the
Stockholders and no Stockholder shall have any cause of action against the
Stockholders Representatives for any action taken, decision made or instruction
given by the Stockholders Representatives under this Agreement, except for fraud
or willful breach of this Agreement by the Stockholders Representatives;
(iii) the provisions of this Section 2.07 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Stockholder may have in
connection with the transactions contemplated by this Agreement;
(iv) remedies available at law for any breach of the provisions
of this Section 2.07 are inadequate; therefore, the Surviving Corporation and
the Company shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages if either the Surviving Corporation or
the Company brings an action to enforce the provisions of this Section 2.07; and
(v) the provisions of this Section 2.07 shall be binding upon
the executors, heirs, legal representatives and successors of each Stockholder,
and any references in this Agreement to a Stockholder or the Stockholders shall
mean and include the successors to the Stockholders' rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and distribution or
otherwise.
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(f) All fees and expenses incurred by the Stockholders
Representatives after the Closing shall be the responsibility of the
Stockholders and the Stockholders Representatives shall have the right to
reimbursement of such fees and expenses from any amounts distributed to the
Stockholders Representatives under this Agreement for distribution to the
Stockholders and shall have the right to defer the distribution of all or a
portion of any such amounts in reasonable anticipation of any fees or expenses
incurred by them in the performance of their duties hereunder.
(g) The Stockholders Representatives shall not be liable for any act
done or omitted hereunder as Stockholders Representatives without bad faith or
gross negligence and any act done or omitted pursuant to the advice of counsel
shall be conclusive evidence of good faith. The Stockholders shall severally
indemnify the Stockholders Representatives and hold them harmless against any
loss, liability or expense incurred without gross negligence or bad faith on the
part of the Stockholders Representatives and arising out of or in connection
with the acceptance or administration of their duties hereunder. Any amounts
payable to the Stockholders Representatives hereunder shall be the
responsibility of the Stockholders and shall not be paid out of the Escrow Funds
unless and until distributed to the Stockholders Representatives for
distribution to the Stockholders.
ARTICLE III
REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to MergerCo that, except as set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule") or
contemplated hereby in connection with the authorization and issuance of Class C
Stock, the statements contained in this Article III are correct and complete as
of the date of this Agreement. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Article III.
3.01 Organization.
(a) The Company. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. The Company is duly qualified to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
necessary. The Company has all requisite corporate power and authority to carry
on the business in which it is now engaged and to own and use the properties now
owned and used by it. Section 3.01(a) of the Disclosure Schedule lists the
directors and officers of each of the Company and its Subsidiaries. The Company
has delivered to MergerCo correct and complete copies of the charter and bylaws
of each of the Company and its Subsidiaries (each as amended to date). The
minute books (containing the records of meetings of the stockholders, the board
of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of each of the Company and each of
its Subsidiaries are correct and complete. None of the Company or its
Subsidiaries (as defined below) is in default under or in violation of any
provision of its charter or bylaws. For
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purposes of this Agreement, "Company Material Adverse Effect" means any change,
effect or circumstance that individually or in the aggregate with all other such
changes, effects or circumstances (a) is materially adverse to the assets,
business, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole (other than changes that are the result of
economic factors affecting the economy as a whole or changes that are the result
of factors generally affecting the specific markets in which the Company and its
subsidiaries compete) or (b) materially impairs the ability of the Company to
consummate the Merger; provided, however, that a Company Material Adverse Effect
shall not include any adverse change, effect or circumstance to the extent that
it arises out of or results from actions contemplated by the Parties in
connection with this Agreement, or to the extent that it is attributable to the
announcement or performance of this Agreement or the transactions contemplated
by this Agreement.
(b) Subsidiaries. Each of the Subsidiaries of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization as set forth on Section 3.01(b) of the
Disclosure Schedule. Each such Subsidiary is duly qualified to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is necessary. Each such Subsidiary has all requisite corporate
power and authority to carry on its business in which it is now engaged and to
own and use the properties now owned and used by it. For purposes of this
Agreement, "Subsidiary" means any corporation, limited liability company,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by the Company or one or more of the other Subsidiaries of the
Company or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Subsidiaries of the
Company or a combination thereof. For purposes hereof, the Company shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if the Company shall be
allocated, directly or through one or more of its Subsidiaries, a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any general partner of such limited
liability company, partnership, association or other business entity. A
materially adverse change, effect or circumstance with respect to the assets,
business, financial condition, operations, results of operations or future
prospects of any of the Subsidiaries of the Company other than Globe Elastic Co.
Inc. ("Elastic") (collectively, the "Other Subsidiaries"), individually or in
the aggregate, could not cause a Company Material Adverse Effect.
3.02 Capitalization.
(a) The Company. As of the date hereof, the entire authorized
capital stock of the Company consists of (i) 2,000,000 shares of Class A Common
Stock, par value $0.01 per share, of which 100,000 shares are issued and
outstanding and 99,000 are held in treasury, (ii) 2,000,000 shares of Class B
Common Stock, par value $0.01 per share, of which
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931,404 shares are issued and outstanding and 683,314 are held in treasury, and
(iii) 30,000 shares of Series A Cumulative Preferred Stock, par value $0.01 per
share, none of which shares are issued and outstanding and none of which are
held in treasury. All of the issued and outstanding shares of capital stock of
the Company are and as of the Closing will be duly authorized, validly issued,
fully paid, and nonassessable. Schedule I sets forth a true and correct
description of the ownership of all issued and outstanding shares of capital
stock of the Company. Except as set forth on the Disclosure Schedule, there are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition or acquisition of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Company. There are no agreements, voting trusts, proxies or understandings with
respect to the voting, or registration under the Securities Act of 1933, as
amended (the "Securities Act") of any Company Shares .
(b) Subsidiaries. The authorized, issued and outstanding capital
stock of each of the Company's Subsidiaries is set forth in Section 3.02(b) of
the Disclosure Schedule. All of the issued and outstanding capital stock of
each such Subsidiary is validly issued, fully paid and nonassessable. There are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which any such Subsidiary is a party or which are binding upon
such Subsidiary providing for the issuance, disposition or acquisition of any of
its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to any such Subsidiary. There are
no agreements, voting trusts, proxies or understandings with respect to the
voting, or registration under the Securities Act, of any shares of capital stock
of any such Subsidiary. All of the issued and outstanding shares of capital
stock of each such Subsidiary are owned of record and beneficially by the
Company, free and clear of any mortgage, pledge, Security Interest (as defined
below), encumbrances, charge or other lien, contractual restriction or covenant,
tax, option, warrant, purchase rights, equities, demand, or other claim (whether
arising by contract or by operation of law), other than applicable federal and
state securities law restrictions.
3.03 Authorization. The execution and delivery by the Company of
this Agreement and the agreements provided for herein and the consummation by
the Company of all transactions contemplated hereunder and thereunder by the
Company, have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by the Company. This Agreement
and all other agreements and obligations entered into and undertaken in
connection with the transactions contemplated hereby to which the Company is a
party constitute the valid and legally binding obligations of the Company,
enforceable against it in accordance with their respective terms.
3.04 Noncontravention. Subject to compliance with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"), neither the execution and delivery of
this Agreement by the Company, nor the consummation by the Company and its
Subsidiaries of the transactions contemplated hereby, will (a) conflict with or
violate any provision of the charter or bylaws of the Company or its
Subsidiaries, (b) require on the part of the Company or its Subsidiaries any
filing with, or any
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permit, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (c) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any material contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest or other material arrangement to
which the Company or its Subsidiaries is a party or by which the Company or its
Subsidiaries is bound or to which any of their assets is subject, (d) result in
the imposition of any Security Interest upon the Company Shares or any assets of
the Company or its Subsidiaries or (e) violate any constitution, statute, order,
injunction, decree, judgment, ruling, charge, rule, regulation or other
restriction of any government, governmental agency or court applicable to the
Company, its Subsidiaries or any of their respective properties or assets.
For purposes of this Agreement, "Security Interest" means any mortgage,
pledge, security interest, encumbrance, charge, or other lien (whether arising
by contract or by operation of law), other than (i) mechanic's, materialmen's,
and similar liens, (ii) liens arising under workers' compensation, unemployment
insurance, social security, retirement, and similar legislation, and (iii) liens
on goods in transit incurred pursuant to documentary letters of credit, in each
case arising in the ordinary course of business consistent with the past custom
and practice (as determined by reference to, among other things, quantity and
frequency) of the Company and its Subsidiaries, taken as a whole ("Ordinary
Course of Business"). For purposes of this Agreement, actions taken by the
Company or its Subsidiaries, including the execution of contracts, the borrowing
of money, or the making of capital expenditures or commitments therefor, in
connection with the Company's ongoing 56-cell expansion of its plant in
Tuscaloosa, Alabama shall be deemed to be in the Ordinary Course of Business.
3.05 Subsidiaries, Investments. Except as set forth on the
Disclosure Schedule, neither the Company nor any of its Subsidiaries controls,
directly or indirectly, any corporation, limited liability company, partnership,
trust or other business association, or owns or holds the rights to acquire any
shares of stock or any other security or interest in any other Person. For
purposes of this Agreement, "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
3.06 Financial Statements; Indebtedness.
(a) The Company has provided to MergerCo copies of (a) the
audited consolidated balance sheets and consolidated statements of income and
cash flows for the Company and its Subsidiaries as of and for each of the years
ended December 31, 1997 (the "Most Recent Fiscal Year End"), 1996 and 1995 and
(b) the unaudited consolidated balance sheet (the "Current Balance Sheet") and
consolidated statements of income and cash flows for the Company and its
Subsidiaries as of and for the four-month period ended April 30, 1998. Except
as disclosed in the notes thereto, such financial statements (collectively, the
"Financial
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Statements") have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby and fairly present, in all material
respects, the consolidated financial condition and the results of operations and
cash flows of the Company and its Subsidiaries as of the respective dates
thereof and for the periods referred to therein, and are consistent with the
books and records of the Company and its Subsidiaries; provided, however, that
the Financial Statements referred to in clause (b) above are subject to normal
year end adjustments (which will not be material individually or in the
aggregate) and do not include footnotes.
(b) Except as set forth in Section 3.06(b) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any Indebtedness.
For purposes of this Agreement, "Indebtedness" means, without duplication, (i)
all indebtedness (and accrued interest thereon) for borrowed money (including,
without limitation, purchase money obligations and all indebtedness under
revolving credit arrangements), (ii) any obligation evidenced by any note, bond,
debenture or similar instrument, (iii) all capitalized lease obligations, (iv)
any commitment by which a Person assures a creditor against loss (including,
without limitation, contingent reimbursement obligations with respect to letters
of credit) and (v) all guarantees of any of the foregoing.
3.07 Absence of Certain Changes. Except as contemplated or
permitted by this Agreement, since the Most Recent Fiscal Year End, there have
not been any material adverse changes in the business, assets, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole. Without limiting the generality of the foregoing, except as
contemplated or permitted by this Agreement, since the Most Recent Fiscal Year
End, neither the Company nor any of its Subsidiaries has taken any of the
following actions or permitted any of the following events to occur, and none of
them have occurred:
(a) borrowed any amount or incurred or become subject to any
liabilities, except liabilities incurred in the Ordinary Course of Business (as
defined in Section 3.04), liabilities under contracts entered into in the
Ordinary Course of Business and in the case of the Subsidiaries, borrowings from
the Company;
(b) subjected to any Security Interest any of its assets, except
liens for current Taxes (as defined in Section 3.09) not yet due and payable and
liens for current Taxes that are being contested in good faith;
(c) sold, assigned, leased or transferred any of its assets in a
single transaction or series of related transactions in an amount in excess of
$100,000, other than sales of inventory for fair consideration in the Ordinary
Course of Business;
(d) suffered any extraordinary losses material to the Company
and its Subsidiaries, taken as a whole, or waived any rights of material value
to the Company and its Subsidiaries, taken as a whole;
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(e) issued, sold or transferred any of its capital stock or other
equity securities, securities convertible into its capital stock or other equity
securities or warrants, options or other rights to acquire its capital stock or
other equity securities;
(f) declared or paid any dividends or made any distributions on the
Company's capital stock or other equity securities or redeemed or purchased any
shares of the Company's capital stock or other equity securities;
(g) made any capital expenditures or commitments therefor in an amount
in excess of $300,000 in the aggregate;
(h) entered into any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) either involving more
than $500,000 (other than purchase orders for the purchase or sale of inventory
or raw materials in the Ordinary Course of Business) or outside the Ordinary
Course of Business;
(i) no party (including any of the Company and its Subsidiaries) has
accelerated, terminated, or canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) involving
more than $100,000 to which any of the Company or its Subsidiaries is a party or
by which any of them is bound;
(j) made any capital investment in, any loan to, or any acquisition of
the securities or assets of any other person (or series of related capital
investments, loans, and acquisitions) either involving more than $100,000 or
outside the Ordinary Course of Business;
(k) delayed or postponed the payment of accounts payable and other
liabilities outside the Ordinary Course of Business;
(l) granted any license or sublicense of any rights under or with
respect to any Company Intellectual Property (as defined in Section 3.12) (other
than trademark licenses granted in connection with the sale of inventory in the
Ordinary Course of Business);
(m) made any loan to, or entered into any other transaction with, any
of its directors, officers, and employees outside the Ordinary Course of
Business;
(n) made or authorized any change in the charter or bylaws of the
Company and its Subsidiaries, except for those changes contemplated hereby;
(o) experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property in excess of $250,000 in the aggregate;
(p) entered into any collective bargaining agreement, written or oral,
or modified the terms of any such agreement;
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(q) entered into any employment contract, written or oral, or modified
the terms of any such existing employment contract under which the employee is
paid an annual base salary of $100,000 or more;
(r) granted any increase in the base compensation of any of its
directors, officers, and employees outside the Ordinary Course of Business;
(s) adopted, amended, modified, or terminated any bonus, profit-
sharing, incentive, severance, or other plan, contract or commitment for the
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);
(t) made any other change in employment terms for any of its
directors, officers, and employees whose annual base salary is $100,000 or more
or outside the Ordinary Course of Business; or
(u) made or pledged to make any charitable contribution in excess of
$125,000 in the aggregate.
3.08 Undisclosed Liabilities. None of the Company and its
Subsidiaries has any liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, due or to become due,
including any, liability for Taxes), except for (a) liabilities shown on the
Current Balance Sheet, (b) liabilities which have arisen since April 30, 1998 in
the Ordinary Course of Business and (c) contractual liabilities incurred in the
Ordinary Course of Business.
3.09 Tax Matters. Each of the Company and its Subsidiaries has
filed all material Tax Returns (as defined below) that it was required to file
and all such Tax Returns were correct and complete, except for any error or
omission that would not reasonably be expected to have a Company Material
Adverse Effect. Each of the Company and its Subsidiaries has paid (or accrued
on the Closing Balance Sheet) all Taxes (as defined below) (whether or not shown
to be due on any such Tax Returns). The accrual for Taxes on the Closing Balance
Sheet would be adequate to pay all Tax liabilities of the Company and its
Subsidiaries if its current tax year were treated as ending on the Closing Date.
All Taxes that the Company or its Subsidiaries are or were required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity, except for any such
Taxes with respect to which the failure to withhold, collect or pay would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth on the Section 3.09 of the Disclosure Schedule, there are no audits of any
Company Tax Returns pending, and the Company has not received notice of any
potential audits, that would reasonably be expected to have a Company Material
Adverse Effect. Except as set forth on Section 3.09 of the Disclosure Schedule,
none of the Company or its Subsidiaries has consented to extend the time, nor is
the beneficiary of any extension of time, in which any Tax any be assessed or
collected by any taxing authority. None of the Company or its Subsidiaries is a
party to or bound by any Tax allocation or Tax sharing agreement with any other
Person, and neither the Company nor its
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Subsidiaries has any current or potential contractual obligation to indemnify
any other Person with respect to Taxes. None of the Company or its Subsidiaries
(i) has been a member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of which was the
Company) or (ii) has any liability for the Taxes of any Person (other than any
of the Company or its Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise. No claim has been made during the last
three taxable years by a taxing authority in a jurisdiction where the Company or
its Subsidiaries do not file Tax Returns that such Person is or may be subject
to taxation by such jurisdiction. None of the Company or its Subsidiaries has
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Except as set forth in Section 3.09 of the
Disclosure Schedule, none of the Company or its Subsidiaries has made any
payments, is obligated to make any payments, or is party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Section 280G of the Code. None of the Company or its
Subsidiaries will be required (i) as a result of a change in method of
accounting for a Tax period, to include any adjustment under Section 481(c) of
the Code (or any corresponding provision of state, local, or foreign Tax law) in
taxable income for any such Tax Period, or (ii) as a result of any "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provisions of state, local or foreign Tax law), to include any item of income or
exclude any item of deduction from any Tax period. The Company has provided to
MergerCo copies of all material Tax Returns that it was required to file for
each of the taxable years 1997, 1996 and 1995. Except as set forth in Section
3.09 of the Disclosure Schedule, none of the Company nor its Subsidiaries 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 (i) any deferred intercompany gain or any excess
loss account described in Treasury Regulations under Section 1502 of the Code
(or any corresponding or similar provision or administrative rule of federal,
state, local or foreign tax law) arising prior to the Closing Date, other than
transactions contemplated or required by this Agreement, or (ii) any installment
sale made prior to the Closing Date. For purposes of this Agreement, "Taxes"
means all taxes, including without limitation income, gross receipts, ad
valorem, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment and franchise taxes imposed by the United
States of America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any such
government, and any interest, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any Tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements, forms or other information
required to be supplied to a taxing authority in connection with Taxes.
3.10 Tangible Assets. The Company or Elastic has good title to, or a
valid leasehold interest in, all of the buildings, machinery, equipment and
other tangible assets reflected on the Current Balance Sheet or necessary for
the conduct of the business of the Company or any of its Subsidiaries (other
than property sold, consumed or otherwise disposed of in the Ordinary Course of
Business since the date of the Current Balance Sheet), free and clear of all
Security Interests, except for (i) Security Interests listed on the Disclosure
Schedule, and (ii)
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liens for taxes not yet due and payable or due but not delinquent or being
contested in good faith by appropriate proceedings for which appropriate
reserves under GAAP have been taken. Each such material tangible asset is to the
knowledge of the Company free from defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it is used.
3.11 Leased and Owned Real Property. The Disclosure Schedule lists
all real property that the Company or its Subsidiaries owns (the "Owned Real
Property") or leases (the "Leased Real Property"). With respect to each parcel
of Owned Real Property, except as set forth in the Disclosure Schedule: (i) the
Company or a Subsidiary thereof has good and marketable title thereto and each
such parcel is free and clear of all Security Interests; (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or oral,
granting to any person the right of use or occupancy of any portion of such
parcel; (iii) there are no outstanding actions or rights of first refusal or
options to purchase such parcel or any portion thereof or interest therein; (iv)
to the Company's knowledge, there is no physical condition affecting such
property that materially interferes with access to or the present use of such
parcel in the Ordinary Course of Business; and (v) to the Company's knowledge,
all buildings and improvements located thereon are in good working order and
condition. All certificates of occupancy, permits, licenses, franchises,
approvals, and authorizations of all Governmental Entities having jurisdiction
over the Tuscaloosa, Alabama facility (the "Alabama Facility"), required or
appropriate to have been issued to the Company to enable the Alabama Facility to
undergo the current expansion and to otherwise be lawfully occupied and used for
all of the purposes for which it is currently occupied and used have been
lawfully issued and are, as of the date hereof, in full force and effect. The
Company has provided MergerCo with complete and correct copies of all material
contracts for construction and equipment (collectively, "Construction"), and
an updated Construction budget, as well as amounts paid to date for Construction
and estimated Construction completion costs in connection with the expansion of
the Alabama Facility. The Company has made available to MergerCo correct and
complete copies of the leases and subleases (as amended to date) listed in the
Disclosure Schedule. All such real property leases are in full force and effect
and there exists no default of the Company or any of its Subsidiaries or, to the
Company's knowledge, any other party thereto, under any such real property
leases.
3.12 Intellectual Property.
(a) The Disclosure Schedule contains a complete and correct list of
all patents, trademarks, registered copyrights, trade names and service marks
(and any applications therefor) (collectively, the "Company Intellectual
Property") that are currently used in the business or operations of the Company
or any of its Subsidiaries. Each of the Company or its Subsidiaries owns and
possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Company Intellectual Property as currently used,
free and clear of all Security Interests.
-19-
(b) No claim by any third party contesting the validity,
enforceability, use or ownership of any of the Company Intellectual Property has
been made, is currently outstanding or to the Company's knowledge is threatened.
Neither the Company nor any of its Subsidiaries has received any notices of any
infringement or misappropriation by, or conflict with, any third party with
respect to the Company products (including, without limitation, any demand or
request that the Company license any rights from a third party). Neither the
Company nor any of its Subsidiaries has infringed, misappropriated or otherwise
conflicted with any intellectual property rights of any third parties and
neither the Company nor any of its Subsidiaries is aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the business of the Company or any of its Subsidiaries as currently
conducted.
(c) All of the Company Intellectual Property are or will be owned by,
or properly assigned or licensed to, the Company or its Subsidiaries at the time
of the Closing. The transactions contemplated by this Agreement will have no
material adverse effect on the right, title and interest in and to the Company
Intellectual Property or the validity and enforceability thereof. The Company
and its Subsidiaries have each taken reasonable steps to maintain and protect
the Company Intellectual Property. To the Company's knowledge, no loss or
expiration of any Company Intellectual Property is threatened, pending or
reasonably foreseeable, except for the expiration of patents under law.
3.13 Contracts.
(a) As of the date of this Agreement, neither the Company nor any
of its Subsidiaries is a party to any written or oral:
(1) arrangement (or group of related contracts) for the lease
of personal property from or to third parties providing for lease payments in
excess of $250,000 annually;
(2) contract (or group of related arrangements) for the
purchase or sale of products or services which will extend over a period of more
than one year, result in a material loss to the Company and its Subsidiaries,
taken as a whole, or involve consideration in excess of $200,000;
(3) arrangement establishing a partnership or joint venture;
(4) arrangement (or group of related arrangements) under
which it has created, incurred, assumed, or guaranteed (or may create, incur,
assume, or guarantee) indebtedness (including capitalized lease obligations)
involving more than $50,000 or under which it has imposed (or may impose) a
Security Interest on any assets, except for any Security Interests listed on the
Disclosure Schedule;
-20-
(5) arrangement that prohibits the Company or its
Subsidiaries from freely engaging in business anywhere in the world or that
requires the Company to maintain proprietary or confidential information of a
third-party on a confidential basis;
(6) arrangement under which the consequences of a default or
termination would have a Company Material Adverse Effect;
(7) agreement with any of the Stockholders and their
affiliates (as such term is defined in the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder) (individually, an
"Affiliate" and collectively "Affiliates") (other than the Company and its
Subsidiaries);
(8) profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(9) collective bargaining agreements;
(10) agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $100,000 or providing severance benefits;
(11) agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business; or
(12) arrangement (or group of related arrangements) involving
more than $250,000 (other than purchase orders for the purchase of sale of
inventory or raw materials in the Ordinary Course of Business).
(b) The Company has made available to MergerCo a correct and complete
copy of each written agreement (as amended to date) listed in the Disclosure
Schedule and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 3.13(a) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C)
none of the Company, its Subsidiaries or, to the knowledge of the Company, any
other party is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) none of the Company,
its Subsidiaries or, to the knowledge of the Company, any other party has
repudiated any provision of the agreement.
3.14 Litigation. Except as set forth on the Disclosure Schedule,
there is no (a) unsatisfied judgment, order, decree, stipulation or injunction
or (b) claim, complaint, action,
-21-
suit, proceeding, hearing or investigation of or in any Governmental Entity or
before any arbitrator to which the Company or any of its Subsidiaries is a party
or, to the Company's knowledge, which has been threatened against the Company or
any of its Subsidiaries.
3.15 Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or bound by any collective bargaining agreement, nor has either of
them experienced, since January 1, 1992, any (i) strikes or (ii) any grievances,
claims of unfair labor practices or other collective bargaining disputes. The
Company has no knowledge of any organizational effort being made or threatened
since January 1, 1992, by or on behalf of any labor union with respect to
employees of the Company or any of its Subsidiaries.
3.16 Employee Benefits.
(a) The Disclosure Schedule contains a complete and accurate
list of all Employee Benefit Plans (as defined below) maintained, or contributed
to, by the Company, any of its Subsidiaries, or any ERISA Affiliate (as defined
below) for the benefit of present or former employees of the Company or any of
its Subsidiaries (the "Company Plans"). For purposes of this Agreement,
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) other than a "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA, any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and any other material written or oral plan, agreement or arrangement
involving direct or indirect compensation, including without limitation
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation. For purposes of this Agreement, "ERISA Affiliate" means any entity
which is a member of (i) a controlled group of corporations (as defined in
Section 414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Internal Revenue Code of
1986, as amended (the "Code") or the regulations under Section 414(o) of the
Code), any of which includes the Company or any of its Subsidiaries. Complete
and accurate copies of all Company Plans and all related trust agreements,
insurance contracts and summary plan descriptions, have been made available to
MergerCo. Each Company Plan has been administered in accordance with its terms
and each of the Company and its Subsidiaries has met its obligations with
respect to such Company Plan. The Company and the Company Plans are in
compliance with the currently applicable provisions of ERISA and the Code and
the regulations thereunder, including all reporting and disclosure requirements,
and other laws applicable to such plans.
(b) There are no termination proceedings or other claims (except
claims for benefits payable in the normal operation of the Employee Benefit
Plans and proceedings with respect to qualified domestic relations orders),
audits, suits or proceedings against or involving any Company Plan or asserting
any rights or claims to benefits under any Company Plan, or, to the Company's
knowledge, investigations by any Governmental Entity involving any Company Plan.
-22-
(c) The Company Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Company Plans are qualified and the
plans and the trusts related thereto are exempt from federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code. No event has occurred
that would reasonably be expected to give rise to disqualification or loss of
tax-exempt status of any such Company Plan or related trust under Sections
401(a) and 501(a) of the Code.
(d) No Employee Benefit Plan contributed to, or maintained by,
the Company, any of its Subsidiaries or any ERISA Affiliate which is subject to
Title IV of ERISA has been terminated or has accrued benefits, the present value
of which exceeds the assets of such plans, all calculated based on the
assumptions set forth in the Disclosure Schedule. No "accumulated funding
deficiency" (as defined in Section 412 of the Code) has occurred with respect to
any Employee Benefit Plan contributed to, or maintained by, the Company, any of
its Subsidiaries or any ERISA Affiliate which is subject to Section 412 of the
Code or Title IV of ERISA.
(e) None of the Company, its Subsidiaries or any ERISA Affiliate
is obligated to contribute to or has any actual or potential liability with
respect to any multiemployer plans.
(f) There are no unfunded obligations under any Company Plan
providing benefits after termination of employment to any employee of the
Company or any of its Subsidiaries (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred compensation,
but excluding continuation of health coverage required to be continued under
Section 4980B of the Code or other applicable law and insurance conversion
privileges under state law.
(g) No act or omission has occurred and no condition exists with
respect to any Employee Benefit Plan maintained by the Company, any of its
Affiliates or any ERISA Affiliate that would subject the Company, any of its
Subsidiaries or any ERISA Affiliate to any fine, penalty, tax or liability of
any kind imposed under ERISA or the Code.
3.17 Environmental Matters.
(a) Except as disclosed in the Disclosure Schedule:
(i) the Company's and each of its Subsidiaries' operations
are in compliance and have been in compliance with all applicable Environmental
Laws (as defined in Section 3.17(e) below);
(ii) there is no pending civil or criminal litigation,
written notice of violation or formal administrative proceeding relating to any
Environmental Law involving the Company or any of its Subsidiaries;
-23-
(iii) there is no pending investigation, inquiry or
information request relating to any Environmental Law involving the Company or
any of its Subsidiaries; and
(iv) each of the Company and its Subsidiaries have all
permits, licenses and approvals required under Environmental Laws to operate
properties it currently owns and/or leases.
(b) The Disclosure Schedule lists all permits, licenses, and approvals
required under Environmental Laws applicable to the Company's and its
Subsidiaries' operations.
(c) Except as disclosed in the Disclosure Schedule:
(i) there has been no release of Materials of
Environmental Concern (as defined in Section 3.17(f)) to the environment that
would reasonably be expected to give rise to a liability of the Company or any
of its Subsidiaries;
(ii) there is no existing governmental order or claim
requiring the investigation or remediation of a release of Materials of
Environmental Concern; and
(iii) neither the Company nor its Subsidiaries has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, or released any Materials of Environmental Concern, or owned or
operated any property or facility, in a manner that has given or would give rise
to liabilities pursuant to CERCLA or any other Environmental Law.
(e) For purposes of this Agreement, "Environmental Law" means any
federal, state or local law, statute, rule or regulation relating to the
environment or occupational health and safety, including without limitation any
statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) underground and
other storage tanks or vessels; (vi) health and safety of employees; and (vii)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms "release" and "environment" shall have the
meaning set forth in the federal Comprehensive Environmental Compensation,
Liability and Response Act of 1980 ("CERCLA").
(f) For purposes of this Agreement, "Materials of Environmental
Concern" mean any chemicals, pollutants or contaminants, hazardous substances
(as such term is defined under CERCLA), solid wastes and hazardous wastes (as
such terms are defined under the federal Resource Conservation and Recovery Act
("RCRA")), toxic materials, oil or petroleum and petroleum products.
-24-
(g) The Company, the Stockholders and MergerCo agree that the
only representations and warranties of the Company and the Stockholders herein
as to any Environmental Matters (as defined below) are those contained in this
Section 3.17. Without limiting the generality of the foregoing, MergerCo
specifically acknowledges that the representations and warranties contained in
Section 3.18 and Section 3.19 do not relate to Environmental Matters. For
purposes of this Agreement, "Environmental Matters" means any legal obligation
or liability arising under Environmental Laws.
3.18 Legal Compliance. Each of the Company and its Subsidiaries has
complied and is in compliance with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of any federal, state, local or foreign government, or any
Governmental Entity (other than Environmental Laws, which are addressed in
Section 3.17 above), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
3.19 Permits.
(a) The Company and its Subsidiaries have all material permits,
licenses, franchises or authorizations from any Governmental Entity used in or
necessary for their business operations as presently conducted (collectively,
the "Permits"). Neither the Company nor any of its Subsidiaries is in violation
of or default under any of its Permits.
(b) No Permit will be revoked, terminated prior to its normal
expiration date or not renewed solely as a result of the consummation of the
transactions contemplated by this Agreement.
3.20 Insurance. The Disclosure Schedule lists each insurance policy
maintained by the Company or its Subsidiaries. All of such insurance policies
are in full force and effect and neither the Company nor its Subsidiaries is in
default with respect to its obligations under any of such insurance policies.
3.21 Brokers' Fees. Neither the Company nor any of its Subsidiaries
has any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement,
other than to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees and expenses shall be paid by the
Stockholders.
3.22 Indebtedness to and from Officers, Directors and Stockholders:
Other Affiliate Transactions.
(a) Except for intercompany indebtedness payable among the Company and
its Subsidiaries, neither the Company nor any of its Subsidiaries is indebted,
directly or indirectly, to any person who is an officer, director or stockholder
of either the Company or any of its Subsidiaries or any affiliate of any such
person in any amount whatsoever other than for salaries for services rendered or
reimbursable business expenses, and, except as set
-25-
forth on the Disclosure Schedule, no such officer, director, stockholder or
affiliate is indebted to the Company or any of its Subsidiaries except for
advances made to employees of the Company or its Subsidiaries in the Ordinary
Course of Business to meet reimbursable business expenses anticipated to be
incurred by such obligor.
(b) None of the Stockholders and to the Company's knowledge their
Affiliates has been involved in any business arrangement or relationship with
any of the Company and its Subsidiaries within the past 12 months and none of
the Stockholders and to the Company's knowledge their Affiliates owns any asset,
tangible or intangible, which is used in the business of any of the Company and
its Subsidiaries.
3.23 Notes and Accounts Receivable. All notes and accounts receivable
of the Company and its Subsidiaries are reflected properly on their books and
records and are valid receivables subject to no setoffs or counterclaims.
3.24 Powers of Attorney; Guaranties. There are no outstanding
powers of attorney executed on behalf of any of the Company and its
Subsidiaries. None of the Company and its Subsidiaries is a guarantor or
otherwise is liable for any liability or obligation (including indebtedness) of
any other Person.
3.25 Product Warranty and Returns. Each product manufactured, sold,
leased, or delivered by any of the Company and its Subsidiaries has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and reserve for product warranty claims and returns set
forth on the Most Recent Balance Sheet as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Company and its Subsidiaries is sufficient to account for any liability for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease.
3.26 Customer and Supplier Relations. Section 3.26 of the Disclosure
Schedule sets forth a list of the top fifteen (15) customers and top ten (10)
suppliers of the Company and its Subsidiaries, taken as a whole by volume or
sales and purchases respectively, in each case for either of the fiscal years
ended December 31, 1997 and 1996 (the "Material Customers" and "Material
Suppliers", respectively). The Company has not received any information from any
Material Supplier or Material Customer to the effect that, and the Company does
not anticipate that, any Material Supplier or Material Customer will stop,
materially decrease the rate of, or materially change the terms (whether related
to payment, price or otherwise) with respect to, supplying or purchasing, as
applicable, materials, products or services with respect to the Company or its
Subsidiaries (whether as a result of the consummation of the transactions
contemplated hereby or otherwise).
3.27 Teoh ▇▇▇▇ ▇▇▇▇. Except as set forth in Section 3.27 of the
Disclosure Schedule, Teoh ▇▇▇▇ ▇▇▇▇ is not, and has never been, an agent or
representative of the Company or any of its Affiliates, except for BRI. Without
limiting the generality of the
-▇▇-
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ of the Company and its Affiliates, except for BRI, (i) has, or
has ever had, a contract or agreement with Teoh ▇▇▇▇ ▇▇▇▇, or (ii) pays, or has
ever paid any salary to Teoh ▇▇▇▇ ▇▇▇▇.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGERCO
MergerCo represents and warrants to the Company as follows:
4.01 Organization. MergerCo is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.02 Authorization. (a) MergerCo has all requisite corporate power
and authority to execute and deliver this Agreement and the agreements provided
for herein. The execution, delivery and performance by MergerCo of this
Agreement and the consummation by MergerCo of the agreements contemplated hereby
have been duly authorized by its Board of Directors and, other than the approval
and adoption of this Agreement by the stockholders of MergerCo, no other
corporate proceedings on the part of MergerCo are necessary to authorize the
execution and delivery of this Agreement and the consummation of the agreements
contemplated hereby. This Agreement has been duly executed and delivered by
MergerCo and, assuming this Agreement and the agreements provided for herein
constitute the valid and binding obligations of the other parties hereto,
constitute the valid and legally binding obligations of MergerCo, enforceable
against MergerCo in accordance with their respective terms.
(b) MergerCo has previously delivered to the Company a letter
from Fund, addressed to the Company, confirming Fund's agreement to vote to
approve and adopt this Agreement, in its capacity as a stockholder of MergerCo,
upon its purchase of MergerCo Common Stock.
4.03 Noncontravention. Subject to compliance with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, neither the execution and delivery of
this Agreement by MergerCo, nor the consummation by MergerCo of the transactions
contemplated hereby, will (a) conflict or violate any provision of the charter
or by-laws of MergerCo, (b) require on the part of MergerCo any filing with, or
any permit, authorization, consent or approval of, any Governmental Entity,
except for any filing, permit, authorization, consent or approval which if not
obtained or made would not reasonably be expected to have a material adverse
effect on the assets, business, financial condition or results of operations of
MergerCo or on the ability of the parties to consummate the transactions
contemplated by this Agreement, (c) conflict with, result in breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which MergerCo is a
party or by which MergerCo is bound or to which any of its assets are subject,
(d) result in the imposition of any
-27-
Security Interest upon MergerCo shares or any assets of MergerCo or (e) violate
any constitution, statute, order, writ, injunction, decree, judgment, ruling,
charge, rule, regulation or other restriction of any government, governmental
agency or court applicable to MergerCo or any of its properties or assets,
except for any violation that would not reasonably be expected to have a
material adverse effect on the assets, business, financial condition or results
of operations of MergerCo or on the ability of the parties to consummate the
transactions contemplated by this Agreement.
4.04 Broker's Fees. MergerCo has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, other than to Code ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLC, whose fees and expenses shall be paid by the Surviving Corporation.
4.05 Litigation. There are no actions, suits, claims or legal,
administrative or arbitratorial proceedings pending against, or, threatened
against, MergerCo which would adversely affect MergerCo's performance under this
Agreement or the consummation of the transactions contemplated by this
Agreement.
4.06 Financing. The Fund has received and accepted and agreed to
a commitment letter from Bank of America National Trust and Savings Association
and BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, addressed to the Fund, a copy of which is
attached hereto (the "Bank Commitment Letter"), whereby such financial
institutions have committed, upon the terms and subject to the conditions set
forth therein, to provide debt financing for the transactions contemplated
hereby. MergerCo has received and accepted and agreed to a letter from the
Fund, a copy of which is attached hereto, whereby the Fund has committed, upon
the terms and subject to the conditions set forth therein, to provide equity
financing to MergerCo up to $67.5 million.
4.07 Formation of MergerCo; No Prior Activities. MergerCo was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and the Effective Time, except for (i)
obligations or liabilities incurred in connection with its incorporation or
organizations and the transactions contemplated by this Agreement, and (ii) this
Agreement and any other agreements or arrangements contemplated by this
Agreement or in furtherance of the transactions contemplated hereby, MergerCo
has not incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
Person.
ARTICLE V
PRE-CLOSING COVENANTS
5.01 Efforts. Each of the parties shall use commercially reasonable
efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement.
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5.02 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Each of the parties shall promptly
file (or cause to be filed) any Notification and Report Forms and related
material that it may be required to file with the Federal Trade Commission and
the Antitrust Division of the United States Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, shall use reasonable best efforts to obtain an early
termination of the applicable waiting period, and shall make any further filings
or information submissions pursuant thereto that may be necessary, proper or
advisable. Each of the Company and MergerCo will use their reasonable best
efforts to resolve any competitive issues relating to or arising under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Act or any other federal or state antitrust or fair trade law
raised by any Governmental Entity. If such proposed resolutions are not
accepted by such Governmental Entity, MergerCo (with the Company's cooperation)
shall pursue all litigation resulting from such issues. The parties hereto will
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or any other federal or state antitrust or fair trade
law. In the event of a challenge to the transactions contemplated by this
Agreement pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, each of the Company and
MergerCo shall use their reasonable best efforts to defeat such challenge,
including by institution and defense of litigation, or to settle such challenge
on terms that permit the consummation of the transactions contemplated hereby;
provided, however, that nothing herein shall require either party to agree to
divest or hold separate any portion of its business or otherwise take action
that could reasonably be expected to have a material adverse effect on such
party. Without limiting the foregoing, in the event that either the Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice should issue a Request for Additional Information or Documentary
material under 17 C.F.R. (S)803.20 (a "Second Request"), then the Company and
MergerCo each agree to use their reasonable best efforts to respond fully to
such Second Request within 20 days after its receipt and shall promptly make any
further filings or information submissions and make any employee available for
interview or testimony pursuant to the foregoing (both before and after any
Second Request) that may be necessary, proper or advisable.
5.03 Operation of Business. Except as otherwise contemplated by this
Agreement or consented to in writing by MergerCo, during the period from the
date of this Agreement until the Closing Date the Company will not cause or
permit any of the Company and its Subsidiaries to engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Company will
not cause or permit any of the Company and its Subsidiaries to engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 3.07 above (other than capital expenditures in the Ordinary Course of
Business); provided that the Company will not be deemed to have breached this
covenant as a result of (i) actions taken or omissions made by Persons other
than the Company or its Subsidiaries or (ii) acts of God or other events beyond
their control.
5.04 Access. The Company and its Subsidiaries shall permit the
representatives of MergerCo listed on Attachment 5.04 of this Agreement to have
reasonable access (at reasonable times, on reasonable prior written notice and
in a manner so as not to interfere with
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the normal business operations of the Company and its Subsidiaries) to the
premises, properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to the Company and its
Subsidiaries for reasonable business purposes (it being acknowledged by MergerCo
that MergerCo has completed its due diligence investigation and that the purpose
of this provision is not to permit further due diligence). MergerCo acknowledges
and agrees that it is bound by the Confidentiality Agreement, dated February 10,
1998, previously entered into between the Fund and the Company (the
"Confidentiality Agreement"). Prior to the Closing, MergerCo and its
representatives shall contact and communicate with the employees, customers and
suppliers of the Company in connection with the transactions contemplated by
this Agreement only with the prior written consent of the Company, which consent
will not be unreasonably withheld.
5.05 Notification.
(a) By the Company. The Company shall deliver to MergerCo
written notice of any event or development that would (i) render any statement,
representation or warranty of the Company in this Agreement (including the
Disclosure Schedule) inaccurate or incomplete in any material respect or (ii)
constitute or result in a breach by the Company of, or a failure by the Company
to comply with, any agreement or covenant in this Agreement applicable to it.
Any disclosure made by the Company pursuant to clause (i) of the prior sentence
shall be deemed to amend and supplement the Disclosure Schedule for all purposes
of this Agreement (except for MergerCo's right to terminate this Agreement
pursuant to clause (b) of Section 9.01 (and to seek damages in connection with
such termination as permitted by Section 9.02) and, if the disclosure relates to
a fact or circumstance existing prior to the date hereof or a Knowing Breach
after the date hereof, MergerCo's right to seek indemnification under Article XI
hereof). "Knowing Breach" means an action (or a willful failure to take action)
by, at the direction of, or with the prior knowledge of any of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ ▇▇▇▇, which would cause any of the representations or warranties of the
Company in this Agreement to be untrue in any material respect (other than
actions (or willful failures to take action) in the Ordinary Course of
Business).
(b) By MergerCo. MergerCo shall deliver to the Company and the
Stockholders Representatives written notice of any event or development that
would (i) render any statement, representation or warranty of MergerCo in this
Agreement inaccurate or incomplete in any material respect, or (ii) constitute
or result in a breach by MergerCo or a failure by MergerCo to comply with, any
agreement or covenant in this Agreement applicable to it.
5.06 Exclusivity. During the period from the date of this Agreement
until the Closing or the earlier termination of this Agreement, the Company
shall not and shall use its best efforts to cause each of its stockholders,
affiliates, officers, directors, employees, representatives and agents not to,
directly or indirectly, encourage, solicit, initiate, engage or participate in
discussions or negotiations with any person or entity (other than MergerCo)
concerning any merger or consolidation involving the Company or its
Subsidiaries, any sale of material assets by the Company or its Subsidiaries not
in the Ordinary Course of Business, sale of the capital stock
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of the Company or its Subsidiaries or other business combination involving the
Company or its Subsidiaries.
5.07 Bakrie Sale and Release. Prior to Closing, the Company shall use
its reasonable efforts to complete the sale of its interest in BRI and to obtain
a release (the "Release") (in form and substance satisfactory to MergerCo) from
BRI and PT. Bakrie Capitanindo Corporation (the sole other owner of an interest
in BRI) with respect to any obligation of, or claim of any kind against, the
Company that relates to BRI (including those related to operating losses,
antitrust matters, losses related to third party claims of any kind,
consequential, incidental or any other form of damages or losses of BRI), except
for trade payables incurred in the Ordinary Course of Business.
5.08 Authorization of Class C Stock. Prior to the Closing, the
Company will use its commercially reasonable efforts to cause to be issued and
outstanding immediately prior to the Effective Time such number of shares of
Class C Stock that, when multiplied by the Cash Merger Consideration, shall
equal at least $7.5 million but not more than $15.0 million.
ARTICLE VI
TRANSFER OF ASSETS
6.01 Asset Transfer. Upon the request of MergerCo, the Company shall
use its commercially reasonable efforts to transfer substantially all of the
assets and liabilities of the Company to Elastic prior to the Closing (the
"Asset Transfer"). Notwithstanding any provision of this Agreement to the
contrary, (i) none of the Company, its Subsidiaries or the Stockholders shall
have any liability under this Agreement to MergerCo, the Fund, the Surviving
Corporation, any Indemnified Person or any third party as a result of or in
connection with (x) the Asset Transfer or any actions or omissions of the
Company, its Subsidiaries or the Stockholders in anticipation of, or in
connection with the Asset Transfer or (y) any breach of, or failure to perform,
any representation, warranty, covenant (other than the covenants set forth in
Section 6.02 below), agreement or obligation contained in this Agreement or any
other agreement, instrument or document contemplated by this Agreement to the
extent such breach or failure to perform is a result of or arises out of the
Asset Transfer or any actions or omissions of the Company, its Subsidiaries or
the Stockholders in anticipation of, or in connection with, the Asset Transfer
(a "Transfer Related Breach"); (ii) Transfer Related Breaches shall have no
impact on the determination of whether a condition precedent set forth in
Section 7.01 of this Agreement, other than Section 7.01(h), shall have been
satisfied and (iii) all fees and expenses incurred in connection with, or in
anticipation of, the Asset Transfer shall be the responsibility of MergerCo.
6.02 Covenant of Company. Upon the request of MergerCo to undertake
the Asset Transfer, the Company shall promptly prepare and deliver to MergerCo a
schedule of assets to be transferred and consents to be obtained in connection
with the Asset Transfer that, to the Company's knowledge, is true and correct in
all material respects. The Company shall use its
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commercially reasonable efforts to complete the Asset Transfer. The Company
shall consult with MergerCo from time to time regarding the Asset Transfer.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF MERGERCO AND THE COMPANY
7.01 Conditions to Obligations of MergerCo. The obligation of
MergerCo to consummate the transactions contemplated by this Agreement is
subject to the satisfaction (or waiver by MergerCo) of the following conditions:
(a) the Company and its Subsidiaries shall have obtained all of
the waivers, permits, consents, approvals or other authorizations, and effected
all of the registrations, filings and notices required to consummate the
transactions contemplated by this Agreement and included on the Disclosure
Schedule and identified thereon as being subject to Section 7.01(a).
(b) the representations and warranties of the Company set forth
in Article III shall be true and correct at and as of the Closing Date as if
made as of the Closing Date, except for (i) changes contemplated or permitted by
this Agreement, (ii) those representations and warranties that address matters
only as of a particular date (which shall be true and correct as of such date)
and (iii) where the failure of the representations and warranties to be true and
correct could not reasonably be expected to have a Company Material Adverse
Effect.
(c) the Company shall have performed or complied with its
agreements and covenants required to be performed or complied with by it under
this Agreement as of or prior to the Closing, except where the failure to so
perform or comply could not reasonably be expected to have a Company Material
Adverse Effect;
(d) the Company shall have delivered to MergerCo a certificate to
the effect that each of the conditions specified in clauses (a) and (c) of this
Section 7.01 is satisfied in all respects and the Company shall have delivered
to MergerCo a certificate as to its compliance with Section 7.01(b) (the "Bring-
Down Certificate");
(e) no action, suit or proceeding shall be pending by or before
any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(f) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been terminated;
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(g) MergerCo shall have received at or prior to the Closing such
documents, instruments or certificates as MergerCo may reasonably request
including, without limitation:
(i) such certificates of the Company's officers and such
other documents evidencing satisfaction of the conditions specified in this
Section 7.01 as MergerCo shall reasonably request;
(ii) a certificate of the Secretary of State of the
Commonwealth of Massachusetts as to the legal existence and good standing of the
Company in Massachusetts;
(iii) certificates of the Clerk of the Company attesting to the
incumbency of the Company's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents of the Company;
(iv) certificates of appropriate governmental officials in
each state in which the Company is required to qualify to do business as a
foreign corporation as to the due qualification and good standing of the Company
in each such jurisdiction;
(v) a certificate of an appropriate officer of the Company to
the effect that SHFEES represents all fees and expenses incurred by the Company
on behalf of the Stockholders as contemplated by Section 2.01(c);
(vi) written resignations of all members of the Company's
Board of Directors;
(vii) the original corporate minute books of the Company and
all corporate seals; and
(viii) a certification executed on behalf of the Company by an
appropriate officer of the Company, pursuant to the requirements of Section
1.897-2(g) of the Treasury Regulations, certifying that neither the Company nor
any of its Subsidiaries is or has been a United States Real Property Holding
Corporation, as defined in Section 897(c)(2) of the Code and Section 1.897-2(b)
of the regulations promulgated by the Internal Revenue Service during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(h) MergerCo and the Company shall have received sufficient funds to
pay the Merger Consideration, repay or redeem all of the existing indebtedness
of the Company and its Subsidiaries (including accrued interest and prepayment
premiums or penalties) and otherwise enable MergerCo to consummate the
transactions contemplated hereby and to meet the working capital requirements of
the Surviving Corporation pursuant to financing arrangements consistent with the
structure reflected in the Bank Commitment Letter and definitive financing
agreements completed to the satisfaction of MergerCo in its reasonable judgment
(the "Financing" );
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(i) certain of the Stockholders shall have exchanged certain of
their shares of Company Common Stock for shares of Class C Stock, as
contemplated in Section 5.08, with the result that, after such exchange: (i) at
least $7,500,000 in aggregate value of Class C Stock (including shares
outstanding and held by the persons identified in (ii) through (v) below) shall
be held by former holders of Company Common Stock (the various values of Class C
Stock referred to in this subparagraph being the product of an appropriate
number of shares of Class C Stock times the Cash Merger Consideration), (ii) at
least $5,500,000 in value of such Class C Stock, issued in exchange for shares
of Class A Stock, shall be held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., (iii) at least
$2,000,000 in value of such Class C Stock shall be held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
III, (iii) at least $500,000 in value of Class C Stock shall be held by, or
subject to Options held by, ▇▇▇▇▇▇▇ ▇▇▇▇, (iv) at least $500,000 in value of
Class C Stock shall be held by, or subject to Options held by, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, and (v) at least $500,000 in value of Class C Stock shall be held by, or
subject to Options held by, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
(j) each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have entered into noncompetition
and confidentiality agreements substantially in the form attached hereto as
Exhibit C with the Surviving Corporation;
(k) the Company shall have received payoff letters and lien releases
with respect to the Indebtedness of the Company to be paid at Closing as
specified by MergerCo;
(l) the Company shall have either (i) dissolved Globe Elastic
Thread, Ltd. (the "British Subsidiary") or (ii) transferred all of the
outstanding capital stock of the British Subsidiary to the Company (except for
any shares required by law to be held by another person or entity);
(m) the Company shall have received an acknowledgment in writing
from each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ that the Company's funding obligations under
its supplemental pension plan and its non-qualified pension plan do not continue
upon the respective covered employee's termination of employment; and
(n) the Company shall have received full payment for the loan
outstanding to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III in the principal amount of $278,181.00,
including any and all accrued interest thereon.
7.02 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by the Company) of the following conditions:
(a) the representations and warranties of MergerCo set forth in
Article 4 shall be true and correct at and as of the Closing Date as if made as
of the Closing Date, except for (i) changes contemplated or permitted by this
Agreement, (ii) those representations and warranties that address matters only
as of a particular date (which shall be true and correct as
-34-
of such date) and (iii) where the failure of the representations and warranties
to be true and correct could not reasonably be expected to have a material
adverse effect on the assets, business, financial condition or results of
operations of MergerCo or on the ability of the parties to consummate the
transactions contemplated by this Agreement;
(b) MergerCo shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
by it under this Agreement as of or prior to the Closing, except where the
failure to so perform or comply could not reasonably be expected to have a
material adverse effect on the assets, business, financial condition or results
of operations of MergerCo or on the ability of the parties to consummate the
transactions contemplated by this Agreement.;
(c) MergerCo shall have delivered to the Company a certificate to the
effect that each of the conditions specified in clauses (a) and (b) of this
Section 7.02 is satisfied in all respects;
(d) no action, suit or proceeding shall be pending by or before any
Governmental Entity wherein an unfavorable judgment, order, decree, stipulation
or injunction would reasonably be expected to (i) prevent consummation of any of
the transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(e) all applicable waiting periods (and any extensions thereof) under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been terminated; and
(f) the Company shall have received at or prior to the Closing such
documents, instruments or certificates as the Company may reasonably request
including, without limitation:
(i) such certificates of MergerCo's officers and such other
documents evidencing satisfaction of the conditions specified in this Section
7.02 as the Company shall reasonably request;
(ii) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of MergerCo in Delaware;
and
(iii) a certificate of the Secretary of MergerCo attesting to the
incumbency of MergerCo's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents and by-laws
delivered pursuant to this Agreement.
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ARTICLE VIII
PRESS RELEASES AND ANNOUNCEMENTS
Prior to the Closing, neither the Company nor MergerCo shall issue (and
each party shall cause its Affiliates not to issue) any press release or public
disclosure relating to the subject matter of this Agreement without the prior
written approval of the other such party; provided, however, that either such
party may make any public disclosure it believes in good faith is required by
law, regulation or exchange rule (in which case the disclosing party shall
advise the other party and the other party shall have the right to review such
press release or announcement prior to its publication).
ARTICLE IX
TERMINATION
9.01 Termination of Agreement. The parties may terminate this
Agreement prior to the Closing as provided below:
(a) the parties may terminate this Agreement by mutual written
consent of MergerCo and the Company;
(b) MergerCo may terminate this Agreement by giving written
notice to the Company in the event the Company is in material breach of any
representation, warranty, covenant or agreement contained in this Agreement, and
such breach (i) is not remedied within 15 days of delivery of written notice
thereof and (ii) results in a Company Material Adverse Effect;
(c) the Company may terminate this Agreement by giving written
notice to MergerCo in the event MergerCo is in material breach of any
representation, warranty, covenant or agreement contained in this Agreement, and
such breach (i) is not remedied within 15 days of delivery of written notice
thereof and (ii) results in a material adverse effect on the assets, business,
financial condition or results of operation of MergerCo or on the ability of the
parties to consummate the transactions contemplated by this Agreement;
(d) MergerCo may terminate this Agreement by giving written
notice to the Company if the Closing shall not have occurred on or before
September 15, 1998 by reason of the failure of any condition precedent under
Section 7.01 hereof (unless the failure results primarily from a breach by
MergerCo of any representation, warranty, covenant or agreement contained in
this Agreement);
(e) the Company may terminate this Agreement by giving written
notice to MergerCo if the Closing shall not have occurred on or before September
15, 1998 by reason of the failure of any condition precedent under Section 7.02
hereof (unless the failure
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results primarily from a breach by the Company or any Stockholder of any
representation, warranty, covenant or agreement contained in this Agreement);
and
(f) if the Closing shall not have occurred before August 1, 1998,
August 16, 1998 or August 31, 1998 (each of which dates shall constitute an
"Optional Termination Date") due to the failure of MergerCo to obtain the
Financing (unless the failure results from a breach by the Company or any
Stockholder of any representation, warranty, covenant or agreement contained in
this Agreement), then the Company may terminate this Agreement by giving written
notice to MergerCo on such Optional Termination Date. If the Company fails to
provide written notice of termination on such Optional Termination Date, it
shall have waived its right to terminate this Agreement pursuant to this clause
(f) as of such date.
9.02 Effect of Termination. If this Agreement is terminated pursuant
to Section 9.01, all obligations of the parties hereunder shall terminate
without any liability of any party to any other party; provided, however, that
nothing herein shall relieve any party from liability for any breach of this
Agreement prior to such termination. The Confidentiality Agreement shall
survive the termination of this Agreement for any reason.
ARTICLE X
FURTHER AGREEMENTS
10.01 Director and Officer Indemnification. For the six (6) year
period after the Closing, each of MergerCo and the Company shall not take any
action to alter or impair any exculpatory or indemnification provisions, now
existing in the charter or by-laws of the Company or its Subsidiaries, for the
benefit of any individual who served as a director or officer of the Company or
any of its Subsidiaries at any time prior to the Closing Date, except for any
changes that may be required to conform with changes in applicable law and any
changes that do not affect the application of such provisions to acts or
omissions of such individuals prior to the Closing Date. For the six (6) year
period after the Closing, the Surviving Corporation shall continue the Company's
executive risk insurance coverage on substantially similar terms and conditions
as the Company's existing Executive Risk Package, a summary of which has been
previously delivered to MergerCo; provided, however, that the Surviving
Corporation may reduce such coverage as necessary so that the annual premium
does not exceed $80,000.
10.02 Disclosure Generally.
(a) Any information furnished in the Disclosure Schedule (or
any update thereto) shall be arranged in sections corresponding to the numbered
paragraphs contained in Article III hereof and the disclosure in any section of
the Disclosure Schedule shall qualify only the corresponding section in Article
III hereof unless the applicability to another section of Article III is readily
apparent. The inclusion of any information in the Disclosure Schedule (or any
update thereto) shall not be deemed to be an admission or acknowledgment, in and
of itself, that such information is required by the terms hereof to be disclosed
or is material to the Company or any of its Subsidiaries or outside the Ordinary
Course of Business.
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(b) For purposes of this Agreement, the terms "to the Company's
knowledge," "known by the Company" or other words of similar meaning shall mean
the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇.
10.03 Further Assurances. At any time and from time to time after
the Closing, as and when requested by any party hereto and at such party's
expense, the other party shall promptly execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to evidence and effectuate the
transactions contemplated by this Agreement.
ARTICLE XI
INDEMNIFICATION
11.01 By the Stockholders. From and after the Effective Time, the
Stockholders shall indemnify and hold harmless the Surviving Corporation and its
officers, directors, employees and agents (the "Indemnified Persons") from and
against all claims, damages, losses, liabilities, costs and expenses (including,
without limitation, settlement costs and any reasonable legal, accounting or
other expenses for investigating or defending any actions or threatened actions)
incurred by the Indemnified Persons ("Damages");
(a) resulting from, relating to or constituting any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement (including the reaffirmation of such representations
and warranties in the Bring-Down Certificate);
(b) resulting from, relating to or constituting any breach
prior to the Effective Time of any covenant, agreement or obligation of the
Company contained in this Agreement or any other agreement, instrument or
document contemplated by this Agreement;
(c) resulting from any failure of any Stockholders to have
good, valid and marketable title to the issued and outstanding Shares held by
such Stockholders, free and clear of all liens, claims, pledges, options,
adverse claims or charges of any nature whatsoever;
(d) resulting from, relating to, or arising out of (i) the
current criminal environmental investigation relating to the Company's facility
in Fall River, Massachusetts to the extent related to acts or omissions prior to
the Effective Time; (ii) civil or criminal antitrust claims or investigations
associated with rubber thread and/or P.T. Bakrie Rubber Industry ("BRI") to the
extent related to acts or omissions prior to the Effective Time, in each case
including, without limitation, civil or criminal fines or penalties assessed
against the Surviving Corporation or its officers, directors or employees;
and/or (iii) the complaint filed in Superior Court in the State of Rhode Island
by American Condominium Association, Inc. and Harbor Houses Condominium
Association, Inc. against the Company; or
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(e) if the Company fails to obtain the Release prior to
Closing, resulting from any obligation of, or claim of any kind against, the
Company with respect to BRI (including those related to operating losses,
antitrust matters, losses related to third party claims of any kind,
consequential, incidental or any other form of damages or losses of BRI), except
for trade payables incurred in the Ordinary Course of Business.
11.02 Method of Asserting Claims.
(a) All claims for indemnification by an Indemnified Person
pursuant to this Article XI shall be made in accordance with the provisions of
the Escrow Agreement.
(b) The Indemnified Person shall give prompt written
notification to the Stockholders Representatives of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Article XI may be sought (a "Third Party
Claim"); provided, however, that no delay on the part of the Indemnified Person
in notifying the Stockholders Representatives shall relieve the Stockholders of
any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after
delivery of such notification, the Stockholders Representatives may, upon
written notice thereof to the Indemnified Person, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Person, provided the Stockholders Representatives acknowledge in
writing to the Indemnified Person that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Person in connection
with such action, suit or proceeding constitute Damages for which the
Indemnified Person shall be entitled to indemnification pursuant to this Article
XI. If the Stockholders Representatives do not so assume control of such
defense, the Indemnified Person shall control such defense. The party not
controlling such defense may participate therein at its own expense; provided
that if the Stockholders Representatives assume control of such defense and the
Indemnified Person reasonably concludes that the indemnifying parties and the
Indemnified Person have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Person shall be considered "Damages" for
purposes of this Agreement. The party controlling such defense shall keep the
other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. The Indemnified Person shall not agree to any
settlement of such action, suit or proceeding without the prior written consent
of the Stockholders Representatives, which shall not be unreasonably withheld.
The Stockholders Representatives shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the Indemnified
Person, which shall not be unreasonably withheld except as provided in Section
11.02(d).
(c) Notwithstanding anything to the contrary in this Section
11.02, should any claim hereunder involve a situation where an Indemnified
Person reasonably anticipates that part of the claim will be borne by it due to
(i) the Basket or (ii) the Damages from such claim exceeding the Indemnification
Escrow Fund, the Indemnified Person and the Stockholders Representatives shall
jointly consult and proceed as to any such claim.
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(d) Notwithstanding anything to the contrary in this Section
11.02, the Stockholders Representatives shall not settle or compromise any claim
or action without the express written consent of the Indemnified Person, which
consent may be withheld for any reason or no reason, if such settlement involves
the issuance of injunctive or other forms of non-monetary relief, binding upon
the Indemnified Person, or a plea of guilty or nolo contendere on the part of
any Indemnified Person in any criminal or quasi-criminal proceeding or which has
any collateral estoppel effect on the Indemnified Person.
(e) Notwithstanding anything to the contrary in this Section
11.02, the Stockholders Representatives shall not be entitled to assume control
of any Third Party Claim (and the reasonable fees and expenses of counsel
retained by the Indemnified Person shall be included within the Damages relating
to the claim) if (i) the Indemnified Person reasonably believes an adverse
determination with respect to the action, lawsuit, investigation, proceeding or
other claim giving rise to such claim for indemnification would be detrimental
in any material respect to or injure in any material respect the Indemnified
Person's reputation or future business prospects or (ii) the claim seeks an
injunction or equitable relief against the Indemnified Person. With respect to
the actions, lawsuits, investigations, proceedings and other claims that are the
subject to this Section 11.02(d), the Stockholders Representatives shall have
the right to retain their own counsel (but the expense of such counsel shall be
at the expense of the Stockholders Representatives) and participate therein, and
the Stockholders shall not be liable for any settlement of any such action,
proceeding or claim without the Stockholders Representatives' written consent
(which consent shall not be unreasonably withheld).
(f) Notwithstanding anything to the contrary in this Section
11.02, the Indemnified Persons shall not settle or compromise any claim or
action without the express written consent of the Stockholders Representatives,
which consent may be withheld for any reason or no reason, if such settlement
involves the issuance of injunctive or other forms of non-monetary relief,
binding upon any Stockholder, or a plea of guilty or nolo contendere on the part
of any Stockholder in any criminal or quasi-criminal proceeding or which has any
collateral estoppel effect on any Stockholder.
11.03 Survival. The representations, warranties and covenants of
the Company set forth in this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and continue until the date
that is 18 months after the Closing Date and shall not be affected by any
examination made for or on behalf of MergerCo or the knowledge of any of
MergerCo's officers, directors, stockholders, employees or agents.
Notwithstanding the foregoing, (i) the representations and warranties contained
in Section 3.17 shall survive the Closing and the consummation of the
transactions contemplated thereby and continue until the second anniversary of
the Closing Date; and (ii) the representations and warranties contained in
Section 3.09 shall survive the Closing and the consummation of the transactions
contemplated thereby and continue until the expiration of the applicable statute
of limitations. In addition, the Stockholders' indemnification obligations
pursuant to Sections 11.01(c), 11.01(d) and 11.01(e) above shall survive the
Closing and the consummation of the transactions contemplated thereby and
continue until December 31, 2001. If a notice is given in accordance with the
Escrow Agreement before expiration of the periods referred to in the preceding
two sentences, then
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(notwithstanding the expiration of such time period) the representation,
warranty or covenant (if applicable) and indemnification obligation applicable
to such claim shall survive until, but only for purposes of, the resolution of
such claim.
11.04 Limitations. Notwithstanding anything to the contrary herein,
(a) the aggregate liability of the Stockholders for Damages under this Article
XI shall not exceed the aggregate amount then available for such Damages in the
Indemnification Escrow Fund (including accrued interest); (b) the Stockholders
shall be liable under this Article XI for only that portion of the aggregate
Damages which exceeds $1,000,000 (the "Basket"); provided, however, that any
Damages pursuant to Section 11.01(b), (c), (d) or (e) above or resulting from a
breach of the representations and warranties of the Company in Section 3.02(a)
above shall not be subject to the Basket. Except with respect to claims based on
fraud or claims against any Stockholder by MergerCo resulting from or relating
to the matters described in Section 11.01(c) with respect to such Stockholder,
the rights of the Indemnified Person under this Article XI shall be the
exclusive remedy of the Indemnified Person with respect to claims resulting from
or relating to the matters described in Sections 11.01(c), 11.01(d) or 11.01(e)
above, any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of the Company or the Stockholders contained in this
Agreement or any other agreement, instrument or document contemplated by this
Agreement. No Stockholder shall have any right of contribution against the
Company with respect to any breach by the Company of any of its representations,
warranties, covenants or agreements.
11.05 Dispute Resolution
(a) In the event that any dispute should arise between the
Stockholders Representatives and an Indemnified Person with respect to any
matter covered by this Article XI ("Indemnification Dispute"), resolution of
such Indemnification Dispute shall be in accordance with the procedures set
forth in this Section 11.05.
(b) In the event an Indemnification Dispute remains unresolved
after 30 days of negotiation by the Indemnified Person and the Stockholders
Representatives, either the Stockholders Representatives or the Indemnified
Person may submit such Indemnification Dispute to arbitration by notifying the
other party in writing. Within 10 days after receipt of such notice, the
Stockholders Representatives and the Indemnified Person shall designate in
writing a single arbitrator knowledgeable in the matters in dispute (the
"Arbitrator") to resolve the dispute; provided, however, that if the parties
hereto cannot agree on an Arbitrator within such 10-day period, the Arbitrator
shall be selected by the Boston, Massachusetts office of the American
Arbitration Association. The Arbitrator so designated shall not be an Affiliate,
employee, consultant, officer, director or stockholder of the Company, its
Subsidiaries, MergerCo, or the Fund.
(i) Within 15 days after the designation of the Arbitrator,
the Stockholders Representatives and the Indemnified Person shall deliver to the
Arbitrator in writing all disputed issues and a proposed ruling on each such
issue.
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(ii) The Arbitrator shall set a date for a hearing, which
shall be no later than 30 days after the submission of written proposals
pursuant to Section 11.05(b)(i) above, to discuss each of the issues identified
by the Stockholder Representatives and the Indemnified Person. Each such party
shall have the right to be represented by counsel. The arbitration shall be
governed by the Commercial Arbitration Rules of the American Arbitration
Association; provided, however, that the Federal Rules of Evidence shall govern
the admissibility of evidence.
(iii) The Arbitrator shall use his best efforts to rule
on each disputed issue within 30 days after the completion of such hearings. In
the absence of fraud, the determination of the Arbitrator as to the resolution
of any dispute shall be binding and conclusive upon all parties hereto. All
rulings of the Arbitrator shall be in writing and shall be delivered to the
parties.
(iv) Any attorneys' fees of the parties in any arbitration
shall be borne by the parties as determined by the Arbitrator, together with the
fees of the Arbitrator and the costs and expenses of the arbitration.
(v) Any arbitration pursuant to this Section 11.05 shall
be conducted in Boston, Massachusetts. Any arbitration award may be entered in
and enforced by any court having jurisdiction thereover and shall be final and
binding upon the parties.
11.06 Indemnification for Pre-Closing Taxes. From and after the
Effective Time, the Stockholders agree to indemnify the Surviving Corporation
against all Taxes imposed on the Company or its Subsidiaries with respect to any
Tax period or portion thereof that ends on or before the Closing Date; provided,
however, that the Stockholders shall be liable only to the extent that such
Taxes are in excess of the amount reserved for Tax liability shown on the face
of the Closing Balance Sheet. For purposes of this section in the case of any
Taxes that are imposed on a periodic basis and are payable for a Tax period that
includes (but does not end on) the Closing Date, the portion of such Tax which
relates to the portion of such Tax period ending on the Closing Date shall (x)
in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction the numerator of which is the number of days in the Tax
period ending on the Closing Date and the denominator of which is the number of
days in the entire Tax period, and (y) in the case of any Tax based upon or
related to income or receipts be deemed equal to the amount which would be
payable if the relevant Tax period ended on the Closing Date. Any credits
relating to a Tax period that begins before and ends after the Closing Date
shall be taken into account as though the relevant Tax period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company and its Subsidiaries. Any amounts payable by the Stockholders hereunder
(i) shall be Damages for purposes of Article XI, (ii) shall not be subject to
the Basket and (iii) shall be payable only out of, and subject to, the
Indemnification Escrow Fund.
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ARTICLE XII
MISCELLANEOUS
12.01 Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns and, to the extent specified herein,
their respective Affiliates; provided, however, that the provisions of Section
10.01 are intended for the benefit of the entities and individuals specified
therein and their respective legal representatives, successors and assigns.
12.02 Action to be Taken by Affiliates. Each of the parties shall
cause its Affiliates to comply with any of the obligations specified in this
Agreement to be performed by such Affiliates. .
12.03 Entire Agreement. This Agreement (including the documents
referred to herein) and the Confidentiality Agreement constitute the entire
agreement between MergerCo and its Affiliates, on the one hand, and the Company
and the Stockholders and their Affiliates, on the other. This Agreement
supersedes any prior understandings, agreements, or representations by or
between MergerCo and its Affiliates, on the one hand, and the Company, the
Stockholders and their Affiliates, on the other, whether written or oral, with
respect to the subject matter hereof (other than the Confidentiality Agreement).
12.04 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. Except for the assignment by the Surviving
Corporation of its rights or interests hereunder after the Closing to one or
more of its lenders for collateral security purposes, no party may assign either
this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the Company and MergerCo.
12.05 Counterparts. This Agreement may be executed 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.
12.06 Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.07 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered one
business day after it is sent by (i) a reputable courier service guaranteeing
delivery within one business day or (ii) telecopy, provided electronic
confirmation of successful transmission is received by the sending party and a
confirmation copy is sent on the same day as the telecopy transmission by
certified mail, return receipt requested, in each case to the intended recipient
as set forth below:
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If to the Company Globe Manufacturing Co.
or the Surviving Corporation: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy notices to the ▇▇▇▇ and ▇▇▇▇ LLP
Company to: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy notices to the
Surviving Corporation to: Code, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to MergerCo: Globe Acquisition Company
c/o Code, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Stockholders ▇▇▇▇▇▇▇ Sachs & Co.
Representatives: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Bu
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Globe Manufacturing Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other parties notice in the manner herein set forth.
12.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than those of
the Commonwealth of Massachusetts.
12.09 Amendments and Waivers. The parties may mutually amend or waive
any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Company,
-45-
MergerCo and the Stockholders Representatives. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the body 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.
12.11 Expenses. Except as otherwise specifically provided to the
contrary in this Agreement, each of the parties shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
12.12 Specific Performance. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter.
12.13 Submission to Jurisdiction. Each of the parties, (a) submits to
the jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts in any action or proceeding arising out of or relating to this
Agreement, (b) agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court, and (c) 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 any defense of improper
venue. Each of the parties, may make service on any other party by sending or
delivering a copy of the process to the entity to be served at the address and
in the manner provided for the giving of notices in Section 12.07. Nothing in
this Section 12.13, however, shall affect the right of any party to serve legal
process in any other manner permitted by law.
12.14 Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Any reference to any federal, state, local, or
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foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
12.15 Acknowledgements by MergerCo. MergerCo acknowledges that it has
conducted to its satisfaction an independent investigation and verification of
the financial condition, results of operations, assets, liabilities, properties
and projected operations of the Company and its Subsidiaries and, in making its
determination to proceed with the transactions contemplated by this Agreement,
MergerCo has relied on the results of its own independent investigation and
verification and the representations and warranties of the Company expressly and
specifically set forth in Article III of this Agreement, including the
Disclosure Schedules (and any updates thereto). SUCH REPRESENTATIONS AND
WARRANTIES BY THE COMPANY CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND
WARRANTIES OF THE COMPANY TO MERGERCO IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND MERGERCO UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL
OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED
(INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL
FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF THE COMPANY
AND ANY SET FORTH IN THE DESCRIPTIVE MEMORANDUM PREVIOUSLY DELIVERED TO
MERGERCO) ARE SPECIFICALLY DISCLAIMED BY THE COMPANY AND THE STOCKHOLDERS.
12.16 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12.17 Facsimile Signature. This Agreement may be executed by
facsimile signature.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
(Corporate Seal) GLOBE ACQUISITION COMPANY
ATTEST
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
______________________
Assistant Secretary
(Corporate Seal) GLOBE MANUFACTURING CO.
ATTEST
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chairman and Treasurer
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________
(Corporate Seal) GLOBE MANUFACTURING CO.
ATTEST
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
President
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________
-48-
The undersigned, being the duly elected Secretary of MergerCo, hereby
certifies that this Agreement has been adopted by two-thirds of the votes
represented by the outstanding shares of capital stock of MergerCo entitled to
vote on this Agreement.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________________
Assistant Secretary
The undersigned, being the duly elected Clerk of the Company, hereby
certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Shares entitled to vote on this Agreement.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
Assistant Clerk
-49-
THE INFORMATION PROVIDED IN THE SCHEDULES, ATTACHMENTS AND DISCLOSURE SCHEDULE
TO THE AGREEMENT AND PLAN OF MERGER IS SUMMARIZED. FURTHER INFORMATION WILL BE
FURNISHED UPON REQUEST.
SCHEDULE I
Schedule I contains a list of stockholders and the number of shares of stock,
options and warrants held by each stockholder prior to the merger.
SCHEDULE II
Globe Manufacturing Co.
List of Outstanding Options and Warrants
Schedule II contains a list of outstanding options and warrants prior to the
merger.
EXHIBIT A
Form of Articles of Organization of the Surviving Corporation
EXHIBIT B
Form of Escrow Agreement
EXHIBIT C
Form of Non-Competition Agreement
ATTACHMENT 5.04
Attachment 5.04 lists the representative of MergerCo permitted to have access to
the Company.
DISCLOSURE SCHEDULE
FOR
AGREEMENT AND PLAN OF MERGER
Section 3.01 lists the Board of Directors and Officers of the Company and its
Subsidiaries and the Subsidiaries' jurisdictions of organization.
Section 3.02 lists the outstanding or authorized options, warrants, rights,
agreements or commitments of the Company for the issuance, disposition or
acquisition of any of its capital stock and the authorized, issued and
outstanding capital stock of each of the Company's Subsidiaries.
Section 3.03 indicates "None."
Section 3.04 lists the effects of the Agreement and Plan of Merger on certain
agreements of the Company or its Subsidiaries.
Section 3.05 indicates "None."
Section 3.06 list the Indebtedness of the Company or its Subsidiaries.
Section 3.07 lists exceptions to the items listed under Absence of Certain
Changes.
Section 3.08 indicates "None."
Section 3.09 lists tax audits and filings for extensions.
Section 3.10 lists Security Interests.
Section 3.11 lists real property owned or leased by the Company or its
Subsidiaries and the Construction Budget for the Tuscaloosa, Alabama facility.
Section 3.12 lists patents, trademarks, registered copyrights, trade names and
service marks (and any applications therefor) of the Company or its
Subsidiaries.
Section 3.13 lists exceptions to the statements in Section 3.13 of the
Agreement.
Section 3.14 lists litigation and complaints pending or threatened against the
Company or its Subsidiaries.
Section 3.15 indicates "None."
Section 3.16 lists Employee Benefit Plans of the Company and its Subsidiaries.
Section 3.17 lists exceptions to the environmental representations and contains
a list of required permits, licenses, and approvals.
Section 3.18 indicates "See Section 3.17."
Section 3.19 indicates "None."
Section 3.20 lists each insurance policy maintained by the Company or its
Subsidiaries.
Section 3.21 indicates "None."
Section 3.22 lists indebtedness to and from Officers, Directors and Stockholders
and other affiliate transactions.
Section 3.23 indicates "None."
Section 3.24 lists existing Powers of Attorney.
Section 3.25 indicates "None."
Section 3.6 lists customers and suppliers.
Section 3.27 indicates "None."