FIRST AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
This First Amendment to the Agreement and Plan of Merger by and among
▇▇▇▇▇▇ Color-Fi, Inc. ("▇▇▇▇▇▇"), MCF Acquisition, Inc. ("Acquisition"), and
Dimeling, ▇▇▇▇▇▇▇▇▇ & Park ("DS&P") dated as of February 29, 2000 (the
"Agreement") is dated June 26, 2000 (the "Amendment").
WHEREAS, the parties to the Agreement desire to amend the terms of the
Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, intending to be legally bound hereby, and in consideration of the
representations, warranties, and covenants herein contained, the Parties agree
as follows:
1. All capitalized terms used in this Amendment not defined herein shall
have the meaning given to them in the Agreement.
2. Except as specifically amended hereby, all terms and provisions of the
Agreement shall remain in full force and effect.
3. The following sections will be amended as follows:
(a) The following definitions shall be deleted: Accountants,
Availability Reserve, Capital Contribution, Closing Date Balance Sheet,
Estimated Closing Date Availability, Estimated Closing Date Balance Sheet,
Final Closing Date Availability, Final Purchase Price, Preliminary Purchase
Price, and Tax Liability Reserve.
(b) The definition of "Assumed Liabilities" shall be deleted in its
entirety and replaced with the following:
"Assumed Liabilities" means trade payables incurred after
filing of the Cases in the Ordinary Course of Business and accrued as
of the Closing Date, severance obligations that are due and payable on
or prior to the Closing Date under ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇ Policy for
Salaried Employees and any severance obligations under those certain
Executive Severance Agreements that become due and payable to ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. Summer or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, cure payments under
assumed contracts in the amounts set forth on Exhibit C to the DS&P
Agreement and Plan of Merger, employee's salaries and commissions (and
all associated Tax obligations associated therewith) incurred in the
Ordinary Course of Business and accrued as of the Closing Date, unpaid
fees and expenses associated with the New Debt Financing owed by
▇▇▇▇▇▇, including, without limitation all legal fees of the Lender's
counsel, the fees and expenses of DS&P and Acquisition (which fees and
expenses of DS&P and Acquisition shall not exceed $500,000), including
without limitation legal fees incurred in connection with the
transactions contemplated in the DS&P Agreement and Plan of Merger,
accrued Tax Liabilities up to the Closing, and those taxes set forth on
Sections 4(h), 4(i), and 4(k) of the Disclosure Schedule of the DS&P
Agreement and Plan of Merger (to the extent not discharged by the
bankruptcy), and any liabilities arising from the 401(K) Plan as
described in Section 7(b)(xiii) of the DS&P Agreement and Plan of
Merger, if any (to the extent not discharged by the bankruptcy).
(c) The definition of "Material Adverse Change" shall be revised by
deleting (i)(a).
(d) The definition of "Plan Administrator" shall be restated as
follows:
"Plan Administrator" shall mean the person appointed by the
Bankruptcy Court to oversee the distribution of the Purchase Price
pursuant to the Plan and the Plan Administrator Agreement.
(e) The definition of "Purchase Price" shall be added to read as
follows:
"Purchase Price" means Sixteen Million Dollars ($16,000,000). As
additional consideration, the Surviving Corporation shall assume the
Assumed Liabilities. The term Purchase Price shall be substituted for Final
Purchase Price in the Agreement wherever it appears.
(f) The definition of "Tax Liability" shall be restated as follows:
"Tax Liability shall be defined as: (A) all fees and expenses
associated with the determination of any Tax, including, but not
limited to, costs of preparation of any Tax Returns, determining any
Tax liability or lien on a Tax Return, or defending any position taken
on a Tax Return, (B) any unpaid Tax liabilities shown on any Tax
Return for all periods ending on or prior to the Closing, (C) any
other Taxes owed by the Surviving Corporation attributable to actions
of ▇▇▇▇▇▇ or its subsidiaries on or prior to the Closing (including,
without limitation, any Taxes attributable to the transfer of the
Trust Assets), and (D) any Taxes owed by the Surviving Corporation for
any period after Closing as a result of a breach of the
representations in Sections 4(k) or 4(dd).
(g) Section 2(c) shall be revised to delete the phrase "with
$10,000,000").
(h) Section 2(e)(i) shall be restated as follows:
On the Closing Date, DS&P shall capitalize Acquisition and ▇▇▇▇▇▇
shall obtain a revolving line of credit to be arranged by ▇▇▇▇▇▇
satisfactory to DS&P and Acquisition in their sole discretion and a
term loan to be arranged by ▇▇▇▇▇▇ satisfactory to DS&P and
Acquisition in their sole discretion, (the revolving line of credit
and the term loan are referred to herein as the "New Debt Financing").
(i) Section 2(e)(ii) shall be deleted and restated as follows:
No later than three (3) business days prior to Closing, ▇▇▇▇▇▇
shall provide to DS&P a pro forma balance sheet of ▇▇▇▇▇▇ on a
consolidated basis estimated as of the Closing.
(j) Section 2(e)(iii) shall be restated as follows:
On the Closing Date, the Purchase Price shall be paid as follows:
Fifteen Million Dollars ($15,000,000) from the Purchase Price shall be
distributed directly to Bank of America (the "Bank") at Closing and
the remaining One Million Dollars ($1,000,000) shall be distributed to
the Plan Administrator to pay the claims of creditors in Classes 2, 3,
6, and 7, as set forth in the Plan and the Plan Administrator fees of
up to $25,000. The Surviving Corporation shall directly pay the
Assumed Liabilities.
(k) Section 2(e)(iv) is deleted in its entirety.
(l) Section 2(e)(v) is deleted in its entirety.
(m) Section 2(f)(i) shall be restated as follows:
The Purchase Price shall be delivered to the Bank and the Plan
Administrator in the amounts set forth hereinabove and shall be
payment in full of all creditors (except for those creditors included
in the Assumed Liabilities) pursuant to the terms and conditions of
the Agreement, this Amendment, and the Plan.
(n) Section 2(f)(ii) shall be restated as follows:
At Closing, the Purchase Price shall be used by the Plan
Administrator to pay Administrative Claims that have been finally
determined as of the Closing, to pay ▇▇▇▇▇▇'▇ creditors pursuant to
the terms of the Plan, to pay any amounts or benefits owed to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("JFM") pursuant to (a) any agreements or arrangements between
▇▇▇▇▇▇ and JFM in effect as of the date hereof or (b) as a result of
any employment relationship or severance of such employment
relationship between JFM and ▇▇▇▇▇▇. The Surviving Corporation will
have no liability for post-petition liabilities or administrative
claims or expenses unless they are expressly included in the
calculation of Assumed Liabilities.
2
(o) Section 2(f)(iii) shall be deleted and restated as follows:
Administrative Claims shall be paid by the Plan Administrator out
of the Purchase Price and Surviving Corporation will have no liability
for any Administrative or Priority Claims unless said claims are
expressly included in the definition of Assumed Liabilities.
(p) Section 2(f)(iv) is deleted in its entirety.
(q) Section 3(a)(v) shall be revised to delete "with
$10,000,000."
(r) Section 5(o)(ii) is deleted in its entirety.
(s) Section 6(a)(v) shall be revised by deleting the phrase "and
the Tax Liability Reserve will be increased as provided herein".
(t) Section 6(a)(xx) shall be revised by deleting the term
"Preliminary Purchase Price" and adding the term "Purchase Price" in
its place.
(u) Section 7(b)(iv) shall be restated as follows:
"distributions to creditors of ▇▇▇▇▇▇ and its Subsidiaries must
be restricted to ensure that all Administrative Claims are filed and
resolved;"
(v) Section 7(b)(x) shall be deleted except for the definition of
"Closing Basis."
(w) Section 7(b)(xi) is deleted in its entirety.
4. Surviving Corporation shall be entitled to keep all cash on
hand as of the Closing Date and any tax refunds relating to ▇▇▇▇▇▇'▇
1996 income tax returns whether such refunds are received before or
after the Closing Date.
5. (a) This Amendment shall not confer any rights or remedies
upon any Person other than the Parties and their respective successors
and permitted assigns.
(b) Other than that certain Confidentiality Agreement dated July
16, 1999 between ▇▇▇▇▇▇ and DS&P, the Agreement (including the
documents referred to herein) and this Amendment constitute the entire
agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or
oral, to the extent they related in any way to the subject matter
hereof; provided, however, that the Confidentiality Agreement was
amended by the Agreement to delete Section 5 of the Confidentiality
Agreement in its entirety and supersede it with the terms contained
therein.
(c) This Amendment shall be binding upon and inure to the benefit
of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Amendment or any of
its rights, interests, or obligations hereunder without the prior
written approval of DS&P and ▇▇▇▇▇▇; provided, however, that DS&P may
(i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder.
(d) This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together
will constitute one and the same instrument.
(e) This Amendment shall be governed by and construed in
accordance with the domestic laws of the State of South Carolina
without giving effect to any choice or conflict of law provision or
rule (whether of the State of South Carolina or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of South Carolina.
3
(f) No amendment of any provision of this Amendment shall be
valid unless the same shall be in writing and signed by DS&P and
▇▇▇▇▇▇. 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.
(g) Any term or provision of this Amendment 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.
6. This Amendment has been duly authorized by each of the Parties hereto
and, subject to approval by the Bankruptcy Court, will be a valid and legal
binding obligation of each of the Parties hereto.
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment on the
date first above written.
SIGNATURES OMITTED
4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
▇▇▇▇▇▇ COLOR-FI, INC.
AND
MCF ACQUISITION, INC.
AND
DIMELING, ▇▇▇▇▇▇▇▇▇ & PARK
FEBRUARY 29, 2000
TABLE OF CONTENTS
1. Definitions..............................................................................................1
2. Basic Transaction........................................................................................8
(a) The Merger..........................................................................................8
(b) The Closing.........................................................................................8
(c) Actions at the Closing..............................................................................8
(d) Effect of Merger....................................................................................8
(i) General..................................................................................8
(ii) Certificate of Incorporation.............................................................8
(iii) Bylaws...................................................................................9
(iv) Directors and Officers...................................................................9
(v) Cancellation of ▇▇▇▇▇▇ Shares............................................................9
(vi) Conversion of Capital Stock of Acquisition...............................................9
(e) Determination of Payments...........................................................................9
(f) Payments and Satisfaction of all Claims............................................................10
(g) Closing of Transfer Records........................................................................12
3. Representations and Warranties Concerning the Transaction....................................................12
(a) Representations and Warranties of the DS&P.........................................................12
(i) Organization............................................................................12
(ii) Authorization of Transaction............................................................12
(iii) Noncontravention........................................................................12
(iv) Brokers' Fees...........................................................................12
(v) Financial Ability.......................................................................13
(b) Representations and Warranties of Acquisition......................................................13
(i) Organization of Acquisition.............................................................13
(ii) Authorization of Transaction............................................................13
(iii) Noncontravention........................................................................13
(iv) Brokers' Fees...........................................................................13
4. Representations and Warranties Concerning ▇▇▇▇▇▇ and Its Subsidiaries........................................13
(a) Organization, Qualification, and Corporate Power...................................................14
(b) Capitalization.....................................................................................14
(c) Noncontravention...................................................................................14
(d) Brokers' Fees......................................................................................15
(e) Title to Assets....................................................................................15
(f) Subsidiaries.......................................................................................15
(g) Financial Statements...............................................................................15
(h) Events Subsequent to Most Recent Fiscal Year End...................................................16
(i) Undisclosed Liabilities............................................................................18
(j) Legal Compliance...................................................................................18
(k) Tax Matters........................................................................................18
(l) Real Property......................................................................................20
(m) Intellectual Property..............................................................................22
(n) Tangible Assets....................................................................................25
(o) Inventory..........................................................................................25
(p) Contracts..........................................................................................25
(q) Notes and Accounts Receivable......................................................................27
(r) Powers of Attorney.................................................................................27
(s) Insurance..........................................................................................27
(t) Litigation.........................................................................................27
(u) Product Warranty...................................................................................28
(v) Product Liability..................................................................................28
(w) Employees..........................................................................................28
(x) Employee Benefits..................................................................................29
(y) Guaranties.........................................................................................31
(z) Environmental, Health, and Safety Matters..........................................................31
(aa) Year 2000................................................................................32
(bb) Certain Business Relationships with ▇▇▇▇▇▇ and Its Subsidiaries..........................33
(cc) Disclosure...............................................................................33
(dd) Provided Information.....................................................................33
i
5. Pre-Closing Covenants...................................................................................33
(a) General............................................................................................33
(b) Notices and Consents...............................................................................33
(c) Operation of Business..............................................................................34
(d) Preservation of Business...........................................................................34
(e) Full Access........................................................................................34
(f) Notice of Developments.............................................................................34
(g) Exclusivity........................................................................................34
(h) Title Insurance....................................................................................36
(i) Liquidating Trust..................................................................................36
(j) Surveys............................................................................................37
(k) Employment Contracts...............................................................................37
(l) Notice to Creditors................................................................................37
(m) New Debt Financing.................................................................................37
(n) Contract...........................................................................................37
(o) Determination of ▇▇▇▇▇▇'▇ Tax Liability............................................................37
(i) File Tax Return..........................................................................37
(ii) Pay Shortfall............................................................................37
(p) Notice of Taxes....................................................................................38
(q) Lease of Property in Dalton, Georgia...............................................................38
(r) ▇▇▇▇▇▇▇▇ Industries, Inc...........................................................................38
(s) Leased Property Owners.............................................................................38
6. Conditions to Obligation to Close.......................................................................38
(a) Conditions to Obligation of DS&P and Acquisition...................................................38
(b) Conditions to Obligation of ▇▇▇▇▇▇.................................................................41
7. The Chapter 11 Case.....................................................................................42
(a) Bar Date...........................................................................................42
(b) Plan...............................................................................................42
(c) Liquidating Trust..................................................................................45
(d) Confirmation Order.................................................................................45
8. Termination..................................................................................................46
(a) Termination of Agreement...........................................................................46
(b) Effect of Termination..............................................................................46
9. Miscellaneous................................................................................................46
(a) Press Releases and Public Announcements............................................................46
(b) No Third-Party Beneficiaries.......................................................................47
(c) Entire Agreement...................................................................................47
(d) Succession and Assignment..........................................................................47
(e) Counterparts.......................................................................................47
(f) Headings...........................................................................................47
(g) Notices............................................................................................47
(h) Governing Law......................................................................................48
(i) Amendments and Waivers.............................................................................48
(j) Severability.......................................................................................48
(k) Expenses...........................................................................................48
(l) Construction.......................................................................................49
(m) Incorporation of Exhibits, Annexes, and Schedules..................................................49
(n) Submission to Jurisdiction.........................................................................49
(o) Survivability......................................................................................49
(p) Sole Remedy of ▇▇▇▇▇▇..............................................................................49
(q) Disclosure Generally...............................................................................50
ii
AGREEMENT AND PLAN OF MERGER
Agreement entered into as of February 29, 2000, by and among DIMELING,
▇▇▇▇▇▇▇▇▇ & PARK, a Pennsylvania general partnership ("DS&P"), MCF Acquisition,
Inc. a South Carolina corporation ("Acquisition") and ▇▇▇▇▇▇ COLOR-FI, INC., a
South Carolina corporation ("▇▇▇▇▇▇"). DS&P, Acquisition and ▇▇▇▇▇▇ are referred
to collectively herein as the "Parties".
This Agreement contemplates a transaction in which DS&P will acquire all of
the outstanding stock of ▇▇▇▇▇▇ for cash through a reverse subsidiary merger of
Acquisition with and into ▇▇▇▇▇▇.
Now, therefore, in consideration of the premises and the mutual promises
herein made, intending to be legally bound hereby, and in consideration of the
representations, warranties, and covenants herein contained, the Parties agree
as follows.
1. Definitions.
"Accountants" has the same meaning set forth in Section 2(e)(iv).
"Acquisition" has the meaning set forth in the preface above.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision
of state, local or foreign law.
"Assumed Liabilities" means trade payables incurred after filing of
the Chapter 11 Case in the Ordinary Course of Business and accrued as of
the Closing Date, severance obligations that are due and payable on or
prior to the Closing Date under ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇ Policy for Salaried
Employees, any severance obligations under those certain Executive
Severance Agreements that become due and payable to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇. Summer or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, cure payments under assumed contracts in
the amounts set forth on Exhibit C, employee's salaries and commissions
(and all associated Tax obligations associated therewith) incurred in the
Ordinary Course of Business and accrued as of the Closing Date, unpaid fees
and expenses associated with the New Debt Financing owed by ▇▇▇▇▇▇,
including, without limitation all legal fees of the lender's counsel, the
fees and expenses of DS&P and Acquisition (which fees and expenses of DS&P
and Acquisition shall not exceed $500,000), including without limitation
legal fees incurred in connection with the transactions contemplated
herein, accrued Tax liabilities for the period prior to the Closing, and
those taxes set forth on Sections 4(k), 4(h) and 4(i) of the Disclosure
Schedule (to the extent not discharged by the bankruptcy).
"Availability Reserve" has the meaning set forth in Section 2(e)(iii).
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of South Carolina.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis
for any specified consequence.
"Bar Date" means the date on which all administrative claims must be
filed, as contemplated in Section 7(a) below.
"Capital Contribution" has the meaning set forth in Section 2(e)(i)
below.
"Chapter 11 Case" means that certain case under Chapter 11 of the
United States Bankruptcy Code involving ▇▇▇▇▇▇ in the Bankruptcy Court,
Case Number 98-10145/W.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Basis" has the meaning set forth in Section 7(b)(x) below.
"Closing Date" has the meaning set forth in Section 2(b) below.
"Closing Date Balance Sheet" means the final balance sheet of ▇▇▇▇▇▇
(on a consolidated basis) as of Closing that includes and specifies in
detail all Assumed Liabilities as contemplated in Section 2(e)(iii) and
(iv).
"Code" means the Internal Revenue Code of 1986.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Competing Transaction" has the meaning set forth in Section 5(g).
"Confidential Information" means any information concerning the
businesses and affairs of ▇▇▇▇▇▇ and its Subsidiaries that is not already
generally available to the public.
"Confidentiality Agreement" has the meaning set forth in Section 9(c).
"Confirmation Order" means that certain order which confirms the Plan
under the Chapter 11 Case and approves the transaction contemplated herein.
"Controlled Group" has the meaning set forth in Code Section 1563.
"Deferred Intercompany Transaction" has the meaning set forth in Reg.
1.1502-13.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"DS&P" has the meaning set forth in the preface above.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer
Plan), or (d) Employee Welfare Benefit Plan or material fringe benefit or
other retirement, bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release,
control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now
or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2
"ERISA Affiliate" means each entity which is treated as a single
employer with ▇▇▇▇▇▇ for purposes of Code Section 414.
"Estimated Closing Date Availability" has the meaning set forth in
Section 2(e)(ii) below.
"Estimated Closing Date Balance Sheet" has the meaning set forth in
Section 2(e)(ii) below.
"Excess Loss Account" has the meaning set forth in Reg. Section
1.1502-19.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Final Closing Date Availability" has the meaning set forth in Section
2(e)(iii) below.
"Final Order" means the Confirmation Order that is not subject to a
stay by a court of competent jurisdiction and for which the period to
appeal has elapsed.
"Final Purchase Price" means an amount equal to the sum of (a) the
Capital Contribution and (b) the Final Closing Date Availability less the
Availability Reserve.
"Financial Statement" has the meaning set forth in Section 4(g) below.
"401(k) Plan" means the ▇▇▇▇▇▇ Color-Fi, Inc. 401(k) Profit Sharing
Plan and Trust.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Initial DS&P Overbid" has the meaning set forth in Section 5(g).
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever
form or medium).
"JFM" has the meaning set forth in Section 2(f)(ii).
"Knowledge" means actual knowledge after reasonable investigation.
"Lender" means the lender under the New Debt Financing.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
3
"Liquidating Trust" means that certain trust set up pursuant to the
Plan where certain assets and liabilities of ▇▇▇▇▇▇ and its Subsidiaries
are transferred prior to the Merger. The Surviving Corporation shall have
no liability with respect to actions, claims, demands, damages, loss,
costs, and expenses arising from the Liquidation Trust, the Trust Assets or
liabilities contained therein.
"▇▇▇▇▇▇" has the meaning set forth in the preface above.
"▇▇▇▇▇▇ Share" means any share of the Common Stock, no par value, of
▇▇▇▇▇▇.
"Material Adverse Change" means (i) with respect to ▇▇▇▇▇▇, a material
adverse effect upon the business, assets, properties, conditions (financial
or otherwise) or prospects of ▇▇▇▇▇▇ and its Subsidiaries taken as a whole,
as follows: (a) if adjusted EBITDA (calculated in the same manner as
adjusted EBITDA is calculated in ▇▇▇▇▇▇'▇ 4th Quarter 1999 Flash Report)
for the period from January 1, 2000 through the Closing on an annualized
basis is less than $4.4 million, (b) if ▇▇▇▇▇▇ or its officers shall have
received any clear and unambiguous indication or notice from any or all of
the top twenty customers, the sales revenues from whom in 1999 constituted
53.7% of ▇▇▇▇▇▇'▇ 1999 sales revenues, that such customers, collectively,
intend to purchase less than 85% of the sales revenues such customers
purchased in 1999 from ▇▇▇▇▇▇ and its Subsidiaries during 2000, unless
▇▇▇▇▇▇ or its officers shall have received any notice from any other
existing or prospective customers that such customers, collectively, intend
to purchase the difference at comparable margins, (c) if the net revenue of
▇▇▇▇▇▇ and its Subsidiaries for the period from January 1, 2000 through
Closing on an annualized basis is less than $44,500,000, (d) a material
failure in any operating system of ▇▇▇▇▇▇ and its Subsidiaries taken as a
whole which cannot be remedied without material disruption of ▇▇▇▇▇▇'▇
operations or processing of accounts, (e) a material problem with suppliers
that cannot be remedied in a timely or cost effective manner; (f) a
catastrophic event relating to any of the facilities; (g) the occurrence of
material post petition litigation or the threat of material post petition
litigation significant to the ongoing business of ▇▇▇▇▇▇, which DS&P
determines is significant in its reasonable discretion; (h) the death or
disability of any of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; (i) seizure, impoundment or taking
of all or substantially all of the real property owned or leased by ▇▇▇▇▇▇
and its Subsidiaries; or (j) fraudulent misstatements by ▇▇▇▇▇▇ in any of
the representations set forth in this Agreement or (ii) with respect to
DS&P or Acquisition, a material adverse effect upon such Person's ability
to fulfill its obligations under this Agreement and consummate the
transactions herein.
"Merger" has the meaning set forth in Section 2(a) below.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"New Debt Financing" has the meaning set forth in Section 2(e)(i)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
4
"Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Plan" means the Plan of Reorganization to be filed in connection with
the Chapter 11 Case which shall be satisfactory to DS&P and Acquisition in
their reasonable discretion and which incorporates the terms herein.
"Plan Administrator" means the person appointed by the Bankruptcy
Court to oversee the distribution of the Preliminary Purchase Price, the
Final Purchase Price and the Tax Liability Reserve pursuant to the Plan.
"Preliminary Purchase Price" has the meaning set forth in Section
2(e)(iii) below.
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code 4975.
"Restricted Stock Account" means any participant account under the
401(k) Plan to which ▇▇▇▇▇▇ Shares have been allocated pursuant to the 75%
matching provision or otherwise and from which the ▇▇▇▇▇▇ Shares could not
be transferred to another investment fund at the direction of the
participant.
"Reimbursement Fee" has the meaning set forth in Section 5(g).
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest of any kind.
"SCBCA" means the South Carolina Business Corporation Act of 1988.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors.
"Survey" has the meaning set forth in Section 5(j) below.
"Surviving Corporation" has the meaning set forth in Section 2(a)
below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Liability" has the meaning set forth in Section 7(b)(x) below.
5
"Tax Liability Reserve" means (a) $1,000,000 or (b) if on or prior to
Closing, an audit is commenced by any taxing authority, a Tax or adjustment
is asserted by any taxing authority, an error is discovered relating to any
Return that was or should have been filed by ▇▇▇▇▇▇ for which the statute
of limitations is not closed (other than the sales tax liability assessed
against ▇▇▇▇▇▇▇▇ Industries, Inc. in Florida and Nevada in the specific
amount disclosed on Section 4(k) of the Disclosure Schedule), or the
Closing Basis is less than $32,188,276, the Tax Liability Reserve shall be
increased from $1,000,000 by the sum of (i) the maximum amount of Tax that
▇▇▇▇▇▇ or Surviving Corporation could owe as a result thereof and (ii)
forty percent (40%) of the amount by which $32,188,276 exceeds Closing
Basis, provided that the amount of the increase shall be capped at $750,000
so that the Tax Liability Reserve shall never exceed $1,750,000.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trust Assets" has the meaning set forth in Section 5(i) below.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Plan, and the SCBCA, Acquisition will merge with and into
▇▇▇▇▇▇ (the "Merger") at the Effective Time. The separate corporate
existence of Acquisition shall cease. ▇▇▇▇▇▇ shall be the corporation
surviving the Merger (after the Merger, the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇ LLP in ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
commencing at 9:00 a.m. local time the later to occur of (a) the expiration
of any statutory waiting period applicable to the consummation of the
transactions contemplated hereby pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act; or
(b) the day after the day on which the Confirmation Order becomes a Final
Order; or (c) the tenth day following the date on which all the conditions
set forth in Section 6 have been satisfied or waived (other than conditions
with respect to actions the respective Parties will take at the Closing
itself); or (d) such other date as the Parties may mutually determine (the
"Closing Date").
(c) Actions at the Closing. At the Closing, (i) ▇▇▇▇▇▇ will deliver to
DS&P and Acquisition the various certificates, instruments, and documents
referred to in Section 6 below, (ii) DS&P and Acquisition will deliver to
▇▇▇▇▇▇ the various certificates, instruments, and documents referred to in
Section 6 below, (iii) ▇▇▇▇▇▇ and Acquisition will file with the Secretary
of State of the State of South Carolina Articles of Merger in the form
attached hereto as Exhibit A (the "Articles of Merger"), and (iv) DS&P
shall capitalize Acquisition with $10,000,000.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time (the
"Effective Time") ▇▇▇▇▇▇ and Acquisition file the Articles of Merger
with the Secretary of State of the State of South Carolina. The Merger
shall have the effect set forth in the SCBCA. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on
behalf of either ▇▇▇▇▇▇ or Acquisition in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the
Certificate of Incorporation of Acquisition immediately prior to the
Effective Time (except that the name of the Surviving Corporation will
remain unchanged).
6
(iii) Bylaws. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to read as did
the Bylaws of Acquisition immediately prior to the Effective Time
(except that the name of the Surviving Corporation will remain
unchanged).
(iv) Directors and Officers. The directors and officers of
Acquisition shall become the directors and officers of the Surviving
Corporation at and as of the Effective Time (retaining their
respective positions and terms of office).
(v) Cancellation of ▇▇▇▇▇▇ Shares. At and as of the Effective
Time, each outstanding ▇▇▇▇▇▇ Share, option to purchase ▇▇▇▇▇▇ Shares,
and other equity interest issued and outstanding or held in ▇▇▇▇▇▇'▇
treasury shall automatically be cancelled and extinguished without
conversion hereof and no payment shall be made in respect thereof. No
▇▇▇▇▇▇ Share shall be deemed to be outstanding or to have any rights
after the Effective Time.
(vi) Conversion of Capital Stock of Acquisition. At and as of the
Effective Time, each share of common stock, no par value, of
Acquisition shall be converted into one share of common stock, no par
value, of the Surviving Corporation.
(e) Determination of Payments.
(i) On the Closing Date, DS&P shall capitalize Acquisition with
$10,000,000 (the "Capital Contribution") and ▇▇▇▇▇▇ shall obtain a
revolving line of credit to be arranged by ▇▇▇▇▇▇ satisfactory to DS&P
and Acquisition in their sole discretion and a term loan to be
arranged by ▇▇▇▇▇▇ satisfactory to DS&P and Acquisition in their sole
discretion, (the revolving line of credit and the term loan are
referred to herein as the "New Debt Financing").
(ii) No later than three business days prior to the Closing,
▇▇▇▇▇▇ shall provide to DS&P a pro forma balance sheet of ▇▇▇▇▇▇ on a
consolidated basis estimated as of the Closing which will include and
specify in detail all Assumed Liabilities (the "Estimated Closing Date
Balance Sheet") and a calculation of total funds available for draw by
the Surviving Corporation as of the Closing under the New Debt
Financing (the "Estimated Closing Date Availability"). ▇▇▇▇▇▇ and DS&P
shall work in good faith to resolve any disputes identified by DS&P in
the Estimated Closing Date Balance Sheet and Estimated Closing Date
Availability prior to the Closing.
(iii) On the Closing Date, an amount equal to the sum of (A) the
Capital Contribution and (B) the Estimated Closing Date Availability,
less the Availability Reserve (which shall be the amount of $2,400,000
plus Assumed Liabilities as per the Estimated Closing Date Balance
Sheet) shall be paid to the Plan Administrator (the "Preliminary
Purchase Price"). Within 60 days following the Closing, the Surviving
Corporation shall submit to the Plan Administrator, its calculation of
the Final Purchase Price based on a final Closing Date Balance Sheet
and a final calculation of total funds available for draw by the
Surviving Corporation under the New Debt Financing on the Closing Date
(the "Final Closing Date Availability"). The Plan Administrator will
review the Surviving Corporation's calculations of the Final Purchase
Price and Final Closing Date Availability and will notify Surviving
Corporation of any objection to its calculations of the Final Purchase
Price and Final Closing Date Availability within 30 days of its
receipt of the final Closing Date Balance Sheet and Closing Date
Availability. At the expiration of such 30 day period, if the Plan
Administrator has not notified Surviving Corporation of any objection,
Surviving Corporation's calculations of the Final Purchase Price shall
be final. If the Plan Administrator gives notice of objections to the
Surviving Corporation's calculation of the Final Purchase Price, then
Surviving Corporation and the Plan Administrator shall, in good faith,
attempt to resolve any dispute.
7
(iv) If the Surviving Corporation and the Plan Administrator are
unable to resolve such dispute concerning the determination of the
Final Purchase Price, the dispute will be submitted to a
nationally-recognized independent certified public accounting firm
(the "Accountants"). If the Plan Administrator and the Surviving
Corporation cannot agree on a choice of Accountants to make such
determination within 45 days after the Surviving Corporation's receipt
of the notice of objection, the Plan Administrator and the Surviving
Corporation shall each select an Accountant, and the two Accountants
so selected shall select a third Accountant to make such determination
which shall not be the Surviving Corporation's, the Plan
Administrator's or any of their affiliates' accounting firms. If
issues in dispute are submitted to Accountants for resolution, (i)
each party will furnish to the Accountants such work papers and other
documents and information relating to the disputed issues as the
Accountants may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity
to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants;
(ii) the determination by the Accountants, as set forth in a notice
delivered to both Parties by the Accountants, will be binding and
conclusive on the Parties; and (iii) all fees of the Accountants shall
be deemed administrative claims and paid from the Final Purchase
Price.
(v) Within 10 days following the Final Purchase Price
determination as contemplated above in Section 2(e)(iii) and (iv), the
Surviving Corporation will pay to the Plan Administrator any positive
increase in the Final Purchase Price over the Preliminary Purchase
Price, and the Plan Administrator out of the Preliminary Purchase
Price, to the extent such funds have not previously been distributed
to creditors, will pay to the Surviving Corporation any negative
difference in the Preliminary Purchase Price over the Final Purchase
Price.
(f) Payments and Satisfaction of all Claims.
(i) The Final Purchase Price shall be used by the Plan Administrator
as payment in full of all creditors pursuant to the terms and conditions of
this Agreement and the Plan and satisfaction of any adjustment necessary as
a result of Section 2(e) above and any Tax Liabilities described below.
(ii) At Closing, the excess of the Preliminary Purchase Price over the
sum of the Tax Liability Reserve and $2,500,000 shall be used by the Plan
Administrator to pay administrative claims that have been finally
determined as of the Closing, to pay ▇▇▇▇▇▇'▇ creditors pursuant to the
terms of the Plan, to pay any amounts or benefits owed to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("JFM") pursuant to (a) any agreements or arrangements between ▇▇▇▇▇▇ and
JFM in effect as of the date hereof or subsequently negotiated, including,
but not limited to, any split dollar agreement or (b) as a result of any
employment relationship or severance of such employment relationship
between JFM and ▇▇▇▇▇▇, and to pay to the 401(k) Plan an amount, if any,
equal to the sum of (i) the amount the 401(k) Plan used to purchase (from
any source including another account in the 401(k) Plan) ▇▇▇▇▇▇ Shares
after the filing of the Chapter 11 Case for the benefit of any
participant's account other than a Restricted Stock Account, (ii) the
difference between the cost basis of all ▇▇▇▇▇▇ Shares purchased (from any
source including another account in the 401(k) Plan) for the 401(k) Plan
Restricted Stock Accounts and the amounts distributed from such accounts,
(iii) any difference between the 401(k) Plan trust balances and the 401(k)
Plan participant record keeper balances, (iv) with respect to any 401(k)
Plan participant who received distributions after the filing of the Chapter
11 Case, the excess of the value of ▇▇▇▇▇▇ Shares reported to any
participant on the third quarter 1999 participant statement and the value
distributed to such participant with respect to such ▇▇▇▇▇▇ Shares, (v)
with respect to any 401(k) Plan participant who requested a distribution
but did not receive a distribution of ▇▇▇▇▇▇ Shares, the value of such
8
▇▇▇▇▇▇ Shares on the applicable distribution valuation date plus interest
from such date at the rate of 8 percent, and (vi) the excess of any amount
reported to a participant in the 401(k) Plan after the filing of the
Chapter 11 Case over $0.01 for any ▇▇▇▇▇▇ Shares in the Participant's
account not previously distributed and, with respect to ▇▇▇▇▇▇ Shares in
the Restricted Stock Account less any amount paid under (ii) above with
respect to such participant. The remaining $2,500,000 shall be held by the
Plan Administrator and used to make any payment required to be made by the
Plan Administrator to the Surviving Corporation upon the determination of
the Final Purchase Price, if any, and to pay all administrative claims not
yet paid as of the Closing Date (including without limitation, attorneys
fees for ▇▇▇▇▇▇ and the creditors' committee, any other professional fees
such as those of accountants, auditors, investment bankers and any similar
fees, any fees for substantial contribution to the case) when such claims
become allowed claims. The Surviving Corporation will have no liability for
post-petition liabilities or administrative claims or expenses unless they
are expressly included in the calculation of Assumed Liabilities.
(iii) After the final determination of the Final Purchase Price as
contemplated in Section 2(e) and the final determination and payment of all
administrative and priority claims including those submitted on or prior to
the Bar Date, the Plan Administrator shall distribute to ▇▇▇▇▇▇'▇ creditors
pursuant to the Plan the remaining Final Purchase Price less the Tax
Liability Reserve.
(iv) After the final determination of any Tax Liability, the Plan
Administrator shall distribute to the Surviving Corporation from the Tax
Liability Reserve an amount necessary to pay the Tax Liability and the
remainder, if any, shall be distributed to ▇▇▇▇▇▇'▇ creditors. The
Surviving Corporation shall pay any excess of the Tax Liability over the
amount in the Tax Liability Reserve, and the Plan Administrator shall have
no liability for any such excess Tax Liability.
(v) The Surviving Corporation shall assume the Assumed Liabilities,
and such assumption will accrue to the benefit of certain of ▇▇▇▇▇▇'▇
creditors.
(g) Closing of Transfer Records. After the close of business on the Closing
Date, transfers of ▇▇▇▇▇▇ Shares outstanding prior to the Effective Time shall
not be made on the stock transfer books of the Surviving Corporation.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of DS&P. DS&P represents and
warrants to ▇▇▇▇▇▇ that the statements contained in this Section 3(a) are
correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout
this Section 3(a)).
(i) Organization. DS&P is a Pennsylvania general partnership and
has all requisite partnership power and authority to own its property
and to carry on its business as now conducted.
(ii) Authorization of Transaction. DS&P has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of DS&P, enforceable in accordance with its
terms and conditions. Except as contemplated herein, DS&P need not
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order
to consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
DS&P is subject or any provision of its partnership agreement or, (B)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which DS&P is a party or by which it is bound or to
which any of its assets is subject.
9
(iv) Brokers' Fees. DS&P 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 for which ▇▇▇▇▇▇ or
any of its Subsidiaries could become liable or obligated.
(v) Financial Ability. DS&P has the financial ability to perform
its obligations under this Agreement and to capitalize Acquisition
with $10,000,000.
(b) Representations and Warranties of Acquisition. Acquisition
represents and warrants to ▇▇▇▇▇▇ that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(b)).
(i) Organization of Acquisition. Acquisition is a corporation
duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. Acquisition has full power and
authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
Acquisition, enforceable in accordance with its terms and conditions.
Except as contemplated herein, Acquisition need not give any notice
to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
Acquisition is subject or any provision of its articles or bylaws or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which Acquisition is a party or by which it is bound or
to which any of its assets is subject.
(iv) Brokers' Fees. Acquisition 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 for which
▇▇▇▇▇▇ or its Subsidiaries could become liable or obligated.
4. Representations and Warranties Concerning ▇▇▇▇▇▇ and Its Subsidiaries.
▇▇▇▇▇▇ represents and warrants to Acquisition and DS&P that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the Disclosure
Schedule delivered by ▇▇▇▇▇▇ to Acquisition and DS&P on the date hereof and
initialed by the Parties (the "Disclosure Schedule"). The Parties acknowledge
that the Trust Assets shall be transferred to the Liquidating Trust and the
transfer of all such assets to the Liquidating Trust will not be deemed to be a
breach of any of the following representations. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Disclosure Schedule identifies the
exception with particularity and describes the relevant facts in detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 4.
10
(a) Organization, Qualification, and Corporate Power. Each of ▇▇▇▇▇▇
and its Subsidiaries is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation.
Contingent upon the approval of the Plan by the Bankruptcy Court, each of
▇▇▇▇▇▇ and its Subsidiaries is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where such
qualification is required. Each of ▇▇▇▇▇▇ and its Subsidiaries has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and
used by it. Section 4(a) of the Disclosure Schedule lists the directors and
officers of each of ▇▇▇▇▇▇ and its Subsidiaries. ▇▇▇▇▇▇ has delivered to
DS&P and Acquisition correct and complete copies of the charter and bylaws
of each of ▇▇▇▇▇▇ and its Subsidiaries (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 ▇▇▇▇▇▇ and its
Subsidiaries are correct and complete. None of ▇▇▇▇▇▇ and its Subsidiaries
is in default under or in violation of any provision of its charter or
bylaws.
(b) Capitalization. The entire authorized capital stock of ▇▇▇▇▇▇
consists of 50,000,000 ▇▇▇▇▇▇ Shares, of which 6,730,284 ▇▇▇▇▇▇ Shares are
issued and outstanding and no ▇▇▇▇▇▇ Shares are held in treasury. All of
the issued and outstanding ▇▇▇▇▇▇ Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by
the respective stockholders as set forth in Section 4(b) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights,
or other contracts or commitments that could require ▇▇▇▇▇▇ to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to ▇▇▇▇▇▇. There are no
voting trusts, proxies, or other agreements or understandings with respect
to the voting of the capital stock of ▇▇▇▇▇▇.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of ▇▇▇▇▇▇ and its
Subsidiaries is subject or any provision of the charter or bylaws of any of
▇▇▇▇▇▇ and its Subsidiaries or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which any of ▇▇▇▇▇▇ and its Subsidiaries is a party or by
which it is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets). None of
▇▇▇▇▇▇ and its Subsidiaries needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Other than the Gordian Group, none of ▇▇▇▇▇▇ and
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.
(e) Title to Assets. ▇▇▇▇▇▇ and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and
assets used by them, located on their premises, or shown on the Most Recent
Balance Sheet or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance
Sheet.
11
(f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth
for each Subsidiary of ▇▇▇▇▇▇ (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of
each class of its capital stock, (iii) the number of issued and outstanding
shares of each class of its capital stock, the names of the holders
thereof, and the number of shares held by each such holder, and (iv) the
number of shares of its capital stock held in treasury. All of the issued
and outstanding shares of capital stock of each Subsidiary of ▇▇▇▇▇▇ have
been duly authorized and are validly issued, fully paid, and nonassessable.
One of ▇▇▇▇▇▇ and its Subsidiaries holds of record and owns beneficially
all of the outstanding shares of each Subsidiary of ▇▇▇▇▇▇, free and clear
of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require any of ▇▇▇▇▇▇
and its Subsidiaries to sell, transfer, or otherwise dispose of any capital
stock of any of its Subsidiaries or that could require any Subsidiary of
▇▇▇▇▇▇ to issue, sell, or otherwise cause to become outstanding any of its
own capital stock. There are no outstanding stock appreciation, phantom
stock, profit participation, or similar rights with respect to any
Subsidiary of ▇▇▇▇▇▇. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital
stock of any Subsidiary of ▇▇▇▇▇▇. None of ▇▇▇▇▇▇ and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of ▇▇▇▇▇▇.
(g) Financial Statements. Attached hereto as Exhibit B are the
following financial statements (collectively the "Financial Statements"):
(i) audited consolidated and unaudited consolidating balance sheets and
statements of income, changes in stockholders' equity, and cash flow as of
and for the fiscal years ended December 31, 1996, December 31, 1997,
December 31, 1998, (the "Most Recent Fiscal Year End") for ▇▇▇▇▇▇ and its
Subsidiaries; and (ii) unaudited consolidated and consolidating balance
sheets and statements of income, changes in stockholders' equity, and cash
flow (the "Most Recent Financial Statements") as of and for the 9 months
ended September 30, 1999 (the "Most Recent Fiscal Month End") for ▇▇▇▇▇▇
and its Subsidiaries. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of ▇▇▇▇▇▇ and its Subsidiaries as of such dates and the results
of operations of ▇▇▇▇▇▇ and its Subsidiaries for such periods, are correct
and complete, and are consistent with the books and records of ▇▇▇▇▇▇ and
its Subsidiaries (which books and records are correct and complete);
provided, however, that the Most Recent Financial Statements are subject to
normal year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes and other presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Other than as
disclosed in Section 4(h) of the Disclosure Schedule, since the Most Recent
Fiscal Month End, there has not been any non de minimis adverse change in
the business, financial condition, operations, results of operations, or
future prospects of any of ▇▇▇▇▇▇ and its Subsidiaries. Without limiting
the generality of the foregoing, since that date:
(i) none of ▇▇▇▇▇▇ and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of
Business;
(ii) none of ▇▇▇▇▇▇ and its Subsidiaries has entered into any
12
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more
than $250,000 or outside the Ordinary Course of Business;
(iii) no party (including any of ▇▇▇▇▇▇ and its Subsidiaries) has
accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $250,000 to which
any of ▇▇▇▇▇▇ and its Subsidiaries is a party or by which any of them
is bound;
(iv) none of ▇▇▇▇▇▇ and its Subsidiaries has imposed any Security
Interest upon any of its assets, tangible or intangible;
(v) none of ▇▇▇▇▇▇ and its Subsidiaries has committed to make any
capital expenditure (or series of related capital expenditures) either
involving more than $250,000 or outside the Ordinary Course of
Business;
(vi) none of ▇▇▇▇▇▇ and its Subsidiaries has committed to make
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;
(vii) none of ▇▇▇▇▇▇ and its Subsidiaries has issued any note,
bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $100,000 singly or $250,000 in
the aggregate;
(viii) none of ▇▇▇▇▇▇ and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities
outside the Ordinary Course of Business during the course of the
Chapter 11 Case;
(ix) none of ▇▇▇▇▇▇ and its Subsidiaries has cancelled,
compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $100,000 or
outside the Ordinary Course of Business;
(x) none of ▇▇▇▇▇▇ and its Subsidiaries has granted any license
or sublicense of any rights under or with respect to any Intellectual
Property;
(xi) there has been no change made or authorized in the charter
or bylaws of any of ▇▇▇▇▇▇ and its Subsidiaries;
(xii) none of ▇▇▇▇▇▇ and its Subsidiaries has issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(xiii) none of ▇▇▇▇▇▇ and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or redeemed, purchased,
or otherwise acquired any of its capital stock;
(xiv) none of ▇▇▇▇▇▇ and its Subsidiaries has experienced any
damage, destruction, or loss (whether or not covered by insurance) to
its property;
(xv) none of ▇▇▇▇▇▇ and its Subsidiaries has made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xvi) none of ▇▇▇▇▇▇ and its Subsidiaries has entered into any
employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
13
(xvii) none of ▇▇▇▇▇▇ and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xviii) none of ▇▇▇▇▇▇ and its Subsidiaries has 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);
(xix) none of ▇▇▇▇▇▇ and its Subsidiaries has made any other
change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xx) none of ▇▇▇▇▇▇ and its Subsidiaries has made or pledged to
make any charitable or other capital contribution outside the Ordinary
Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of ▇▇▇▇▇▇ and its Subsidiaries; and
(xxii) none of ▇▇▇▇▇▇ and its Subsidiaries has committed to any
of the foregoing.
(i) Undisclosed Liabilities. None of ▇▇▇▇▇▇ and its Subsidiaries has
any Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for (i)
Liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) and (ii) Liabilities which have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement,
or violation of law).
(j) Legal Compliance. Each of ▇▇▇▇▇▇, its Subsidiaries, and their
respective predecessors and Affiliates has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all agencies thereof), 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.
(k) Tax Matters.
(i) Each of ▇▇▇▇▇▇ and its Subsidiaries has filed all Tax Returns
that it was required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by any of ▇▇▇▇▇▇ and its
Subsidiaries (whether or not shown on any Tax Return) have been paid.
None of ▇▇▇▇▇▇ and its Subsidiaries currently is the beneficiary of
any extension of time within which to file any Tax Return. No claim
has ever been made by an authority in a jurisdiction where any of
▇▇▇▇▇▇ and its Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of ▇▇▇▇▇▇ and its Subsidiaries
that arose in connection with any failure (or alleged failure) to pay
any Tax.
(ii) Each of ▇▇▇▇▇▇ and its Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(iii) No stockholder of ▇▇▇▇▇▇, director or officer (or employee
14
responsible for Tax matters) of any of ▇▇▇▇▇▇ and its Subsidiaries
expects any authority to assess any additional Taxes for any period
for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of any of ▇▇▇▇▇▇ and its Subsidiaries
either (A) claimed or raised by any authority in writing or (B) as to
which any of and the directors and officers (and employees responsible
for Tax matters) of ▇▇▇▇▇▇ and its Subsidiaries has Knowledge based
upon personal contact with any agent of such authority. Section 4(k)
of the Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to any of ▇▇▇▇▇▇ and its
Subsidiaries for taxable periods ended on or after 1994, indicates
those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. ▇▇▇▇▇▇ has delivered
to DS&P correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against
or agreed to by any of ▇▇▇▇▇▇ and its Subsidiaries since 1993.
(iv) None of ▇▇▇▇▇▇ and its Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) None of ▇▇▇▇▇▇ and its Subsidiaries has filed a consent under
Code Section 341(f) concerning collapsible corporations. None of
▇▇▇▇▇▇ and its Subsidiaries has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. None of ▇▇▇▇▇▇ and its
Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). Each of
▇▇▇▇▇▇ and its Subsidiaries has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of
Code Section 6662. None of ▇▇▇▇▇▇ and its Subsidiaries is a party to
any Tax allocation or sharing agreement. None of ▇▇▇▇▇▇ and its
Subsidiaries (A) 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 ▇▇▇▇▇▇) or (B) has any Liability for the Taxes of
any Person (other than any of ▇▇▇▇▇▇ and its Subsidiaries) under Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(vi) Section 4(k) of the Disclosure Schedule sets forth the
following information with respect to each of ▇▇▇▇▇▇ and its
Subsidiaries (or, in the case of clause (B) below, with respect to
each of the Subsidiaries) as of the most recent practicable date: (A)
the basis of ▇▇▇▇▇▇ or Subsidiary in its assets; (B) the basis of the
stockholder(s) of the Subsidiary in its stock (or the amount of any
Excess Loss Account); (C) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to ▇▇▇▇▇▇ or Subsidiary;
and (D) the amount of any deferred gain or loss allocable to ▇▇▇▇▇▇ or
Subsidiary arising out of any Deferred Intercompany Transaction.
(vii) The unpaid Taxes of ▇▇▇▇▇▇ and its Subsidiaries (A) did
not, as of the Most Recent Fiscal Month End, exceed the reserve for
Tax Liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set forth
on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (B) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of ▇▇▇▇▇▇ and its Subsidiaries in filing their Tax
Returns.
(viii) There has been no ownership change as defined in Code
Section 382 for the period ending on the date hereof, and there shall
be no ownership change as defined in Code Section 382 for the period
ending on the Closing (assuming that the Closing had not occurred).
(l) Real Property.
15
(i) Section 4(l)(i) of the Disclosure Schedule lists and
describes briefly all real property that any of ▇▇▇▇▇▇ and its
Subsidiaries owns. With respect to each such parcel of owned real
property:
(A) the identified owner has good and marketable title
to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction,
except for installments of special assessments not yet
delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy,
or value, or the marketability of title, of the property
subject thereto;
(B) there are no pending or threatened condemnation
proceedings, lawsuits, or administrative actions relating to
the property or other matters affecting adversely the
current use, occupancy, or value thereof;
(C) the legal description for the parcel contained in
the deed thereof describes such parcel fully and adequately,
the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, zoning laws,
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which
may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use
of the land, and the property is not located within any
flood plain or subject to any similar type restriction for
which any permits or licenses necessary to the use thereof
have not been obtained;
(D) all facilities have received all approvals of
governmental authorities (including licenses and permits)
required in connection with the ownership or operation
thereof and have been operated and maintained in accordance
with applicable laws, rules, and regulations;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting
to any party or Parties the right of use or occupancy of any
portion of the parcel of real property;
(F) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or any
portion thereof or interest therein;
(G) there are no Parties (other than ▇▇▇▇▇▇ and its
Subsidiaries) in possession of the parcel of real property,
other than tenants under any leases disclosed in Section
4(l)(i) of the Disclosure Schedule who are in possession of
space to which they are entitled;
(H) all facilities located on the parcel of real
property are supplied with utilities and other services
necessary for the operation of such facilities, including
gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules, and
regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting the
parcel of real property; and
(I) each parcel of real property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant
16
easement benefiting the parcel of real property, and access
to the property is provided by paved public right-of-way
with adequate curb cuts available.
(ii) Section 4(l)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of
▇▇▇▇▇▇ and its Subsidiaries. Section 4(l)(ii) of the Disclosure
Schedule also identifies the leased or subleased properties for
which title insurance policies are to be procured in accordance
with Section 5(h)(ii) below. ▇▇▇▇▇▇ has delivered to DS&P correct
and complete copies of the leases and subleases listed in Section
4(l)(ii) of the Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section 4(l)(ii) of
the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease 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) no party to the lease or sublease 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
thereunder;
(D) no party to the lease or sublease has repudiated
any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations
and warranties set forth in subsections (A) through (E)
above are true and correct with respect to the underlying
lease;
(G) none of ▇▇▇▇▇▇ and its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations;
(I) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
(J) the owner of the facility leased or subleased has
good and marketable title to the parcel of real property,
free and clear of any Security Interest, easement, covenant,
or other restriction, except for installments of special
easements not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of
title, of the property subject thereto.
(m) Intellectual Property.
(i) ▇▇▇▇▇▇ and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary or desirable for the operation of
the businesses of ▇▇▇▇▇▇ and its Subsidiaries as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by any of ▇▇▇▇▇▇ and its
17
Subsidiaries immediately prior to the Closing hereunder will be
owned or available for use by ▇▇▇▇▇▇ or the Subsidiary on
identical terms and conditions immediately subsequent to the
Closing hereunder. Each of ▇▇▇▇▇▇ and its Subsidiaries has taken
all necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) None of ▇▇▇▇▇▇ and its Subsidiaries has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties,
and none of the stockholders and the directors and officers (and
employees with responsibility for Intellectual Property matters)
of ▇▇▇▇▇▇ and its Subsidiaries has ever received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that any of ▇▇▇▇▇▇ and its Subsidiaries must
license or refrain from using any Intellectual Property rights of
any third party). To the Knowledge of any of the directors and
officers (and employees with responsibility for Intellectual
Property matters) of ▇▇▇▇▇▇ and its Subsidiaries, no third party
has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property
rights of any of ▇▇▇▇▇▇ and its Subsidiaries.
(iii) Section 4(m)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued to
any of ▇▇▇▇▇▇ and its Subsidiaries with respect to any of its
Intellectual Property, identifies each pending patent application
or application for registration which any of ▇▇▇▇▇▇ and its
Subsidiaries has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which any of ▇▇▇▇▇▇ and its Subsidiaries has granted
to any third party with respect to any of its Intellectual
Property (together with any exceptions). ▇▇▇▇▇▇ has delivered to
DS&P correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and
permissions (as amended to date) and have made available to DS&P
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. Section 4(m)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by any
of ▇▇▇▇▇▇ and its Subsidiaries in connection with any of its
businesses. With respect to each item of Intellectual Property
required to be identified in Section 4(m)(iii) of the Disclosure
Schedule:
(A) ▇▇▇▇▇▇ and its Subsidiaries possess all right,
title, and interest in and to the item, free and clear of
any Security Interest, license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or, to the Knowledge of any of the directors and
officers (and employees with responsibility for Intellectual
Property matters) of ▇▇▇▇▇▇ and its Subsidiaries, is
threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) none of ▇▇▇▇▇▇ and its Subsidiaries has ever agreed
to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with
respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies
each item of Intellectual Property that any third party owns and
that any of ▇▇▇▇▇▇ and its Subsidiaries uses pursuant to license,
18
sublicense, agreement, or permission. ▇▇▇▇▇▇ has delivered to
DS&P correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be
identified in Section 4(m)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect;
(B) the license, sublicense, agreement, or permission
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
(including the assignments and assumptions referred to in
Section 2 above);
(C) no party to the license, sublicense, agreement, or
permission 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 thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or, to the Knowledge of the directors and officers
(and employees with responsibility for Intellectual Property
matters) of ▇▇▇▇▇▇ and its Subsidiaries, is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(H) none of ▇▇▇▇▇▇ and its Subsidiaries has granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(v) To the Knowledge of the directors and officers (and
employees with responsibility for Intellectual Property matters)
of ▇▇▇▇▇▇ and its Subsidiaries, none of ▇▇▇▇▇▇ and its
Subsidiaries will interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property
rights of third parties as a result of the continued operation of
its businesses as presently conducted and as presently proposed
to be conducted.
(vi) None of the directors and officers (and employees with
responsibility for Intellectual Property matters) of ▇▇▇▇▇▇ and
its Subsidiaries has any Knowledge of any new products,
inventions, procedures, or methods of manufacturing or processing
that any competitors or other third parties have developed which
reasonably could be expected to supersede or make obsolete any
product or process of any of ▇▇▇▇▇▇ and its Subsidiaries.
(n) Tangible Assets. ▇▇▇▇▇▇ and its Subsidiaries own or lease all
buildings, machinery, equipment, nd other tangible assets necessary
for the conduct of their businesses as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free
from defects (patent and latent), has been maintained in accordance
19
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 presently is used and presently is proposed to
be used.
(o) Inventory. The inventory of ▇▇▇▇▇▇ and its Subsidiaries
consists of raw materials and supplies, manufactured and purchased
parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is slow-moving, obsolete, damaged, or
defective, subject only to the reserve for inventory writedown set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of ▇▇▇▇▇▇ and its
Subsidiaries.
(p) Contracts. Section 4(p) of the Disclosure Schedule lists the
following contracts and other agreements to which any of ▇▇▇▇▇▇ and
its Subsidiaries is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease payments in excess of $100,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, result in a loss to any of ▇▇▇▇▇▇
and its Subsidiaries, or involve consideration in excess of
$500,000;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $100,000 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition; provided that any confidentiality agreements
entered into after the filing of the Chapter 11 Case in
connection with soliciting new debt or equity financing or
restructuring existing debt need not be disclosed until Closing;
(vi) any agreement with any of the stockholder of ▇▇▇▇▇▇ and
their Affiliates (other than ▇▇▇▇▇▇ and its Subsidiaries);
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of its current or former
directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $150,000 or providing severance
benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of any of ▇▇▇▇▇▇ and its Subsidiaries; or
20
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$500,000.
▇▇▇▇▇▇ has delivered to DS&P a correct and complete copy of each written
agreement listed in Section 4(p) of the Disclosure Schedule (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4(p) 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) no 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) no party has repudiated any
provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts
receivable of ▇▇▇▇▇▇ and its Subsidiaries are reflected properly on
their books and records, are valid receivables subject to no setoffs
or counterclaims, are current and collectible, and will be collected
in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of ▇▇▇▇▇▇ and its Subsidiaries.
(r) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of ▇▇▇▇▇▇ and its Subsidiaries.
(s) Insurance. Section 4(s) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety arrangements) to
which any of ▇▇▇▇▇▇ and its Subsidiaries has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within
the past 10 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings
are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy 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) neither any of ▇▇▇▇▇▇ and its Subsidiaries nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Each of ▇▇▇▇▇▇ and its
Subsidiaries has been covered during the past 10 years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Section 4(s) of the Disclosure Schedule
describes any self-insurance arrangements affecting any of ▇▇▇▇▇▇ and its
Subsidiaries.
21
(t) Litigation. Section 4(t) of the Disclosure Schedule sets forth
each instance in which any of ▇▇▇▇▇▇ and its Subsidiaries (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is a party or, to the Knowledge of any of the directors and officers
(and employees with responsibility for litigation matters) of ▇▇▇▇▇▇ and
its Subsidiaries, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 4(t) of the
Disclosure Schedule could result in any adverse change in the business,
financial condition, operations, results of operations, or future prospects
of any of ▇▇▇▇▇▇ and its Subsidiaries. None of the directors and officers
(and employees with responsibility for litigation matters) of ▇▇▇▇▇▇ and
its Subsidiaries has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
any of ▇▇▇▇▇▇ and its Subsidiaries.
(u) Product Warranty. To the Knowledge of any of the directors and
officers (and employees with responsibility for product warranty matters)
of ▇▇▇▇▇▇ and its Subsidiaries, each product manufactured, sold, leased, or
delivered by any of ▇▇▇▇▇▇ and its Subsidiaries has been in conformity with
all applicable contractual commitments and all express and implied
warranties, and none of ▇▇▇▇▇▇ and its Subsidiaries has any Liability (and
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for
product warranty claims set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and
practice of ▇▇▇▇▇▇ and its Subsidiaries. To the Knowledge of any of the
directors and officers (and employees with responsibility for product
warranty matters) of ▇▇▇▇▇▇ and its Subsidiaries, no product manufactured,
sold, leased, or delivered by any of ▇▇▇▇▇▇ and its Subsidiaries is subject
to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Section 4(u) of the
Disclosure Schedule includes copies of the standard terms and conditions of
sale or lease for each of ▇▇▇▇▇▇ and its Subsidiaries (containing
applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. To the Knowledge of any of the directors and
officers (and employees with responsibility for product liability matters)
of ▇▇▇▇▇▇ and its Subsidiaries, none of ▇▇▇▇▇▇ and its Subsidiaries has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability) arising out of any injury
to individuals or property as a result of the ownership, possession, or use
of any product manufactured, sold, leased, or delivered by any of ▇▇▇▇▇▇
and its Subsidiaries.
(w) Employees. To the Knowledge of any of the directors and officers
(and employees with responsibility for employment matters) of ▇▇▇▇▇▇ and
its Subsidiaries, no executive, key employee, or group of employees has any
plans to terminate employment with any of ▇▇▇▇▇▇ and its Subsidiaries. None
of ▇▇▇▇▇▇ and its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices, or other collective
bargaining disputes. None of ▇▇▇▇▇▇ and its Subsidiaries has committed any
unfair labor practice. None of the directors and officers (and employees
with responsibility for employment matters) of ▇▇▇▇▇▇ and its Subsidiaries
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
any of ▇▇▇▇▇▇ and its Subsidiaries.
(x) Employee Benefits.
22
(i) Section 4(x) of the Disclosure Schedule lists each Employee
Benefit Plan that any of ▇▇▇▇▇▇ and its Subsidiaries maintains or to
which any of ▇▇▇▇▇▇ and its Subsidiaries contributes or has any
obligation to contribute.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements
of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, summary annual reports, PBGC-1's,
and summary plan descriptions) have been timely filed and
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of COBRA have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of ▇▇▇▇▇▇ and its Subsidiaries.
All premiums or other payments for all periods ending on or
before the Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Section 401(a), has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service that it is a "qualified
plan," and ▇▇▇▇▇▇ is not aware of any facts or circumstances
that could result in the revocation of such determination
letter.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan
(other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) ▇▇▇▇▇▇ has delivered to DS&P correct and complete
copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the
Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that any of
▇▇▇▇▇▇, its Subsidiaries, and any ERISA Affiliate maintains or
ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) has
been completely or partially terminated or been the subject
of a Reportable Event as to which notices would be required
to be filed with the PBGC. No proceeding by the PBGC to
terminate any such Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been instituted or, to the
Knowledge of any of the directors and officers (and
employees with responsibility for employee benefits matters)
of ▇▇▇▇▇▇ and its Subsidiaries, threatened.
23
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to
the Knowledge of any of the directors and officers (and
employees with responsibility for employee benefits matters)
of ▇▇▇▇▇▇ and its Subsidiaries, threatened. None of the
directors and officers (and employees with responsibility
for employee benefits matters) of ▇▇▇▇▇▇ and its
Subsidiaries has any Knowledge of any Basis for any such
action, suit, proceeding, hearing, or investigation.
(C) None of ▇▇▇▇▇▇ and its Subsidiaries has incurred,
and none of the directors and officers (and employees with
responsibility for employee benefits matters) of ▇▇▇▇▇▇ and
its Subsidiaries has any reason to expect that any of ▇▇▇▇▇▇
and its Subsidiaries will incur, any Liability to the PBGC
(other than PBGC premium payments) or otherwise under Title
IV of ERISA (including any withdrawal liability as defined
in ERISA Section 4201) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(iii) None of ▇▇▇▇▇▇, its Subsidiaries, and the other
members of the Controlled Group that includes ▇▇▇▇▇▇ and its
Subsidiaries contributes to, ever has contributed to, or ever has
been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal liability as defined in ERISA
Section 4201) under any Multiemployer Plan.
(iv) None of ▇▇▇▇▇▇ and its Subsidiaries maintains or ever
has maintained or contributes, ever has contributed, or ever has
been required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in
accordance with COBRA).
(y) Guaranties. None of ▇▇▇▇▇▇ and its Subsidiaries is a
guarantor or otherwise is liable for any Liability or obligation
(including indebtedness) of any other Person.
(z) Environmental, Health, and Safety Matters.
(i) Each of ▇▇▇▇▇▇, its Subsidiaries, and their respective
predecessors and Affiliates has complied and is in compliance
with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each
of ▇▇▇▇▇▇, its Subsidiaries and their respective Affiliates has
obtained and complied with, and is in compliance with, all
permits, licenses and other authorizations that are required
pursuant to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other
authorizations is set forth on the attached "Environmental and
Safety Permits Schedule."
(iii) Neither ▇▇▇▇▇▇, its Subsidiaries, nor their respective
predecessors or Affiliates has received any written or oral
notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising
under Environmental, Health, and Safety Requirements.
24
(iv) None of the following exists at any property or
facility owned or operated by ▇▇▇▇▇▇ or its Subsidiaries: (1)
underground storage tanks, (2) asbestos-containing material in
any form or condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of ▇▇▇▇▇▇, its Subsidiaries, or their respective
predecessors or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any substance, including without limitation any
hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to
liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act,
as amended ("SWDA") or any other Environmental, Health, and
Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in
any obligations for site investigation or cleanup, or
notification to or consent of government agencies or third
parties, pursuant to any of the so-called "transaction-triggered"
or "responsible property transfer" Environmental, Health, and
Safety Requirements.
(vii) Neither ▇▇▇▇▇▇, its Subsidiaries, nor any of their
respective predecessors or Affiliates has, either expressly or by
operation of law, assumed or undertaken any liability, including
without limitation any obligation for corrective or remedial
action, of any other Person relating to Environmental, Health,
and Safety Requirements.
(viii) No facts, events or conditions relating to the past
or present facilities, properties or operations of ▇▇▇▇▇▇, its
Subsidiaries, or any of their respective predecessors or
Affiliates will prevent, hinder or limit continued compliance
with Environmental, Health, and Safety Requirements, give rise to
any investigatory, remedial or corrective obligations pursuant to
Environmental, Health, and Safety Requirements, or give rise to
any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and
Safety Requirements, including without limitation any relating to
onsite or offsite releases or threatened releases of hazardous
materials, substances or wastes, personal injury, property damage
or natural resources damage.
(ix) Section 4(z)(ix) of the Disclosure Schedule (a) lists
the location, by mailing address, of all real property owned or
leased at any time by ▇▇▇▇▇▇, its Subsidiaries, or the respective
predecessors or Affiliates of ▇▇▇▇▇▇ or its Subsidiaries and (b)
describes briefly, for each location, all operations ever
undertaken there by ▇▇▇▇▇▇, its Subsidiaries, or the respective
predecessors or Affiliates of ▇▇▇▇▇▇ or its Subsidiaries, and
indicates the duration of each such operation.
(aa) Year 2000. To the Knowledge of any of the
directors and officers (and employees with responsibility
for Year 2000 issues) of ▇▇▇▇▇▇ or its Subsidiaries, none of
the computer software, computer firmware, computer hardware
(whether general or special purpose) or other similar or
related items of automated, computerized or software systems
that are used or relied on by ▇▇▇▇▇▇ or its Subsidiaries in
the conduct of their respective businesses, and none of the
products and services sold, licensed, rendered, or otherwise
25
provided by ▇▇▇▇▇▇ and its Subsidiaries in the conduct of
their respective businesses, have not and will not
malfunction, cease to function, generate incorrect data or
produce incorrect results when processing, providing or
receiving (i) date-related data from, into and between the
twentieth and twenty-first centuries or (ii) date-related
data in connection with any valid date in the twentieth and
twenty-first centuries.
Except as set forth in Section 4(aa) of the Disclosure
Schedule, neither ▇▇▇▇▇▇ nor its Subsidiaries has made any
representations or warranties regarding the ability of any
product or service sold, licensed, rendered, or otherwise
provided by ▇▇▇▇▇▇ or its Subsidiaries in the conduct of
their respective businesses to operate without malfunction,
to operate without ceasing to function, to generate correct
data or to produce correct results when processing,
providing or receiving (i) date-related data from, into and
between the twentieth and twenty-first centuries and (ii)
date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
(bb) Certain Business Relationships with ▇▇▇▇▇▇ and Its
Subsidiaries. To the Knowledge of any of the directors,
officers and key employees of ▇▇▇▇▇▇ or its Subsidiaries,
none of the current shareholders of ▇▇▇▇▇▇ and their
Affiliates has been involved in any business arrangement or
relationship with any of ▇▇▇▇▇▇ and its Subsidiaries within
the past 12 months, and none of the current shareholders and
their Affiliates owns any asset, tangible or intangible,
which is used in the business of any of ▇▇▇▇▇▇ and its
Subsidiaries.
(cc) Disclosure. The representations and warranties
contained in this Section 4 do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
(dd) Provided Information. The estimates provided by
▇▇▇▇▇▇ to DS&P and its advisors regarding the net operating
losses (for regular and alternative minimum tax purposes),
depreciation, debt forgiveness, asset basis and depreciation
of ▇▇▇▇▇▇'▇ and its Subsidiaries' assets in November and
December of 1999, and January and February of 2000 are
reasonably accurate estimates based on the information
available at the time.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below).
(b) Notices and Consents. ▇▇▇▇▇▇ and its Subsidiaries shall give any
notices to third parties and obtain any third party consents that Acquisition or
DS&P may request in connection with the matters referred to in Section 4(c)
above. Each of the Parties will give any notices to, make any filings with, and
use its reasonable efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters referred
to in Section 3(a)(ii), Section 3(b)(ii), and Section 4(c) above. Without
limiting the generality of the foregoing, each of the Parties will file 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, will use its
reasonable efforts to obtain an early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be necessary
in connection therewith.
26
(c) Operation of Business. Except as expressly contemplated herein, ▇▇▇▇▇▇
and its Subsidiaries shall not engage herein in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business unless
DS&P, in its reasonable discretion, consents to such practice, action or
transaction. Without limiting the generality of the foregoing, ▇▇▇▇▇▇ and its
Subsidiaries shall not (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock, (ii) change the methods of manufacture,
purchase, sale, lease, management, or accounting; (iii) file any Tax Return
without the consent of DS&P which consent shall not be unreasonably withheld; or
(iv) otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in Section 4(h) above.
(d) Preservation of Business. ▇▇▇▇▇▇ and its Subsidiaries shall use their
best efforts to keep their business and properties substantially intact,
including their present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees;
provided, however, this paragraph shall not prohibit ▇▇▇▇▇▇ and its Subsidiaries
from transferring certain assets to the Liquidating Trust as contemplated by
Sections 5(i) and 7(c) hereof.
(e) Full Access. ▇▇▇▇▇▇ and its Subsidiaries shall permit representatives
of DS&P and Acquisition to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of ▇▇▇▇▇▇ and
its Subsidiaries, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to each of
▇▇▇▇▇▇ and its Subsidiaries. In addition, ▇▇▇▇▇▇ will immediately direct Ernst &
Young LLP to discuss with DS&P and its advisors all issues in all tax returns of
▇▇▇▇▇▇ and its Subsidiaries for which the statute of limitations has not expired
and which Ernst & Young LLP signed as preparer.
(f) Notice of Developments. ▇▇▇▇▇▇ will give prompt written notice to DS&P
and Acquisition of any material adverse development causing a breach of any of
the representations and warranties in Section 4 above. Acquisition and DS&P will
give prompt written notice to ▇▇▇▇▇▇ of any material adverse development causing
a breach of any of its own representations and warranties in Section 3 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Bidding Procedure for Proposed Competing Transactions and Reimbursement
Fee "Competing Transaction" shall mean the purchase by any person other than
DS&P or Acquisition of all or a substantial portion of the stock or assets of
▇▇▇▇▇▇ or its Subsidiaries, any merger or consolidation of ▇▇▇▇▇▇ or its
Subsidiaries with or into any person other than DS&P or Acquisition, or any
other transaction competing, conflicting or interfering with the completion of
the transactions contemplated by this Agreement, including but not limited to a
plan of reorganization proposed solely by ▇▇▇▇▇▇ or its creditors. As of the
date hereof, ▇▇▇▇▇▇ and its officers, directors and advisors (including Gordian
Group) will cease to actively market ▇▇▇▇▇▇ or its stock or assets for the
purpose of soliciting any Competing Transaction; provided, however, that ▇▇▇▇▇▇
may respond to requests for information from third parties. In addition, ▇▇▇▇▇▇
may send unsolicited public information to any person who has previously
expressed an interest in acquiring the assets or making an investment in ▇▇▇▇▇▇.
▇▇▇▇▇▇ shall advise DS&P promptly upon receipt of any proposal for a Competing
Transaction or receipt of any request for information about ▇▇▇▇▇▇ or its
Subsidiaries from third parties.
(i) Bidding Procedure. In the event ▇▇▇▇▇▇ receives a proposal to
enter into a Competing Transaction, the following bidding procedures shall
be observed:
(A) Any proposals by ▇▇▇▇▇▇ or any other Person to enter into a
Competing Transaction shall (1) be made in writing, (2) contain
conditions no less favorable than the conditions in this Agreement,
provided that a Competing Transaction structured as an asset purchase
27
shall be deemed a more favorable offer only if the purchase price
under such Competing Transaction is at least the sum of the Capital
Contribution, the New Debt Financing, $1,000,000, and, if the
Competing Transaction does not contemplate offering employment
agreements with the same terms and conditions as those referenced in
Section 5 (k) above, the economic value of the employment agreements
referenced in Section 5(k) above (3) require a cash capital
contribution by the proposing party of at least $11,000,000 plus, if
the Competing Transaction does not contemplate offering employment
agreements with the same terms and conditions as those referenced in
Section 5 (k) above, the economic value of the employment agreements
referenced in Section 5(k) above, (4) include evidence satisfactory to
▇▇▇▇▇▇ and the Bankruptcy Court of the financial ability of the Person
submitting the proposal to consummate the transaction for cash, and
(5) be delivered to the Parties no later than the close of business on
the fifteenth day preceding the scheduled hearing on the Confirmation
Order.
(B) In the event of proposal of any Competing Transaction that
meets the requirements of subparagraph (A) above, ▇▇▇▇▇▇ shall
schedule an auction hearing to be held no later than 5 days prior to
the scheduled hearing on the Confirmation Order. At such auction
hearing DS&P and Acquisition shall have the unconditional right to
submit an overbid proposal (the "Initial DS&P Overbid"). If DS&P and
Acquisition decide, in their sole discretion, to submit an overbid,
the Initial DS&P Overbid shall exceed the total proposed purchase
price of the Competing Transaction by at least $100,000. If DS&P and
Acquisition submit such an Initial DS&P Overbid, other Parties may
submit further overbid proposals at the auction hearing, which will,
in turn, be subject to further overbid proposals by DS&P and
Acquisition. Each overbid proposal by DS&P and Acquisition or any
other Person must exceed by at least $100,000 the total proposed
purchase price of the most recent prior overbid proposal.
(C) In the event ▇▇▇▇▇▇ receives any proposals for a Competing
Transaction in accordance with the bidding procedures outlined above,
the final decision as to which transaction shall be consummated shall
be within the reasonable discretion of ▇▇▇▇▇▇, ▇▇▇▇ be announced at
the auction hearing and will be subject to final approval of the
Bankruptcy Court.
(ii) Reimbursement Fee. DS&P shall be entitled to a Reimbursement Fee
in an amount sufficient to reimburse it for its reasonable fees and
expenses (including fees of its attorneys and accountants) incurred in
connection with the transactions contemplated herein which amount shall not
exceed $500,000 (the "Reimbursement Fee") if, while this Agreement is in
effect or within 180 days after termination of this Agreement any of the
following events occurs:
(A) ▇▇▇▇▇▇ or any of its Subsidiaries enters into a Competing
Transaction or any agreement to enter into a Competing Transaction; or
(B) ▇▇▇▇▇▇ or any of its creditors files or sponsors a plan of
reorganization that does not contemplate a transaction with DS&P and
or Acquisition;
provided, however, DS&P shall not be entitled to such Reimbursement Fee
in the event that the failure to consummate the transactions
contemplated by this Agreement is a direct result of a breach by DS&P
or Acquisition of Section 6(b)(i) or Section 6(b)(ii) and DS&P failed
to cure such breach after written notice thereof. Any such
Reimbursement Fee shall be payable on the date on which an agreement to
consummate a Competing Transaction is made or a plan of reorganization
contemplating a Competing Plan is filed. Any such Reimbursement Fee
shall be treated as an administrative expense claim in the Chapter 11
Case.
28
Within 5 business days after execution of this Agreement,
▇▇▇▇▇▇ shall cause to be filed in the Bankruptcy Court a motion seeking
an order of the Bankruptcy Court approving the bidding procedures and
the Reimbursement Fee described above.
(h) Title Insurance. ▇▇▇▇▇▇ and its Subsidiaries shall, if
requested by Lender, obtain title insurance, satisfactory to Lender.
(i) Liquidating Trust. ▇▇▇▇▇▇ shall transfer or cause to be
transferred the assets designated on Schedule 5(i) (the "Trust
Assets") to the Liquidating Trust immediately prior to Closing
pursuant to the Plan such assets shall not include the pigment
equipment in Dalton, Georgia. ▇▇▇▇▇▇ shall arrange as soon as possible
for phase I environmental site assessments in accordance with ASTM
Standard E1527-97, performed by an auditor reasonably satisfactory to
DS&P, of the 34 acre tract of land in Trenton, Edgefield County, South
Carolina and the 17.86 acre parcel of land located in Trenton,
Edgefield County, South Carolina. A copy of the environmental audits
shall be delivered to DS&P upon receipt by ▇▇▇▇▇▇ and, at the DS&P's
option, in its sole discretion, such parcels or parcel, as the case
may be, may then be removed from the list of assets on Schedule 5(I)
to be transferred to the Liquidating Trust.
(j) Surveys. With respect to each parcel of real property that
any of ▇▇▇▇▇▇ and its Subsidiaries owns, leases, or subleases, and as
to which a title insurance policy is to be procured pursuant to
Section 5(h) above, ▇▇▇▇▇▇ and its Subsidiaries if requested by
Lender, shall procure in preparation for the Closing a current survey
of the real property certified to the Surviving Corporation , prepared
in accordance with the Lender's specifications (the "Survey"). The
Survey shall not disclose any survey defect or encroachment from or
onto the real property which has not been cured or insured over prior
to the Closing.
(k) Employment Contracts. ▇▇▇▇▇▇ shall negotiate employment
agreements with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in a form and substance
satisfactory to DS&P in its reasonable discretion. These employment
agreements shall supercede all other agreements or understandings
between ▇▇▇▇▇▇ and each of the employees listed above.
(l) Notice to Creditors. ▇▇▇▇▇▇ shall provide notice of the
bankruptcy proceedings and Plan to all known creditors, including,
without limitation, all taxing authorities and all Parties with
contingent claims against or interests in ▇▇▇▇▇▇ and shall provided
DS&P with evidence of such notice. ▇▇▇▇▇▇ also shall (i) provide
notice of the bankruptcy proceedings and plan and proof of claim forms
to all persons who are or were participants in the 401(k) Plan or any
predecessor thereto since January 1, 1995 and (ii) extend the bar date
or create a new bar date to permit such participants to complete and
return such forms.
(m) New Debt Financing. ▇▇▇▇▇▇ shall use its best efforts to
obtain New Debt Financing satisfactory to DS&P and Acquisition in
their sole discretion.
(n) Contract. Within 10 days after reviewing the contracts
disclosed herein, DS&P and Acquisition shall supply ▇▇▇▇▇▇ with a list
of contracts they wish to reject. ▇▇▇▇▇▇ shall ensure that the Plan
rejects all such contracts, and the Plan shall provide that all
contracts not previously disclosed to DS&P and Acquisition herein
shall be rejected.
(o) Determination of ▇▇▇▇▇▇'▇ Tax Liability. ▇▇▇▇▇▇ shall take
each of the following actions:
29
(i) File Tax Return. ▇▇▇▇▇▇ shall prepare and file with the
Internal Revenue Service ("IRS") its consolidated Federal income
Tax Return for its fiscal year ended December 31, 1999 (the "1999
Tax Year") not later than April 30, 2000.
(ii) Pay Shortfall. If as a result of the transactions
contemplated herein Closing Basis is less than $32,188,276 or as
a result of any adjustment to any ▇▇▇▇▇▇ Tax Return for any
period ending on or before Closing, the Surviving Corporation's
basis for its assets is reduced, the Plan Administrator shall pay
to the Buyer out of the Tax Liability Reserve an amount equal to
40% of (A) the amount by which $32,188,276 exceeds the Closing
Basis or (B) any such basis adjustments, which in the aggregate,
exceed the excess, if any, of the Closing Basis over $32,188,276.
The Plan Administrator shall pay to the Surviving Corporation any
amount determined under this Section 5(o) in accordance with
Section 7(b)(x) and, in any event, such amount shall not exceed
the Tax Liability Reserve.
(p) Notice of Taxes. ▇▇▇▇▇▇ shall immediately give DS&P and
Acquisition written notice if an audit is commenced by any taxing
authority, a Tax or adjustment is asserted by any taxing authority, or
an error is discovered relating to any Return that was or should have
been filed by ▇▇▇▇▇▇ or any of its Subsidiaries for which the statute
of limitations is not closed or if the representations and warranties
contained in Section 4(k) are no longer true and correct.
(q) Lease of Property in Dalton, Georgia. ▇▇▇▇▇▇ shall arrange as
soon as possible for a phase I environmental site assessment in
accordance with ASTM Standard E1527-97, performed by an auditor
reasonably satisfactory to DS&P, of that property situate at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ currently leased by ▇▇▇▇▇▇ ▇▇▇▇ B &
S Realty Company, Inc. ▇▇▇▇▇▇ shall deliver the results of the
environmental audit to DS&P upon receipt of such results by ▇▇▇▇▇▇ and
not later than 30 days from the date hereof. ▇▇▇▇▇▇ shall arrange to
continue to lease ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ on a
month to month basis and to have the ability to terminate such lease
at any time upon 15 days notice. All other terms of the lease must be
acceptable to DS&P in its sole discretion. At any time prior to the
Closing, if ▇▇▇▇▇▇ receives notice from DS&P directing it to terminate
the lease of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall
terminate the lease and move the equipment and inventory located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ to another facility owned
or leased by ▇▇▇▇▇▇ as directed in the notice from DS&P.
(r) ▇▇▇▇▇▇▇▇ Industries, Inc. ▇▇▇▇▇▇▇▇ Industries, Inc. shall not
be dissolved, liquidated, or merged with the Company nor shall its
existence otherwise be terminated prior to Closing. All of the stock
of ▇▇▇▇▇▇▇▇ Industries, Inc. shall be transferred to the Liquidating
Trust prior to the Closing.
(s) Leased Property Owners. Within 15 days from the date hereof,
▇▇▇▇▇▇ shall send to DS&P a list which identifies for each currently
or formerly leased property, the landlord and, if different, any
current owner known to ▇▇▇▇▇▇, its Subsidiaries, or the respective
predecessors or Affiliates of ▇▇▇▇▇▇ or its Subsidiaries.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of DS&P and Acquisition. The
obligation of DS&P and Acquisition to consummate the transactions to
be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
30
(i) other than the representations and warranties set forth
in 4(k), the representations and warranties set forth in Section
4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) ▇▇▇▇▇▇ shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
(iii) ▇▇▇▇▇▇ and its Subsidiaries shall have procured all of
the third party consents specified in Section 5(b) above, all of
the title insurance commitments, policies, and riders specified
in Section 5(h) above, and all of the Surveys specified in
Section 5(i) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect
adversely the right of DS&P to own the shares of the Surviving
Corporation and to control ▇▇▇▇▇▇ and its Subsidiaries, or (D)
affect adversely the right of any of ▇▇▇▇▇▇ and its Subsidiaries
to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(v) the representations and warranties set forth in Section
4(k) shall be true and correct in all material respects as of the
Closing Date; provided that, if prior to Closing, (i) an audit is
commenced by any taxing authority, a Tax or adjustment is
asserted by any taxing authority, or an error is discovered
relating to any Return that was or should have been filed by
▇▇▇▇▇▇ for which the statute of limitations is not closed and the
maximum amount of Tax that ▇▇▇▇▇▇ or the Surviving Corporation
could owe as a result thereof is less than $750,000 or (ii) the
Closing Basis is $28,000,000 or more, then the representations
and warranties in Section 4(k) shall be deemed not to have been
breached, and the Tax Liability Reserve will be increased as
provided herein;
(vi) ▇▇▇▇▇▇ shall have delivered to DS&P a certificate to
the effect that each of the conditions specified above in Section
6(a)(i)-(v) is satisfied in all respects;
(vii) all applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 4(c) above;
(viii) the relevant parties shall have entered into
Employment Agreements contemplated in Section 5(k);
(ix) DS&P shall have received from ▇▇▇▇▇▇'▇ corporate and
bankruptcy counsel opinions in form and substance as set forth in
Exhibit D attached hereto, addressed to DS&P, Acquisition and
Lender and dated as of the Closing Date;
(x) all actions to be taken by ▇▇▇▇▇▇ in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to DS&P;
(xi) the Plan, the Confirmation Order, and the Liquidating
Trust documents shall be in form and substance satisfactory to
DS&P in its reasonable discretion and in accordance with Section
7 below;
31
(xii) no Material Adverse Change in ▇▇▇▇▇▇'▇ or its
Subsidiaries' business, results of operations, financial
condition, assets, liabilities or prospects has occurred since
the Most Recent Balance Sheet;
(xiii) the Confirmation Order has become a Final Order;
(xiv) the Surviving Corporation shall have obtained the New
Debt Financing;
(xv) the New Debt Financing shall be available pursuant to
documents which are satisfactory to DS&P and Acquisition in their
sole discretion;
(xvi) ▇▇▇▇▇▇ shall provide DS&P with a list and copy of all
confidentiality agreements not previously disclosed to DS&P prior
to Closing;
(xvii) at least two business days prior to the Closing,
▇▇▇▇▇▇ shall provide DS&P a schedule setting forth the following
information on an estimated pro forma basis giving effect to the
consummation of the transactions contemplated herein for ▇▇▇▇▇▇
and its Subsidiaries: (A) the Closing Basis; (B) the amount of
any net operating loss carryover; (C) the amount of cancellation
or indebtedness income and the other income, gain or loss
resulting from the transactions contemplated herein including,
but not limited to, the disposition of assets or stock of any
Subsidiary and, if requested by DS&P or Acquisition, the
additional information included in Section 4(k)(vi) not included
in this Section 6(a)(xii);
(xviii) at least two business days prior to the Closing,
▇▇▇▇▇▇ shall provide to DS&P, in form satisfactory to DS&P, (A) a
written reconciliation of the trust records for the 401(k) Plan
with the participant statement records, (B) a schedule, by each
401(k) Plan participant, of each participant who has or had
▇▇▇▇▇▇ Shares in a Restricted Stock Account, the number of ▇▇▇▇▇▇
Shares in such account, the cost basis to such participant of
each ▇▇▇▇▇▇ Share, the amounts distributed to the participant
from such account, and an explanation of how the amount of any
distribution was determined, and (C) any other information
necessary to calculate the amounts to be paid to the 401(k) Plan
under Section 2(f)(ii);
(xix) ▇▇▇▇▇▇ shall have caused the litigation known as
SouthTrust Bank, N.A. ▇. ▇▇▇▇▇▇ Color-Fi, Inc., Bankruptcy Case
No. 98-10145W to be terminated, resolved or settled in a manner
which is fully satisfactory to DS&P in its reasonable discretion;
and
(xx) that certain Agreement between JFM and ▇▇▇▇▇▇ dated
February __, 2000 is approved by the Bankruptcy Court, or, if
such agreement is not approved by the Bankruptcy Court, the Plan
and the Final Order shall state that the Surviving Corporation
shall have no liabilities or obligations with respect to JFM and
that all liabilities or obligations owed to JFM by ▇▇▇▇▇▇ shall
be satisfied solely by the Plan Administrator from the
Preliminary Purchase Price.
DS&P may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of ▇▇▇▇▇▇. The obligation of ▇▇▇▇▇▇ to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
32
(i) the representations and warranties set forth in Sections 3(a)
and 3(b) above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) DS&P shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section
3(b)(ii), and Section 4(c) above;
(v) all actions to be taken by DS&P in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to ▇▇▇▇▇▇;
(vi) DS&P shall have delivered to ▇▇▇▇▇▇ a certificate to the
effect that each of the conditions specified above in Section
6(b)(i)-(iv) is satisfied in all respects;
(vii) the Confirmation Order is shall be a Final Order; and
(viii) the Surviving Corporation shall have obtained the New Debt
Financing.
▇▇▇▇▇▇ may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. The Chapter 11 Case.
(a) Bar Date. Upon the execution of this Agreement, ▇▇▇▇▇▇ shall petition
the Bankruptcy Court to set bar dates for all claims, including administrative
claims as soon as practicable after the Closing (the "Bar Date").
(b) Plan. ▇▇▇▇▇▇ shall and its agents shall consult with and keep DS&P
informed of negotiations, drafting, and modifications of the Plan. The Plan, at
a minimum, must contain the following concepts:
(i) all ▇▇▇▇▇▇ Shares issued and outstanding or authorized, all
options, warrants, stock appreciation rights, or rights to acquire ▇▇▇▇▇▇
Shares prior to the Effective Time (other than the right of Acquisition to
convert its shares of the Surviving Corporation) shall be cancelled;
(ii) as provided in the Plan, the Final Purchase Price shall be used
to fully satisfy creditors of ▇▇▇▇▇▇ and its Subsidiaries including without
limitation all pre-petition liabilities, all administrative and
post-petition claims, liabilities or expenses such as any fees owed to
Gordian Group, attorneys fees for ▇▇▇▇▇▇ and its Subsidiaries and the
creditors' committee, any other professional fees such as those of
accountants, auditors, investment bankers and any similar fees, any fees
for substantial contribution to the case, unless any such amount is
expressly included in the calculation of Assumed Liabilities;
33
(iii) a Plan Administrator shall be appointed in the Plan to pay the
creditors of ▇▇▇▇▇▇ and its Subsidiaries including, without limitation, all
administrative claimants, out of the Final Purchase Price;
(iv) distributions to creditors of ▇▇▇▇▇▇ and its Subsidiaries must be
restricted in the manner set forth in Section 2(f) until all administrative
claims are filed and resolved and Tax Liabilities are finally determined;
(v) other than the Assumed Liabilities, all liabilities and
indebtedness of ▇▇▇▇▇▇ and its Subsidiaries to the fullest extent permitted
by law will be discharged by the Bankruptcy Court as against ▇▇▇▇▇▇ and its
Subsidiaries including, but not limited to, any penalties, fines, claims,
or liabilities of any kind assertable or asserted against ▇▇▇▇▇▇ or its
Subsidiaries as a direct or indirect result of either:
(A) any operations by or business conducted by ▇▇▇▇▇▇ or its
Subsidiaries, or any interest of ▇▇▇▇▇▇ or its Subsidiaries, directly
or indirectly, in any real property previously owned or operated by
▇▇▇▇▇▇ or its Subsidiaries, including, without limitation, those
properties situated, or any business conducted, at any of the
following locations: ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇; Pensacola, Florida; and any location other
than a location to be owned or operated by the Surviving Corporation;
or
(B) any failure of ▇▇▇▇▇▇ or its Subsidiaries, before the date of
this order, to obtain or maintain any permit or license necessary
under any environmental law, to make any governmental filing required
by any environmental law (including, without limitation, any filing
required by any law concerning emergency planning), or to comply with
any environmental law.
(vi) all assets of ▇▇▇▇▇▇ included on the Most Recent Balance Sheet
(that have not been assigned to the Liquidating Trust or used or sold in
the Ordinary Course of Business) will be vested in the Surviving
Corporation free and clear of all claims, liens, pledges or encumbrances of
any nature whatsoever, to the fullest extent possible under Chapter 11 of
the United States Bankruptcy Code;
(vii) the procedures for third party bidding set forth in Section 5(g)
hereof;
(viii) all contracts not specifically disclosed pursuant to this
Agreement and all contracts DS&P and Acquisition elect to reject, in their
sole discretion, shall be rejected pursuant to the Plan;
(ix) a provision enjoining the commencement or continuation of any
action, the employment of any process, or any act to collect from or offset
against the Surviving Corporation or any of its Subsidiaries on account of
any claim, interest or lien arising from actions occurring prior to the
Closing other than the Assumed Liabilities, and, without limiting the
generality of the foregoing, provide for issuance of a permanent injunction
channeling all claims against ▇▇▇▇▇▇ and its Subsidiaries arising from acts
or omissions occurring prior to the Closing and all administrative claims
(including without limitation, attorneys fees for ▇▇▇▇▇▇ and the creditors'
committee, any other professional fees such as those of accountants,
auditors, investment bankers and any similar fees, any fees for substantial
contribution to the case) to the Plan Administrator for exclusive treatment
and payment by the Plan Administrator from the Final Purchase Price;
(x) a provision creating a Tax Liability Reserve out of the
Preliminary Purchase Price to be held by the Plan Administrator until all
payments required to be made thereunder are made in accordance with this
Section and the following items must be paid out of the Tax Liability
34
Reserve: (A) all fees and expenses associated with the determination of any
Tax, including, but not limited to, costs of preparation of any Tax
Returns, determining any Tax liability or item on a Tax Return, or
defending any position taken on a Tax Return, (B) any unpaid Tax
liabilities shown on any Tax Return for all periods ending on or prior to
the Closing, (C) any other Taxes owed by the Surviving Corporation
attributable to actions of ▇▇▇▇▇▇ or its subsidiaries on or prior to the
Closing (including, without limitation, any Taxes attributable to the
transfer of the Trust Assets), (D) any Taxes owed by the Surviving
Corporation for any period after Closing as a result of a breach of the
representations in Sections 4(k) or 4(dd), and (E) any amounts owed to the
Surviving Corporation under Section 5(o)(ii) (sub-Sections (A)-(E)
collectively shall be referred to as the "Tax Liability"). Upon the final
determination of any Tax for any period ending on or prior to Closing, the
Plan Administrator shall pay over to the Surviving Corporation (i) the
amount of such finally determined Tax (and the expenses incurred in
connection therewith) to enable the Surviving Corporation to pay such Tax
within 5 business days of Surviving Corporation's request therefore and
(ii) within 5 business days of such request an amount equal to the amount
described in 5(o)(ii). Within 30 days of the later of (y) the period
referred to in the preceding sentence or (z) sixty (60) days after the
expiration of the three (3) year statute of limitations (plus any extension
of the statute of limitations agreed to by ▇▇▇▇▇▇ or the Surviving
Corporation), the Surviving Corporation shall make a final determination
with respect to (A) any breaches of Sections 4(k) or 4(dd) or (B) any
payment due under Section 5(o)(ii) as a result of any basis reduction that
would result from any such breach and notify the Plan Administrator of such
findings. The Plan Administrator shall promptly pay to the Surviving
Corporation the amount determined by the Surviving Corporation sufficient
to reimburse the Surviving Corporation for breaches of Sections 4(k) or
4(dd) or payment due under Section 5(o)(ii). Anytime before 60 days after
filing its tax return for the year ending December 31, 2000, the Surviving
Corporation may notify the Plan Administrator that its Closing Basis (as
defined in the next sentence) for its assets for Federal income tax
purposes is less than $32,188,276, and within 5 business days of receiving
such notice, the Plan Administrator shall pay to the Surviving Corporation
any amounts owed under Section 5(o)(ii). Closing Basis shall mean the sum
of (i) ▇▇▇▇▇▇'▇ basis for its assets as of the close of business on
December 31, 1999 and (ii) net operating loss carryforwards as of January
1, 2000 (each (i) and (ii) as adjusted for the transactions contemplated
herein (including without limitation cancellation of indebtedness income
and transfers to the Liquidating Trust)). If the Plan Administrator
disputes the findings of the Surviving Corporation, then the dispute shall
be resolved in accordance with the same procedures set forth in Sections
2(e)(iii) and (iv);
(xi) the balance remaining in the Tax Liability Reserve, if any, after
all payments finally determined and made to Surviving Corporation pursuant
to Section 7(b)(x) shall be paid to ▇▇▇▇▇▇'▇ and its Subsidiaries'
creditors in accordance with the Plan;
(xii) all claims of shareholders of ▇▇▇▇▇▇, including but not limited
to, federal and state securities law violations, if any, will be
discharged; and
(xiii) the Surviving Corporation shall be relieved of all liabilities
associated with the 401(k) Plan arising from any act or omission occurring
on or prior to the Closing, including but not limited to, (a) the 401(k)
Plan's purchase or sale of ▇▇▇▇▇▇ Shares and (b) any other liabilities of
▇▇▇▇▇▇ in connection with any ▇▇▇▇▇▇ matching contributions to the 401(k)
Plan or investment options involving ▇▇▇▇▇▇ Shares under the 401(k) Plan
and (c) any 401(k) Plan operational defects.
(c) Liquidating Trust.
(i) A Liquidating Trust shall be set up pursuant to the Plan, and the
Trust Assets shall be transferred to the Liquidating Trust prior to the
Effective Date. None of the Surviving Corporation's personnel will serve in
35
any capacity with the Liquidating Trust, as trustee or otherwise. The
Liquidating Trust documents shall be satisfactory to DS&P and Acquisition
in their reasonable discretion.
(ii) The Liquidating Trust will be responsible for all fees, costs and
expenses of storing, securing, moving or handling the Trust Assets and will
indemnify and hold harmless the Surviving Corporation from all fees, costs
and expenses for storing, securing, moving or handling such Trust Assets,
including without limitation, the cost of reasonable rent and reimbursement
of expenses to be paid to Surviving Corporation for the use of any location
or warehouse of Surviving Corporation to store, secure, move or handle any
of the Trust Assets following the Closing. The Surviving Corporation shall
only be liable for any damages caused to such Trust Assets by the Surviving
Corporation's gross negligence, and only to the extent not covered by
customary insurance to be maintained by the Liquidating Trust for such
Trust Assets.
(iii) The Plan Administrator shall be required to set aside reserves
necessary from all payments received by the Plan Administrator pursuant to
the Plan to pay all reasonably anticipated and necessary costs of the
Liquidating Trust before paying any administrative claims.
(d) Confirmation Order.
(i) The Confirmation Order must specifically provide that the
Surviving Corporation will have no liabilities associated in any way with
the assets distributed to the Liquidating Trust, including without
limitation, any liabilities for operations formerly conducted on real
property included in the assets distributed to the Liquidating Trust. All
fees, expenses and costs associated with the Liquidating Trust shall be
paid for out of the Final Purchase Price or the monies generated from the
sale of any assets to the be held in the Liquidated Trust.
(ii) The Confirmation Order shall provide, inter alia, that all
notices provided by ▇▇▇▇▇▇ were adequate and will effect a full and
complete discharge of all indebtedness (other than the Assumed Liabilities
and indebtedness or liabilities assumed on Schedule 7(d)(ii)), contingent
or otherwise, of the Surviving Corporation to the fullest extent possible
under the United States Bankruptcy Code.
8. Termination.
(a) Termination of Agreement. This Agreement may be terminated as
follows:
(i) DS&P and ▇▇▇▇▇▇ may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) DS&P may terminate this Agreement by giving written notice
to ▇▇▇▇▇▇ at any time prior to the Closing (A) in the event that there
is a Material Adverse Change in the business of ▇▇▇▇▇▇ or its
Subsidiaries or (B) if the Closing shall not have occurred on or
before June 15, 2000, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from DS&P itself breaching any representation, warranty, or
covenant contained in this Agreement);
(iii) ▇▇▇▇▇▇ may terminate this Agreement by giving written
notice to DS&P at any time prior to the Closing (A) in the event that
there is a Material Adverse Change in DS&P or (B) if the Closing shall
not have occurred on or before June 15, 2000 by reason of the failure
of any condition precedent under Section 6(b) hereof (unless the
failure results primarily from any of the ▇▇▇▇▇▇ or its Subsidiaries
themselves breaching any representation, warranty, or covenant
contained in this Agreement);
36
(iv) This Agreement shall automatically terminate if the Chapter
11 Case shall be dismissed or converted to a case under Chapter 7 of
the United States Bankruptcy Code, or a trustee shall be appointed in
the Chapter 11 Case; or
(v) This Agreement shall automatically terminate if ▇▇▇▇▇▇ or its
Subsidiaries shall consummate a Competing Transaction.
(b) Effect of Termination. Except as otherwise provided in this
Paragraph, if this Agreement is terminated pursuant to Section 8(a) above,
all rights and obligations of the Parties hereunder shall terminate without
any Liability of any Party to any other Party. The exclusive remedy for
▇▇▇▇▇▇ in the event the Agreement is terminated pursuant to Section
8(a)(iii) is for ▇▇▇▇▇▇ to recover from DS&P and Acquisition an amount
sufficient to reimburse ▇▇▇▇▇▇ for its fees and expenses incurred in
connection with the transactions contemplated herein, but in no event shall
this amount exceed $500,000.
9. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable
efforts to advise the other Parties prior to making the disclosure).
(b) No 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.
(c) Entire Agreement. Other than that certain Confidentiality
Agreement (the "Confidentiality Agreement") dated July 16, 1999 between
▇▇▇▇▇▇ and DS&P, this Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes
any prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they related in any way to the
subject matter hereof; provided, however, that the Confidentiality
Agreement is hereby amended to delete Section 5 of the Confidentiality
Agreement in its entirety and supercede it with the terms contained herein.
(d) 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. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of DS&P and ▇▇▇▇▇▇; provided, however, that DS&P may (i)
assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) 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.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then 2 business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
37
If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Color-Fi
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇, P.A.
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the DS&P or Acquisition:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, 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 intended
recipient. 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.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of South Carolina without
giving effect to any choice or conflict of law provision or rule (whether
of the State of South Carolina or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
South Carolina.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
DS&P and ▇▇▇▇▇▇. 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.
(j) 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.
(k) Expenses. The costs and expenses (including legal fees and
expenses) of ▇▇▇▇▇▇ and its Subsidiaries and their agents (including the
Gordian Group) incurred prior to the Closing shall be paid out of the Final
Purchase Price. The reasonable costs and expenses (including legal fees and
expenses) of DS&P, Acquisition and their agents incurred prior to Closing
shall be paid by the Surviving Corporation as successor to Acquisition and
shall be factored into the calculation of the Assumed Liabilities.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
38
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation. The Parties intend that each representation, warranty,
and covenant contained herein shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of
the relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of the
first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
(n) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of the Bankruptcy Court, in any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect
of the action or proceeding may be heard and determined in any such court.
Each Party also agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action
or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto.
(o) Survivability. Except as provided in Section 2(d), 2(e), 2(f),
2(h), 4(k), 4(dd), 7 and 8, the respective representations, warranties ,
covenants and agreements of the Parties contained herein or in any
certification or other document delivered prior to the Closing shall expire
with, and be terminated by, the Closing, and thereafter neither Party, nor
any director, officer, shareholder or principal thereof, shall be under any
liability whatsoever with respect to any such representation, warranty,
covenant or agreement. The Surviving Corporation shall be entitled to make
a claim against the Final Purchase Price (but not against any director,
officer, shareholder or principal of ▇▇▇▇▇▇) if there is a breach of any of
the representations or covenants contained in Section 2(d), 2(e), 2(f),
4(k), 4(dd), 7, and 8.
(p) Sole Remedy of ▇▇▇▇▇▇. The sole remedy of ▇▇▇▇▇▇ against DS&P
and/or Acquisition for breaches of this Agreement is as set forth in
Section 8(b). ▇▇▇▇▇▇ hereby knowingly waives any right to seek additional
damages in excess of the amount specified above, specific performance from
DS&P or Acquisition or any other right it may have under law or in equity
against DS&P and/or Acquisition for any action arising out of this
Agreement and the negotiation thereof.
(q) Disclosure Generally. If and to the extent any information
required to be furnished in any Section of the Disclosure Statement is
contained in another Section of the Disclosure Statement, such information
will be deemed to be included in all sections or schedules in which such
information is required to be included only to the extent that such
disclosure is reasonably apparent on its face and does not require the
other party hereto to look further than this Agreement.
39
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
SIGNATURES OMITTED
EXHIBITS AND DISCLOSURE SCHEDULE OMITTED
