AGREEMENT AND PLAN OF MERGER by and between THE GENLYTE GROUP INCORPORATED and IGNITE MERGER SUB INC. and INTERNATIONAL MEZZANINE CAPITAL B.V. and JJI LIGHTING GROUP, INC. As of May 12, 2006
Exhibit
10.1
AGREEMENT
AND PLAN OF MERGER
by
and
between
THE
GENLYTE GROUP INCORPORATED
and
IGNITE
MERGER SUB INC.
and
INTERNATIONAL
MEZZANINE CAPITAL B.V.
and
JJI
LIGHTING GROUP, INC.
As
of May
12, 2006
TABLE
OF CONTENTS
ARTICLE
I. MERGER
1.1 The
Merger.
1.2 The
Closing.
1.3 Effective
Time.
1.4 Conversion
of Merger Sub Stock and JJI Stock and Class B Common Stock
Warrants.
1.4.1 Merger
Sub Stock.
1.4.2 Treasury
Shares.
1.4.3 JJI
Stock and Warrants.
1.4.4 Funding
of Escrow Agreement.
1.4.5 Appraisal
Rights.
|
1.4.6
|
Letter
of Transmittal and Procedures for Payment of Net Merger Consideration,
etc.
|
1.4.6.1 Exchange
Agents.
1.4.6.2 Deposit
of Merger Consideration with Exchange Agent.
1.4.6.3 Letter
of Transmittal.
1.4.6.4 Surrender
of Certificates.
1.4.6.5 Other
than Registered Holder.
1.4.6.6 No
Registration After Effective Time.
1.4.6.7 Payment
of Merger Consideration.
1.4.6.8 Unclaimed
Merger Consideration.
1.4.6.9 Return
of Merger Consideration Where Appraisal Rights.
1.4.6.10 Lost
Certificates.
1.4.6.11 Merger
Consideration in Full Satisfaction.
1.4.6.12 THIS
SECTION INTENTIONALLY LEFT BLANK.
1.4.6.13 Investment
of Exchange Fund.
1.5 Effects
of the Merger.
1.5.1 Separate
Existence of Merger Sub Ceases.
1.5.2 Certificate
of Incorporation and Bylaws of the Surviving Company.
1.5.3 Stock
of Merger Sub.
1.5.4 Board
of Directors and Officers of the Surviving Company.
1.5.5 JJI
Stock and Class B Common Stock Warrants.
1.5.6 Applicable
Law.
1.5.7 Treasury
Shares.
1.6 Cooperation
and Further Assurances.
1.7 Merger
Consideration.
1.7.1 Calculation.
1.7.1.4 Initial
Working Capital Adjustment.
1.7.1.4.1 Access
to Books and Records.
1.7.1.4.2 Initial
Working Capital Escrow Amount.
i
1.7.1.4.3 THIS
SECTION INTENTIONALLY LEFT BLANK.
1.7.1.4.4 Adjustment
of Merger Consideration.
1.7.2 Payment
of Merger Consideration at Closing.
1.7.2.1 Escrow
Fund Amount.
1.7.2.2 Payment
to Exchange Agent.
1.7.3 Escrow
Agreement.
1.8 Payment
of the Indemnity Escrow Amount.
1.8.1 THIS
SECTION INTENTIONALLY LEFT BLANK.
1.8.2 Indemnity
Escrow Amount Following General Survival Period.
1.8.2.1 Estimated
Unresolved Claims Amount Equals Zero.
|
1.8.2.2
|
Determining
Estimated Unresolved Claims Amount During Resolution
Period.
|
1.8.2.3 Accountant
Determination of Estimated Unresolved Claims Amount.
|
1.8.3
|
Stockholders
Shall Not Contribute Additional Funds Following General Survival
Period.
|
|
1.8.4
|
Indemnity
Escrow Amount Following Tax and
German Environmental Issue Survival
Period.
|
1.8.4.1 Final
Continuing Indemnity Escrow Amount Equals Zero.
|
1.8.4.2
|
Determining
Final Continuing Indemnity Escrow During Resolution Period.
|
1.8.4.3 Accountant
Determination of Final Continuing Indemnity Escrow.
|
1.8.5
|
Stockholders
Shall Not Contribute Additional Funds Following Tax and German
Environmental Survival Period.
|
1.8.6 Final
Release from Indemnity Escrow Amount.
1.8.7 Payments
to Non-Claiming Holders.
1.8.8 No
Other Obligation to Pay Indemnity Escrow Amount.
1.9 Post-Closing
Adjustment to Working Capital.
1.9.1 Working
Capital Adjustment.
1.9.2 Post-Closing
Statement.
1.9.3 Disputes.
1.9.4 Payment
of Working Capital Adjustment.
1.9.4.1 Increase
of Merger Consideration and Related Payment.
1.9.4.2 Decrease
of Merger Consideration and Related Payment.
1.9.4.2.1 No
Working Capital Payment to Stockholders.
1.9.4.2.2 Working
Capital Payment to Stockholders.
1.9.4.3 No
Change in Merger Consideration.
1.9.4.4 Payments
to Non-Claiming Holders.
1.9.4.5 No
Other Obligation to Pay Working Capital Escrow Amount.
ARTICLE
II. REPRESENTATIONS
AND WARRANTIES OF JJI
2.1 Organization,
Powers, Good Standing and Capitalization.
2.1.1 Organization,
Powers and Good Standing.
ii
2.1.2 Capitalization.
2.2 Authorization;
Binding Obligation.
2.3 No
Material Adverse Effect.
2.4 No
Conflict.
2.5 Financial
Statements.
2.6 Investment
Bankers.
2.7 Compliance
with Laws.
2.8 Intellectual
Property.
|
2.8.1
|
List
of Material Contracts Relating to Intellectual Property and Certain
Other
Intellectual Property Matters.
|
2.8.2 Patents.
2.8.3 Trademarks.
2.8.4 Copyrights.
2.8.5 Trade
Secrets.
2.8.6 No
Settlements, Restrictions or Third Party Use.
2.8.7 Employee
Contracts.
2.8.8 Impact
of Agreement.
2.9 Employee
Matters.
2.10 Litigation;
Adverse Facts.
2.11 Ownership
of Property and Assets; Liens.
2.12 Environmental
Matters.
2.13 ERISA.
2.14 Agreements
and Other Documents.
2.15 Insurance.
2.16 Taxes
and Tax Returns.
2.17 Inactive
Subsidiary.
2.18 Stockholders’
Agent.
2.19 Disclaimer
of Other Representations and Warranties.
2.20 No
Undisclosed Liabilities.
2.21 Inventory.
2.22 Accounts
Receivable.
2.23 Takeover
Statutes Inapplicable.
2.24 Related
Party Transactions.
2.25 Required
Vote of Company Stockholders.
2.26 Books
and Records.
2.27 Product
Liability and Warranties.
2.28 Absence
of Certain Changes and Events.
2.29 THIS
SECTION INTENTIONALLY LEFT BLANK.
2.30 Relationships
with Related Persons.
2.31 Customers.
2.32 Foreign
Corrupt Practices Act and Export Control and Antiboycott Laws
2.33 Certain
Miscellaneous Matters.
2.34 Consents.
2.35 Pay
Off Liabilities.
iii
2.36 Agreed
Deductions Subject Matter.
2.37 Disclosure.
2.38 Foreign
Stockholders.
2.39 Section
306 Stock.
2.40 Real
Property Holding Company.
2.41 Withholding.
ARTICLE
III. REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
3.1 Organization.
3.2 Authorization;
Binding Obligation.
3.3 No
Conflict.
3.4 Consents.
3.5 Litigation.
3.6 Disclosure.
3.7 Investment
Bankers.
3.8 Investigation.
3.9 Merger
Sub.
ARTICLE
IV. COVENANTS
OF THE PARTIES
4.1 Conduct
of the Business.
4.2 Completion
of Transactions.
4.3 Notification.
4.4 Access
to Information; Confidentiality.
4.4.1 Access
to Information.
4.4.2 Confidentiality.
4.5 Regulatory
Filings.
4.6 Consents
and Approvals; Cooperation.
4.7 Access
to Books and Records and the Surviving Company Personnel.
4.8 Director
and Officer Liability and Indemnification.
4.9 Public
Announcements.
4.10 Stockholders
Approval.
4.10.1 Stockholders’
Agent’s Representation and Agreement.
4.10.2 JJI’s
Efforts.
4.11 No
Solicitations.
4.12 Tax
Matters.
4.12.1 Cooperation.
4.12.2 Audits.
4.12.3 Amended
Returns.
4.12.4 Transfer
Taxes.
iv
4.12.5 No
Tax
Withholding.
4.12.6 Tax
Treatment.
4.13 Anti-Takeover
Statutes.
4.14 Stockholder
Litigation.
4.15 Forward
Contracts.
|
4.16
|
Termination
of Stock Option Plans, SERP and Employee’s Pension Plan of JJI and Its
Subsidiaries.
|
4.16.1 Stock
Option Plans.
4.16.2 SERP.
4.16.3 Employees
Pension Plan of JJI and Its Subsidiaries.
4.17 Financial
Statements.
ARTICLE
V. CONDITIONS
TO THE MERGER
5.1 Conditions
to Obligation of Each Party to Effect the Merger.
5.1.1 No
Injunctions or Restraints; Illegality.
5.1.2 Approvals.
5.1.3 Certificate
of Merger.
5.1.4 Maximum
Merger Consideration.
5.2 Additional
Conditions to Obligations of Parent and Merger Sub.
5.2.1 Representations
and Warranties; Performance of Obligations.
5.2.2 Consents
Obtained.
5.2.3 Secretary’s
Certificate.
5.2.4 Closing
Deliveries by JJI.
5.2.4.1 Resignation
Letters.
5.2.4.2 Liabilities
Certificate.
5.2.4.3 Payoff
Letters.
5.2.4.4 Representations
and Warranties Certificate.
5.2.4.5 Compliance
Certificate.
5.2.4.6 Escrow
Agreement.
5.2.4.7 Indemnification
Agreement.
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5.2.4.8
|
Evidence
of Termination of Options and Warrants and Terminated
Contracts.
|
5.2.5 Stockholder
Approval.
5.2.6 No
Material Adverse Affect.
5.2.7 FIRPTA
Certificate.
5.2.8 No
Proceedings.
5.2.9 Right
in JJI Capital Stock.
5.2.10 Stock
Plans.
5.2.11 Opinion
of Counsel.
5.2.12 Other
Documents and Certificates.
5.2.13
Delivery
of Exhibit B.
v
5.2.14 Purchase
of Class A Common Stock held by Employees Pension Plan of JJI and its
Subsidiaries.
5.2.15
Notices
to Stockholders Pursuant to Delaware Law.
5.3 Additional
Conditions to Obligations of JJI.
5.3.1 Representations
and Warranties; Performance of Obligations.
5.3.2 Consents
Obtained.
5.3.3 Secretary’s
Certificate.
ARTICLE
VI. TERMINATION
6.1 Termination.
6.2 Effect
of Termination.
ARTICLE
VII. INDEMNIFICATION
7.1 Survival;
Right to Indemnification Not Affected by Knowledge.
7.2 Indemnification
of Parent.
7.3 Indemnification
of Stockholders.
7.4 Basket;
Limitation on Indemnification
7.4.1 Parent’s
Basket.
7.4.2 THIS
SECTION INTENTIONALLY LEFT BLANK.
7.4.3 Cap.
7.4.4 Agreed
Deductions.
7.5 Indemnification
Procedure for Third Party Claims Against Indemnified Parties.
7.5.1 Notice.
7.5.1.1 Duty
to Notify.
7.5.2 Defense
by Indemnifying Party.
7.5.3 Defense
by Indemnified Party.
7.5.4 Duty
to Keep Other Party Informed.
7.5.5 Confidentiality.
7.5.6 Reimbursement
Payments for Third-Party Claims.
7.6 Limitation
of Remedies.
7.6.1 Limits
on Indemnity Escrow Amount.
7.6.2 Application
of Insurance Proceeds.
7.6.3 Limitations
on Remedy.
7.6.4 Duty
to Mitigate.
7.7
THIS
SECTION INTENTIONALLY LEFT BLANK.
7.8 Payments
to Stockholder Indemnified Party.
7.9 Payments
from the Indemnity Escrow Amount.
7.10 Treatment
of Payments.
7.11 Cooperation
Relating to German Environmental Issue.
vi
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7.12
|
INDEMNIFICATION
IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE.
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ARTICLE
VIII. DEFINITIONS
ARTICLE
IX. GENERAL
PROVISIONS
9.1 Notices.
9.2 Entire
Agreement; Amendment; Waiver.
9.3 Headings,
Terminology.
9.4 Severability.
9.5 Assignment.
9.6 Parties
in Interest.
9.7 Governing
Law.
9.8 Counterparts.
9.9 Fees
and Expenses.
vii
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (this “Agreement”) is entered into as of the
12th
day of
May, 2006, by and among The Genlyte Group Incorporated, a Delaware corporation
(“Parent”), Ignite Merger Sub Inc., a Delaware corporation and an Affiliate of
Parent (“Merger Sub”), International Mezzanine Capital B.V., a limited liability
company incorporated under the laws of the Netherlands (“Stockholders’ Agent”)
and JJI Lighting Group, Inc., a Delaware corporation (“JJI”).
RECITALS
The
parties intend that, subject to the terms and conditions hereinafter set forth,
Merger Sub merge with and into JJI in a statutory merger (the “Merger”), with
JJI to be the surviving corporation, all pursuant to the terms and conditions
of
this Agreement and a Certificate of Merger substantially in the form of
Exhibit
A
with any
blanks to be completed as agreed by JJI and Merger Sub (the “Certificate of
Merger”) and the applicable provisions of the General Corporation Law of the
State of Delaware (“DGCL”). Upon the effectiveness of the Merger, (i) all
outstanding capital stock of JJI (“JJI Stock”) shall be cancelled, and each
outstanding Class B Common Stock Warrant shall be cancelled, in exchange for
the
right to receive a portion of the Merger Consideration, as provided in this
Agreement and the Certificate of Merger and (ii) there will not be outstanding
any rights to acquire or equity claims regarding any JJI Stock or Class B Common
Stock Warrants, or other equity rights or rights to acquire equity.
The
Merger is intended to be a taxable transaction pursuant to the provisions of
the
Internal Revenue Code of 1986, as amended (the “Code”), and the parties intend
to treat the transaction as a taxable purchase of the JJI Stock and Class B
Common Stock Warrants.
The
Board
of Directors of JJI (i) has determined that the Merger is consistent with and
in
furtherance of the long-term business strategy of JJI and advisable and fair
to,
and in the best interests of JJI and its stockholders, (ii) has approved this
Agreement, the Merger and the other Transactions and (iii) has determined to
recommend that the Stockholders of JJI adopt and approve this Agreement and
approve the Merger.
The
holders of 87% of the JJI Stock have agreed to vote in favor of or consent
in a
binding manner to the Merger and the other Transactions contemplated by this
Agreement.
The
Board
of Directors and the sole shareholder of Merger Sub has approved the Merger
and
related Transactions and authorized certain officers to take any and all actions
on behalf of the Merger Sub that any such authorized officer deems necessary
in
connection with the Merger and the other Transactions contemplated by this
Agreement.
The
Board
of Directors of Parent has approved the Merger and related Transactions and
authorized certain officers to take any and all actions on behalf of the Parent
that any such authorized officer deems necessary in connection with the Merger
and the other Transactions contemplated by this Agreement.
1
In
consideration of the foregoing and the representations, warranties, covenants
and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE
I
MERGER
1.1
The
Merger.
At the
Effective Time, and subject to and upon the terms and conditions of this
Agreement and in accordance with the DGCL, Merger Sub shall be merged with
and
into JJI, the separate corporate existence of Merger Sub shall cease, and JJI
shall continue as the surviving corporation, being the successor to all the
property, rights, powers, privileges, liabilities, and obligations of both
JJI
and Merger Sub. JJI as the surviving corporation after the Merger is hereinafter
referred to as JJI or the “Surviving Company.”
1.2
The
Closing.
The
closing of the Merger (the “Closing”) shall
take place at a time and on a date (i) specified by the parties, which shall
be
no later than five (5) Business Days after satisfaction or waiver of each of
the
conditions set forth in Article V or (ii) agreed to in writing by JJI and Parent
(the “Closing Date”). The Closing will be held at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ PLLC, at 1700 PNC Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
unless another place is agreed to in writing by the parties hereto.
1.3
Effective
Time.
Simultaneous with the Closing, the parties hereto shall cause the Merger to
be
consummated by filing a Certificate of Merger, executed in accordance with
the
relevant provisions of the DGCL, with the Delaware Secretary of State (the
time
of such filing being the “Effective Time”).
1.4
Conversion
of Merger Sub Stock and JJI Stock and Class B Common Stock
Warrants.
1.4.1
Merger
Sub Stock.
At the
Effective Time, by virtue of the Merger, (i) each share of common stock of
Merger Sub outstanding immediately prior to the Effective Time shall be
converted into and become Eleven Thousand (11,000) shares of common stock of
the
Surviving Company of the Surviving Company with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Company and (ii) no Person other than
the shareholder(s) of the Merger Sub immediately prior to the Effective Time
shall have any ownership of any capital stock, or any right to thereafter
acquire any ownership of any capital stock, of JJI.
1.4.2
Treasury
Shares.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
any Person each share of capital stock of JJI then held in the treasury of
JJI
or owned by JJI shall be canceled and retired and shall cease to exist without
payment of any consideration therefor.
1.4.3
JJI
Stock and Warrants.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
any Person, each share of JJI Stock outstanding immediately prior to the
Effective Time and each Class B Common Stock Warrant outstanding
immediately
2
prior
to
the Effective Time shall be canceled and retired, in exchange for the right
to
receive either (i) (A) a portion (determined as set forth on the “Net Merger
Consideration Payable at the Effective Time” column of Exhibit
B)
of the
Net Merger Consideration and (B) possibly a portion of the Escrow Fund Amount
(determined as set forth in Sections 1.8 and 1.9), but only to the extent
expressly provided in this Agreement (collectively such rights are the “Merger
Consideration Rights”) or (ii) only with respect to JJI Stock, the right to
receive consideration in connection with perfected appraisal rights in
accordance with Section 1.4.5.
1.4.4
Funding
of Escrow Agreement.
On the
Effective Date (or such later time as may be approved by the Stockholders’
Agent) and notwithstanding anything to the contrary contained in this Section
1.4, the Escrow Fund Amount shall be deducted from the Merger Consideration
in
accordance with Section 1.7 and the Escrow Fund Amount shall be paid to the
Escrow Agent in accordance with the terms of Section 1.7.2.1 of this Agreement
and the Escrow Agreement (the difference between (i) the Merger Consideration
as
of the Effective Time and (ii) the sum of the Escrow Fund Amount and the
Appraisal Right Stockholders’ Consideration, if any, is the “Net Merger
Consideration”).
1.4.5
Appraisal
Rights.
Notwithstanding anything in this Agreement to the contrary, any issued and
outstanding shares of JJI Stock held by a person who has neither voted in favor
of the Merger nor consented in writing thereto and who otherwise complies with
all the applicable provisions of Section 262 of the DGCL concerning the rights
of holders of shares of JJI Stock to dissent from the Merger and require
appraisal of their shares of JJI Stock (the “Dissenting Stockholder”) shall not
be converted into or exchangeable for the right to receive any portion of the
Merger Consideration or any other amount pursuant to this Agreement, but shall
become the right to receive such consideration as may be determined to be due
to
such Dissenting Stockholder with respect to shares for which appraisal rights
have been perfected pursuant to the laws of the State of Delaware. Shares of
JJI
Stock with respect to which appraisal rights have been perfected are referred
to
as “Dissenting Shares”. The Dissenting Shares held by each Dissenting
Stockholder that withdraws his, her or its demand for appraisal or fails to
perfect or otherwise loses his, her or its right of appraisal, in any case
pursuant to the DGCL, shall no longer be considered Dissenting Shares and shall
be deemed to be canceled as of the Effective Time in exchange for the right
to
receive the same portion of the Merger Consideration Rights that he, she or
it
would have received as set forth in this Section 1.4. The remaining Dissenting
Stockholders shall be referred to as the “Appraisal Rights Stockholders”. JJI
or, after the Effective Time, the Surviving Company shall give the Parent
(i) prompt notice of any demands for appraisal of shares of JJI Stock
received by JJI or the Surviving Company, as applicable, and (ii) the
opportunity to participate in all negotiations and proceedings with respect
to
any such demands. JJI shall not, without the prior consent of Parent, make
any
payment with respect to, or settle, offer to settle or otherwise negotiate,
any
such demands. Notwithstanding anything in this Agreement to the contrary, (i)
the Appraisal Rights Stockholders will not be entitled to any portion of the
Merger Consideration or any payment pursuant to this Agreement and (ii) any
amounts from the Merger Consideration and the Escrow Fund Amount which would
have been paid to Appraisal Rights Stockholders had such Appraisal Rights
Stockholders not
3
become
Appraisal Rights Stockholders shall be paid to and be the sole property of
the
Surviving Company and neither the Stockholders nor any other Person shall have
any right thereto.
1.4.6
Letter
of Transmittal and Procedures for Payment of Net Merger Consideration,
etc.
1.4.6.1
Exchange
Agent.
Prior
to the Effective Time, Parent shall appoint an agent (the “Exchange Agent”) for
the purpose of exchanging the Merger Consideration for certificates representing
shares of JJI Stock and for agreements representing Class B Common Stock
Warrants (collectively, the “Certificates”). Parent has the right at any time in
its sole discretion to replace the Exchange Agent with another agent, including
itself or one of its Affiliates, for the purpose of exchanging Merger
Consideration for Certificates.
1.4.6.2
Deposit
of Merger Consideration with Exchange Agent.
Parent
or the Surviving Company shall make available to the Exchange Agent, as needed
and at the time required by this Agreement, cash sufficient to fund the portion
of the Merger Consideration to be paid by the Exchange Agent in respect of
the
Certificates pursuant to this Agreement.
1.4.6.3
Letter
of Transmittal.
At or
prior to the Closing, JJI shall provide Parent with a list showing, for each
Stockholder, the address of each such Stockholder, holdings of JJI Stock and
Class B Common Stock Warrants by each such Stockholder, the percentage of the
Merger Consideration applicable to each such Stockholder and such other
information as Parent may reasonably request. As soon as reasonably practicable
following the Closing, the Exchange Agent or Parent shall provide to each
Stockholder (at the address provided by JJI pursuant to this Section 1.4.6.3)
a
letter of transmittal (in form attached hereto as Exhibit
C
(“Letter
of Transmittal”)) and instructions for use in such exchange. If Parent desires
to modify the Letter of Transmittal, then Parent may send Stockholders’ Agent
written notice of Parent’s proposed modifications and Stockholders’ Agent shall
have five (5) Business Days after such notice has been received by Stockholders’
Agent in which to object to the notice. If no such objection is received by
Parent during such five (5) Business Days, Parent shall have the right to modify
the Letter of Transmittal as indicated in the written notice Parent sent
Stockholders’ Agent. Provided further, Parent shall, at any time, with or
without complying with the immediately preceding two sentences, have the right
to modify the Letter of Transmittal with the prior written consent of
Stockholders’ Agent, which consent shall not be unreasonably withheld or
delayed.
1.4.6.4
Surrender
of Certificates.
Subject
to Sections 1.4.5 and 1.4.6.6, each holder of JJI Stock and Class B Common
Stock
Warrants that have been canceled in exchange for Merger Consideration Rights
shall be entitled to receive, upon surrender to the Exchange Agent of a
Certificate (negotiated as provided in the instructions from the Exchange Agent
or Parent), together with the properly completed and duly executed (by the
holder) Letter of Transmittal, payment(s) (determined in accordance with this
Agreement) in respect of such holder’s Merger Consideration Rights in accordance
with and subject to the provisions of this Agreement. Until so surrendered,
each
such Certificate shall represent after the Effective Time
4
for
all
purposes only the right to receive any applicable Merger Consideration Rights
pursuant and subject to the provisions of this Agreement upon proper presentment
of the Certificate and the Letter of Transmittal. No interest shall be paid
or
accrue on any Merger Consideration except to the extent otherwise expressly
provided in the Escrow Agreement. Notwithstanding anything in this Agreement
to
the contrary, no holder of Merger Consideration Rights shall be entitled to
any
payment(s) of the Merger Consideration (including post-closing payments, if
any
from the Escrow Fund Amount) with respect to any Merger Consideration Rights
for
which Certificate(s) and Letters of Transmittal have not been properly executed
and presented in accordance with this Section 1.4.6.4 or for which the
requirements of 1.4.6.10 have not been complied with relating to lost, stolen
or
destroyed Certificates.
1.4.6.5
Other
than Registered Holder.
If any
Merger Consideration is to be paid to a Person other than the Person in whose
name the surrendered Certificate is registered, it shall be a condition to
such
payment that
1.4.6.5.1
either such Certificate shall be properly endorsed or shall otherwise be in
proper form for transfer and
1.4.6.5.2
the Person requesting such payment shall pay to the appropriate Exchange Agent
any transfer or other Taxes required as a result of such payment to a Person
other than the registered holder of such Certificate or establish to the
satisfaction of the appropriate Exchange Agent that such tax has been paid
or is
not payable.
1.4.6.6
No
Registration After Effective Time.
After
the Effective Time, there shall be no further registration of transfers of
JJI
Stock or Class B Common Stock Warrants.
1.4.6.7
Payment
of Merger Consideration.
Payment
of any portion of the Merger Consideration (and satisfaction of all Merger
Consideration Rights) to each holder of Merger Consideration Rights shall be
effected in the following manner: If any holder of record of JJI Stock or Class
B Common Stock Warrants presents to the Exchange Agent(s) such holder’s
Certificate(s) (negotiated as provided in the instructions from the Exchange
Agent or Parent) therefor along with the Letter(s) of Transmittal duly completed
and executed by such holder and effects the surrender of such Certificate(s)
(all in compliance with Sections 1.4.6.3 and 1.4.6.4), then such holder shall
be
entitled to receive from the Parent or the Surviving Company through the
Exchange Agent:
1.4.6.7.1
payment of a portion of the Net Merger Consideration determined in accordance
with the “Net Merger Consideration Payable at the Effective Time” column of
Exhibit
B
for the
shares of JJI Stock or Class B Common Stock Warrants represented by such duly
tendered Certificate(s) and Letter(s) of Transmittal, if presented at or prior
to the Effective Time, in immediately available funds on the Effective Date
(or
such later time as may be acceptable to the Stockholders’ Agent) by wire
transfer to an account designated by such holder in writing if the amount is
in
excess of $100,000, otherwise by check sent by U.S. mail to such holder, and,
if
presented after the Effective Time, within five (5) Business Days after
such
5
presentation
either (i) in immediately available funds by wire transfer to an account
designated by such holder if requested in writing and only if the amount is
in
excess of $100,000, or (ii) otherwise within five (5) Business Days after such
presentation by check sent by U.S. Mail and
1.4.6.7.2
when payable, if at all, any payment from the Indemnity Escrow Amount
to
the
extent required by and in
accordance with Section 1.8 for such JJI Stock or Class B Common Stock Warrants
represented by such duly tendered Certificate(s) and Letter(s) of Transmittal,
and
1.4.6.7.3
when
payable, if at all, any payment from the Working Capital Escrow Amount to the
extent required by and in accordance with Section 1.9.4 for such JJI Stock
and
Class B Common Stock Warrants represented by such duly tendered Certificate(s)
and Letter(s) of Transmittal.
1.4.6.8
Unclaimed
Merger Consideration.
Any
portion of the Merger Consideration made available to the Exchange Agent
pursuant to this Section 1.4.6 that remains unclaimed by the holders of
Merger Consideration Rights thirty (30) days after the Effective Time shall
be
returned to the Surviving Company, upon demand by the Parent. Any such holder
who has not exchanged his, her or its Merger Consideration Rights for his,
her
or its portion of the Merger Consideration in accordance with this
Section 1.4.6 prior to such return of unclaimed Merger Consideration shall
(i) be subject to the provisions of Sections 1.8.7 and 1.9.4.4 and the
provisions of the immediately following sentence and (ii) thereafter look only
to the Surviving Company (or other Exchange Agent identified by the Surviving
Company at that time) for payment of his, her or its portion of the Merger
Consideration he, she or it may be entitled to receive, if any, in respect
of
such Merger Consideration Rights (without any interest thereon and reduced
for
any amounts required to be withheld under the Code with respect to the making
of
such payment). Notwithstanding the foregoing or anything else in this Agreement
to the contrary, neither Parent, nor any Affiliate of Parent, nor the Surviving
Company nor any Exchange Agent shall be liable to any holder of Merger
Consideration Rights for any amounts of the Merger Consideration paid to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
1.4.6.9
Return
of Merger Consideration Where Appraisal Rights.
Any
portion of the Merger Consideration made available to the Exchange Agent
pursuant to this Section 1.4.6 to pay for JJI Stock for which appraisal
rights have been perfected shall be returned to Parent or the Surviving Company,
upon demand by the Parent.
1.4.6.10
Lost
Certificates.
In the
event any Certificate shall have been lost, stolen or destroyed, then the holder
of such lost, stolen or destroyed Certificate (the “Lost Certificate Holder”)
shall receive his, her or its portion of the Merger Consideration then payable
to such Lost Certificate Holder as provided in and subject to this Section
1.4
if the following steps are taken: the Lost Certificate Holder (i) provides
Parent and JJI with an affidavit, in form and substance acceptable to Parent,
certifying under oath before a notary public that such Certificate has been
lost, stolen or destroyed and cannot be obtained by the Lost
Certificate
6
Holder,
(ii) furnishes
a bond of indemnity reasonably satisfactory to Parent, JJI and the Exchange
Agent as
indemnity against any claim that may be made against Parent, JJI, and the Paying
Agent, and (iii) properly executes and delivers the Letter of Transmittal in
a
manner reasonably acceptable to Parent.
1.4.6.11
Merger
Consideration in Full Satisfaction.
The
portion of the Merger Consideration issued and paid in exchange for the Merger
Consideration Rights in accordance with the terms hereof shall be deemed to
have
been paid in full satisfaction of (i) all rights pertaining to such JJI Stock
and Class B Common Stock Warrants to which the holder thereof is entitled as
provided in this Section 1.4 and (ii) all Merger Consideration Rights and all
other rights under this Agreement.
1.4.6.12
THIS SECTION INTENTIONALLY LEFT BLANK.
1.4.6.13
Investment
of Exchange Fund.
Each
Exchange Agent that is not Parent, the Surviving Company or an Affiliate of
Parent shall invest any cash delivered to it as part of the Merger Consideration
(the “Exchange Fund”) as directed by Parent on a daily basis. Any interest and
other income resulting from such investments will be paid to Parent. In the
event there are any losses resulting from such investments or wrongful conduct
on the part of such Exchange Agent such that the cash in the Exchange Fund
shall
be insufficient to fully satisfy all of the payment obligations to be made
by
such Exchange Agent hereunder, Parent shall promptly cause cash to be deposited
into the Exchange Fund in an amount that is equal to the deficiency in the
amount of cash required to fully satisfy such payment obligations.
1.5
Effects
of the Merger.
At the
Effective Time:
1.5.1
Separate
Existence of Merger Sub Ceases.
The
separate existence of Merger Sub will cease and Merger Sub will be merged with
and into JJI and JJI will be the surviving company, pursuant to the terms of
the
Certificate of Merger.
1.5.2
Certificate
of Incorporation and Bylaws of the Surviving Company.
. The
certificate of incorporation of JJI shall be the certificate of incorporation
of
the Surviving Company until thereafter changed or amended as provided therein
or
by applicable law. The bylaws of Merger Sub shall be the bylaws of the Surviving
Company until the same shall thereafter be changed or amended in accordance
with
applicable law, the certificate of incorporation of the Surviving Company or
said bylaws.
1.5.3
Stock
of Merger Sub.
Each
share of Merger Sub Stock outstanding immediately prior to the Effective Time
will become Eleven Thousand (11,000) shares of common stock of the Surviving
Company as provided in Section 1.4.1.
1.5.4
Board
of Directors and Officers of the Surviving Company.
The
directors and officers of Merger Sub immediately prior to the Effective Time
shall be the directors and officers of the Surviving Company, each to hold
office in accordance with the certificate of
7
incorporation
and bylaws of the Surviving Company and until their respective successors are
duly elected or appointed and qualified.
1.5.5
JJI
Stock and Class B Common Stock Warrants.
At the
Effective Time, (i) each share of JJI Stock and each Class B Common Stock
Warrant outstanding immediately prior to the Effective Time will be cancelled
in
exchange for Merger Consideration Rights as provided in Section 1.4 or, with
respect to JJI Stock, the right to receive consideration in connection with
perfected appraisal rights as provided in Section 1.4.5 and (ii) no Person
other
than the shareholder(s) of the Merger Sub immediately prior to the Effective
Time shall have any ownership of any capital stock, or any right thereafter
to
acquire any ownership of any capital stock of JJI.
1.5.6
Applicable
Law.
The
Merger will, from and after the Effective Time, have all of the effects provided
by applicable law.
1.5.7
Treasury
Shares.
Without
any action on the part of any Person, each share of capital stock of JJI then
held in the treasury of JJI or owned by JJI shall be canceled and retired and
shall cease to exist without payment of any consideration therefor.
1.6
Cooperation
and Further Assurances.
Each
of
the parties agrees to use its best efforts to insure that Parent and Merger
Sub
are able to receive and continue to have all of the benefits contemplated by
this Agreement, including the satisfactory completion of the Merger such that,
at the Effective Time, the stockholder of the Merger Sub immediately prior
to
the Merger becomes the sole stockholder of JJI and the sole Person entitled
to
acquire any equity interest in JJI. If
at any
time after the Effective Time, any further action is necessary or desirable
to
carry out the purposes of this Agreement and to vest the Surviving Company
with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of either Merger Sub or JJI, the officers and directors
of
the Surviving Company are fully authorized in the name of Merger Sub, JJI or
the
Surviving Company or otherwise to take, and shall take, all such further action.
1.7
Merger
Consideration.
1.7.1
Calculation.
For
purposes of this Agreement, the term “Merger Consideration” shall mean (i) One
Hundred Thirty Million and No/Dollars ($130,000,000), (ii) less the sum of
(A)
the Pay Off Liabilities, (B) the Agreed Deductions and (C) the Price Reduction
Liabilities, (iii) plus or minus any adjustments for Working Capital as set
forth in Sections 1.7.1.4.4 and 1.9, (iv) plus adjustments, if any, to the
Indemnity Escrow Amount pursuant to part (g) of Exhibit
D,
(v)
plus adjustment, if any, to the Indemnity Escrow Amount pursuant to Section
4.18
and (vi) less amounts paid, if any, from the Indemnity Escrow Amount to Parent
Indemnified Parties. Between three (3) and five (5) Business Days prior to
the
Closing Date (or such lesser time as may be acceptable to Parent), JJI shall
(i)
determine its good faith best estimate of the Agreed Deductions and the Price
Reduction Liabilities as of the Effective
8
Time
and
(ii) submit such determination (with a detailed itemization of each of the
Agreed Deductions and the Price Reduction Liabilities and the amount of each)
in
writing to Parent.
1.7.1.1
“Pay Off Liabilities” shall mean the aggregate amount required to pay off the
following at the Effective Time:
1.7.1.1.1
Senior Debt Payments;
1.7.1.1.2
Subordinated Debt Payments;
1.7.1.1.3
▇▇▇▇▇▇▇▇▇▇▇ Debt Payments;
1.7.1.1.4
▇▇▇▇▇▇▇▇▇▇▇ Family Plan Expense;
1.7.1.1.5
Change of Control Obligations;
1.7.1.1.6
SERP Funding;
1.7.1.1.7
Defined Benefit Pension Plan Funding, net of anticipated U.S. federal, state
and
local income Taxes (based on an assumed effective U.S. tax rate of 37.5% with
respect to the portion of the amount of such Defined Benefit Pension Plan
Funding which is not related to the purchase of Class A Common Stock held
by the Employees Pension Plan of JJI and its Subsidiaries pursuant to Section
4.16.3.1 and an assumed rate of 0% with respect to the portion of the amount
of
such Defined Benefit Pension Plan Funding which is related
to such purchase of Class A Common Stock held by the Employees Pension
Plan of JJI and its Subsidiaries);
1.7.1.1.8
Transaction Expenses; and
1.7.1.1.9 Contract
Termination Expenses.
Parent
agrees to cause JJI to send funds to pay off the Pay Off Liabilities described
in Sections 1.7.1.1.1, 1.7.1.1.2, 1.7.1.1.3, 1.7.1.1.6 and 1.7.1.1.9 on the
Effective Date or such later time as may be acceptable to the Stockholders’
Agent. Parent and Merger Sub acknowledge that the Pay Off Liabilities which
are
not paid off pursuant to the immediately preceding sentence or otherwise by
Parent or Surviving Company after the Effective Time will continue to be
Liabilities of the Surviving Company until paid.
1.7.1.2
“Agreed Deductions” shall mean the aggregate of the following indicated
amounts:
1.7.1.2.1
In connection with the ▇▇▇▇▇▇▇▇▇▇▇ Lease Support, an amount equal to the
remaining amount (calculated based on $1,000,000 per year, subject to pro ration
on a daily basis from the Effective Time for the balance of 2006, plus
$1,000,000 for
9
2007)
for
the balance of the existing lease ending December 31, 2007 with the ▇▇▇▇▇▇▇▇▇▇▇
landlord;
1.7.1.2.2
$500,000 relating to the ▇▇▇▇▇▇▇▇▇▇▇ Relocation Costs;
1.7.1.2.3 The
amount set forth in row entitled “Total” in the table of Exhibit
E
relating
to the ▇▇▇▇▇▇▇▇▇▇▇ Personnel Severance Costs that corresponds to the month
and
year in which the Effective Time occurred;
1.7.1.2.4
$400,000 relating to the Omega Chemical Site Estimated Cost;
1.7.1.2.5
$163,534 relating
to the ▇▇▇▇▇▇
Valley Site Estimated Cost; provided,
however,
the
amount shall be reduced to $133,534 if, prior to Closing, JJI has provided
Parent with proof reasonably acceptable to Parent that (i) JJI has collected
$30,000 (which will not be reflected in Working Capital) from the former owners
of ▇▇▇▇ Lighting, Inc. and (ii) the maximum liability of JJI and its
Subsidiaries pursuant to a final consent decree cannot exceed
$133,534;
1.7.1.2.6
$100,000 relating to the Other Agreed U.S. Environmental Issues Estimated
Costs;
1.7.1.3
“Price Reduction Liabilities” shall mean, without duplication (and without
duplication of amounts already deducted as a Pay Off Liability or Agreed
Deduction), the aggregate (i) principal, accrued interest and other amounts
due
or which may become due from JJI and its Subsidiaries and (ii) other Liabilities
of JJI and its Subsidiaries in connection with the following as of the Effective
Time:
1.7.1.3.1
All outstanding notes, obligations for borrowed money and capital leases of
JJI
and its Subsidiaries as of the Effective Time;
1.7.1.3.2
All debt, subordinated debt and accrued interest;
1.7.1.3.3
All dividends
JJI or any Subsidiary of JJI has an obligation to pay;
1.7.1.3.4
All customer deposits;
1.7.1.3.5
Any expense or cost (including any premium expense) incurred by Parent in
connection with any Forward Contracts purchased by Parent pursuant to Section
4.15; and
1.7.1.3.6
All liabilities of JJI and its Subsidiaries determined in accordance with GAAP
and all other amounts which have been or should be reserved or accrued in
accordance with GAAP on a consolidated balance sheet of JJI and its Subsidiaries
as of the Effective Time, except (without duplication) (i) reserves or accruals
taken into account (A) in
10
determining
Working Capital, (B) in connection with dividends which are accrued but are
not
and will never be payable and (C) in connection with the ▇▇▇▇▇▇▇▇▇▇▇ Employee
Pension Liability and (ii) Trade Payables taken into account in determining
Working Capital.
Any
reference to “should be reserved or accrued” or “should be accrued” in this
definition shall be deemed to be the amount which should be accrued or reserved
under GAAP as of the Effective Time on audited GAAP based financial statements
if, hypothetically, such financial statements were being prepared.
1.7.1.4
Initial
Working Capital Adjustment.
No
later than the third day before Closing (or such shorter period as may be
acceptable to Parent), JJI shall deliver or shall have delivered to Parent
a
certificate of the Chief Executive Officer and Chief Financial Officer of JJI
certifying (i) JJI’s best estimate of the Working Capital which shall include
the maximum fees and expenses that JJI and each of its Subsidiaries may owe
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, (ii) such estimate of the Working Capital set
forth in such certificate represents the best efforts and good faith estimation
by JJI of Working Capital as of the Effective Time, (iii) the estimated Working
Capital is in categories in the same form as Exhibits
D-1 and D-2
(with
adjustments as appropriate to reflect the provisions of parts (a) through (j)
of
Exhibit
D,
except
no amount will be taken into account in connection with part (g) of Exhibit
D
in
determining Estimated Working Capital and not more than $155,000 will be taken
into account in connection with part (f) of Exhibit
D
in
determining Estimated Working Capital ), and (iv) such other matters as Parent
may reasonably request with respect to Working Capital (the amount of such
estimate so certified is referred to as the “Estimated Working Capital”). The
Estimated Working Capital shall be prepared and determined in accordance with
the methodology for determining Working Capital as reflected on Exhibit
D
and
shall not in any event exceed $32,000,000.
1.7.1.4.1
Access
to Books and Records.
At all
times after the execution of this Agreement, JJI shall grant Parent (and its
representatives) full access to all books and records, and all financial and
accounting personnel, of JJI and its Subsidiaries.
1.7.1.4.2
Initial
Working Capital Escrow Amount.
The
“Initial Working Capital Escrow Amount” shall be an amount equal to the greater
of (i) $1,000,000 plus the difference between Estimated Working Capital and
Target Working Capital (without regard to whether Estimated Working Capital
is
greater or lesser than Target Working Capital) and (ii) the amount that Parent
in its good faith discretion deems appropriate to be placed into escrow for
possible post Closing working capital adjustments.
1.7.1.4.3
THIS SECTION INTENTIONALLY LEFT BLANK.
1.7.1.4.4
Adjustment
of Merger Consideration.
At the
Closing, the parties shall calculate an amount equal to (i) the Estimated
Working Capital minus (ii) the Target Working Capital (the “Closing Working
Capital Adjustment Amount”). If the Closing Working Capital Adjustment Amount is
positive, then the Merger Consideration shall be increased by the Closing
Working Capital Adjustment Amount. If the Closing Working Capital
11
Adjustment
Amount is negative, then the Merger Consideration shall be decreased by the
Closing Working Capital Adjustment Amount.
1.7.2
Payment
of Merger Consideration at Closing.
On the
Effective Date or such later time as may be acceptable to the Stockholders’
Agent, Parent shall pay the Merger Consideration as follows:
1.7.2.1
Escrow
Fund Amount.
Parent
shall (i) withhold from the Merger Consideration the Escrow Fund Amount and
(ii)
deliver the Escrow Fund Amount to Escrow Agent, by wire transfer, to one or
two
account(s) specified by the Escrow Agent.
1.7.2.2
Payment
to Exchange Agent.
Parent
shall cause to be paid by wire transfer the portion of the Net Merger
Consideration payable to Stockholders with respect to JJI Stock and Class B
Common Stock Warrants to the Exchange Agent (that is not the Surviving Company)
as provided in Section 1.4.6.7.1.
1.7.3
Escrow
Agreement.
The
Escrow Agent shall hold the Escrow Fund Amount in accordance with the terms
of
this Agreement and an escrow agreement in substantially the form of Exhibit
F
attached
hereto (the “Escrow Agreement”). The Escrow Fund Amount shall consist of (i) the
Indemnity Escrow Amount and (ii) the Working Capital Escrow Amount.
1.8
Payment
of the Indemnity Escrow Amount.
1.8.1
THIS SECTION INTENTIONALLY LEFT BLANK.
1.8.2
Indemnity
Escrow Amount Following General Survival Period.
In
order to avoid holding unnecessary funds in escrow, the Parent and the
Stockholders’ Agent have agreed that after the General Survival Period, the
Indemnity Escrow Amount need not be greater than the lesser of (x) the Adjusted
Indemnity Escrow Amount at the expiration of the General Survival Period and
(y)
the sum of (i) Five Hundred Thousand Dollars ($500,000) plus (ii) One Million
One Hundred Ninety-Seven Thousand Dollars ($1,197,000) plus (iii) the Estimated
Unresolved Claims Amount (as defined in Section 1.8.2.2 but determined in
accordance with Sections 1.8.2.1, 1.8.2.2 or 1.8.2.3, as applicable)
(collectively, the “Continuing Indemnity Escrow”).
1.8.2.1
Estimated
Unresolved Claims Amount Equals Zero.
If the
Escrow Agent and Stockholders’ Agent have not been sent notice (as referenced in
Section 7.1) of one or more Parent Claims prior to the termination of the
General Survival Period or if a Parent Indemnified Party has provided one or
more of such notices and such Parent Claims have been fully resolved and paid
to
the satisfaction of the applicable Parent Indemnified Party, then (i) the
Estimated Unresolved Claims Amount shall be deemed to equal zero and (ii) the
Continuing Indemnity Escrow shall be deemed to equal One Million Six Hundred
Ninety-Seven Thousand Dollars ($1,697,000). If
the
Continuing Indemnity Escrow is less than the Adjusted Indemnity
12
Escrow
Amount, then the Parent and the Stockholders’ Agent shall promptly provide joint
written directions to the Escrow Agent to disburse (and the intended recipients
shall be entitled to demand from the Escrow Agent and receive) such difference
between the Continuing Indemnity Escrow and the Adjusted Indemnity Escrow Amount
in accordance with the Agreed Escrow Distribution Methodology.
If the
Continuing Indemnity Escrow is more than the Adjusted Indemnity Escrow Amount,
there shall be no disbursements from the Indemnity Escrow Amount at that
time.
1.8.2.2
Determining
Estimated Unresolved Claims Amount During Resolution Period.
If the
Estimated Unresolved Claims Amount has not been deemed to equal zero pursuant
to
Section 1.8.2.1, then the aggregate amount of the past, present and estimated
future Adverse Consequences from each and every Parent Claim that has not been
fully resolved and paid to the satisfaction of the applicable Parent Indemnified
Party from the Indemnity Escrow Amount prior to the end of the General Survival
Period (each a “Surviving Claim”) shall be aggregated (the “Estimated Unresolved
Claims Amount”). The Parent and the Stockholders’ Agent shall use commercially
reasonable efforts to resolve any Surviving Claims in a reasonable time period.
The Stockholders’ Agent and Parent shall use their reasonable best efforts, for
a period of up to thirty (30) days (or such longer period as to which they
shall
mutually agree) (the “Resolution Period”) following the termination of the
General Survival Period, to agree on an amount for the Estimated Unresolved
Claims Amount which shall be an amount sufficient to pay all past, present
and
estimated future Adverse Consequences relating to all Surviving Claims. If
three
(3) Business Days remain prior to the termination of the Resolution Period
and
the Parent and the Stockholders’ Agent have failed to agree on the amount of the
Estimated Unresolved Claims Amount, then Parent or Parent Indemnified Party
shall provide written notice of its Parent Demand Amount to Stockholders’ Agent
on or before two (2) Business Days prior to the termination of the Resolution
Period. If the Parent and the Stockholders’ Agent agree on the amount of the
Estimated Unresolved Claims Amount during such Resolution Period, then the
Parent and the Stockholders’ Agent shall calculate the amount of the Continuing
Indemnity Escrow. Otherwise, the Parent and the Stockholders’ Agent shall follow
the procedures set forth in Section 1.8.2.3. If the Continuing Indemnity Escrow
is less than the Adjusted Indemnity Escrow Amount, then the Parent and the
Stockholders’ Agent shall promptly provide joint written directions to the
Escrow Agent to disburse (and the intended recipients shall be entitled to
demand from the Escrow Agent and receive) such difference between the Continuing
Indemnity Escrow and the Adjusted Indemnity Escrow Amount in accordance with
the
Agreed Escrow Distribution Methodology. If the Continuing Indemnity Escrow
is
more than the Adjusted Indemnity Escrow Amount, there shall be no disbursements
from the Indemnity Escrow Amount at that time.
1.8.2.3
Accountant
Determination of Estimated Unresolved Claims Amount.
If the
Parent and the Stockholders’ Agent fail to agree on the Estimated Unresolved
Claims Amount prior to the termination of the Resolution Period, then the amount
of the Continuing Indemnity Escrow shall be tentatively calculated based on
an
assumption that the Estimated Unresolved Claims Amount is equal to the Parent
Demand Amount. If such tentatively calculated Continuing Indemnity Escrow is
less than the Adjusted Indemnity Escrow
13
Amount,
then the Parent and the Stockholders’ Agent shall promptly provide joint written
directions to the Escrow Agent to disburse (and the intended recipients shall
be
entitled to demand from the Escrow Agent and receive) such difference between
the tentatively calculated Continuing Indemnity Escrow and the Adjusted
Indemnity Escrow Amount in accordance with the Agreed Escrow Distribution
Methodology. If the Continuing Indemnity Escrow is more than the Adjusted
Indemnity Escrow Amount, there shall be no disbursements from the Indemnity
Escrow Amount at that time.
The
Parent and the Stockholders’ Agent shall thereafter promptly submit the
estimation of the Estimated Unresolved Claims Amount to the Accounting Firm
for
final resolution based on the Accounting Firm’s estimate of the amount which
will be sufficient to pay all past and present and estimated future Adverse
Consequences relating to all Surviving Claims. The fees and expenses of the
Accounting Firm in connection with its duties under this Section 1.8 shall
be
paid one-half (1/2) by Parent and one-half (1/2) from the Estimated Unresolved
Claims Amount and the amount to be paid from the Estimated Unresolved Claims
Amount shall also be considered a Surviving Claim and referred to hereafter
as
the “Accountant Surviving Claim.” The amount for the Estimated Unresolved Claims
Amount shall be increased by the Accountant Surviving Claim. Once the Accounting
Firm has estimated the Estimated Unresolved Claims Amount, then the Parent
and
the Stockholders’ Agent shall calculate an amount equal to (i) the Parent Demand
Amount minus (ii) the Accounting Firm’s estimate of the Estimated Unresolved
Claims Amount (the “Adjustment Amount”). If the Adjustment Amount is positive,
then the Parent and the Stockholders’ Agent shall promptly provide joint written
directions to the Escrow Agent to disburse (and the intended recipients shall
be
entitled to demand from the Escrow Agent and receive) the Adjustment Amount
in
accordance with the Agreed Escrow Distribution Methodology. If the Adjustment
Amount is negative, there shall be no additional disbursements from the
Indemnity Escrow Amount at that time.
1.8.3
Stockholders
Shall Not Contribute Additional Funds Following General Survival
Period.
The
Stockholders shall not be obligated to contribute additional funds upon
termination of the General Survival Period to increase the amount of the
Indemnity Escrow Amount in the event the amount of the Continuing Indemnity
Escrow is greater than the Adjusted Indemnity Escrow Amount; provided,
however,
while
the Stockholders are not obligated to increase the Indemnity Escrow Amount,
the
provisions of this sentence shall not impair the right or access of any Parent
Indemnified Party to any other remedy, including specific performance and
damages, against any one or more Stockholders in connection with any Parent
Limitation Exceptions.
1.8.4
Indemnity
Escrow Amount Following Tax and
German Environmental Issue Survival
Period.
In
order to avoid holding unnecessary funds in escrow, the Parent and the
Stockholders’ Agent have agreed that after the Tax and
German Environmental Issue Survival
Period, the Indemnity Escrow Amount need not be greater than the Final
Continuing Indemnity Escrow (as defined in Section 1.8.4.2 but determined in
accordance with Sections 1.8.4.1, 1.8.4.2 or 1.8.4.3, as appropriate).
14
1.8.4.1
Final
Continuing Indemnity Escrow Equals Zero.
If the
Escrow Agent and Stockholders’ Agent have not been sent notice (as referenced in
Section 7.1) of one or more Parent Claims from the Effective Time through the
termination of the Tax and German Environmental Issue Survival Period, or if
a
Parent Indemnified Party has provided one or more of such notices and such
Parent Claims have been fully resolved and paid to the satisfaction of the
applicable Parent Indemnified Party, then the Final Continuing Indemnity Escrow
shall be deemed to equal zero. The Parent and the Stockholders’ Agent shall
promptly provide joint written directions to the Escrow Agent to disburse (and
the intended recipients shall be entitled to demand from the Escrow Agent and
receive) the remaining Adjusted Indemnity Escrow Amount in accordance with
the
Agreed Escrow Distribution Methodology.
1.8.4.2
Determining
Final Continuing Indemnity Escrow During Resolution Period.
If the
Final Continuing Indemnity Escrow has not been deemed to equal zero pursuant
to
Section 1.8.4.1, then the aggregate amount of the past, present and estimated
future Adverse Consequences from each and every timely asserted Parent Claim
(including each and every unpaid Surviving Claim) that has not been fully
resolved and paid to the satisfaction of the applicable Parent Indemnified
Party
from the Indemnity Escrow Amount prior to the end of the Tax and German
Environmental Issue Survival Period (each a “Continuing Surviving Claim”) shall
be aggregated (the “Final Continuing Indemnity Escrow”). The Parent and the
Stockholders’ Agent shall use commercially reasonable efforts to resolve any
Continuing Surviving Claims in a reasonable time period. The Stockholders’ Agent
and Parent shall use their reasonable best efforts during the Resolution Period
following the termination of the Tax and German Environmental Survival Period,
to agree on an amount for the Final Continuing Indemnity Escrow which shall
be
an amount sufficient to pay all past, present and estimated future Adverse
Consequences relating to all Continuing Surviving Claims. If three (3) Business
Days remain prior to the termination of such Resolution Period and the Parent
and the Stockholders’ Agent have failed to agree on the amount of the Final
Continuing Indemnity Escrow, then Parent or Parent Indemnified Party shall
provide written notice of its Parent Demand Amount to Stockholders’ Agent on or
before two (2) Business Days prior to the termination of such Resolution Period.
If the Parent and the Stockholders’ Agent fail to agree on the Final Continuing
Indemnity Escrow during such Resolution Period, then the Parent and the
Stockholders’ Agent shall follow the procedures set forth in Section 1.8.4.3.
Otherwise, if the Final Continuing Indemnity Escrow is less than the Adjusted
Indemnity Escrow Amount, the Parent and the Stockholders’ Agent shall promptly
provide joint written directions to the Escrow Agent to disburse (and the
intended recipients shall be entitled to demand from the Escrow Agent and
receive) such difference between the Final Continuing Indemnity Escrow and
the
Adjusted Indemnity Escrow Amount in accordance with the Agreed Escrow
Distribution Methodology. If the Final Continuing Indemnity Escrow is more
than
the Adjusted Indemnity Escrow Amount, there shall be no disbursements from
the
Indemnity Escrow Amount at that time.
1.8.4.3
Accountant
Determination of Final Continuing Indemnity Escrow.
If the
Parent and the Stockholders’ Agent fail to agree on the Final Continuing
Indemnity Escrow prior to the termination of the Resolution Period following
the
termination of the Tax
15
and
German Environmental Survival Period, then the Final Continuing Indemnity Escrow
shall be tentatively assumed to be equal to the Parent Demand Amount. If such
tentatively assumed Final Continuing Indemnity Escrow is less than the Adjusted
Indemnity Escrow Amount, then the Parent and the Stockholders’ Agent shall
promptly provide joint written directions to the Escrow Agent to disburse (and
the intended recipients shall be entitled to demand from the Escrow Agent and
receive) such difference between the tentatively assumed Final Continuing
Indemnity Escrow and the Adjusted Indemnity Escrow Amount in accordance with
the
Agreed Escrow Distribution Methodology. If the tentatively assumed Final
Continuing Indemnity Escrow is more than the Adjusted Indemnity Escrow Amount,
there shall be no disbursements from the Indemnity Escrow Amount at that time.
The
Parent and the Stockholders’ Agent shall thereafter promptly submit the
estimation of the Final Continuing Indemnity Escrow to the Accounting Firm
for
final resolution based on the Accounting Firm’s estimate of the amount which
will be sufficient to pay all past and present and estimated future Adverse
Consequences relating to all Continuing Surviving Claims. The fees and expenses
of the Accounting Firm in connection with its duties under this Section 1.8
shall be paid one-half (1/2) by Parent and one-half (1/2) from the Final
Continuing Indemnity Escrow and the amount to be paid from the Final Continuing
Indemnity Escrow shall also be considered a Continuing Surviving Claim and
referred to hereafter as the “Accountant Continuing Surviving Claim.” Thus, the
amount for the Final Continuing Indemnity Escrow shall be increased by the
Accountant Continuing Surviving Claim. Once the Accounting Firm has estimated
the Final Continuing Indemnity Escrow, then the Parent and the Stockholders’
Agent shall calculate an amount equal to (i) the Parent Demand Amount minus
(ii)
the Accounting Firm’s estimate of the Final Continuing Indemnity Escrow (the
“Final Adjustment Amount”). If the Final Adjustment Amount is positive, then the
Parent and the Stockholders’ Agent shall promptly provide joint written
directions to the Escrow Agent to disburse (and the intended recipients shall
be
entitled to demand from the Escrow Agent and receive) the Final Adjustment
Amount in accordance with the Agreed Escrow Distribution Methodology. If the
Final Adjustment Amount is negative, there shall be no additional disbursements
from the Indemnity Escrow Amount at that time.
1.8.5
Stockholders
Shall Not Contribute Additional Funds Following Tax and German Environmental
Survival Period.
The
Stockholders shall not be obligated to contribute additional funds upon
termination of the Tax and German Environmental Survival Period to increase
the
amount of the Indemnity Escrow Amount in the event the amount of the Final
Continuing Indemnity Escrow is greater than the Adjusted Indemnity Escrow
Amount; provided,
however,
while
the Stockholders are not obligated to increase the Indemnity Escrow Amount,
the
provisions of this sentence shall not impair the right or access of any Parent
Indemnified Party to any other remedy, including specific performance and
damages, against any one or more Stockholders in connection with any Parent
Limitation Exceptions.
1.8.6
Final
Release from Indemnity Escrow Amount.
Following the resolution of all Continuing Surviving Claims and payments from
the Indemnity Escrow Amount (in accordance with this Agreement and the Escrow
Agreement) of Adverse Consequences suffered
16
through
the final resolution of all Continuing Surviving Claims by the applicable Parent
Indemnified Party for which such Parent Indemnified Party is then entitled
to
indemnification, the Parent and the Stockholders’ Agent shall promptly provide
joint written directions to the Escrow Agent to disburse (and the intended
recipient shall be entitled to demand from the Escrow Agent and receive) the
remaining Adjusted Indemnity Escrow Amount in accordance with the Agreed Escrow
Distribution Methodology.
1.8.7
Payments
to Non-Claiming Holders.
1.8.7.1
If a Non-Claiming Holder duly surrenders his, her or its duly negotiated
Certificate(s) and duly tenders his, her or its duly executed Letter(s) of
Transmittal (with such modifications, if any, made in accordance with Section
1.4.6.3) in accordance with Section 1.4.6 following the Parent’s receipt of any
disbursements from the Indemnity Escrow Amount made in accordance with the
Agreed Distribution Methodology, then the Surviving Company will cause to be
paid to any such Non-Claiming Holder (subject to Sections 1.4.6.8 and 1.8.7.2)
an amount equal to the amount (without interest and reduced for any amounts
required to be withheld under the Code with respect to the making of such
payment) such Non-Claiming Holder would have otherwise received but did not
receive as a result of being a Non-Claiming Holder.
1.8.7.2
Notwithstanding the provisions of Section 1.8.7.1 or any other provision of
this
Agreement, neither Parent, nor any Affiliate of Parent, nor the Surviving
Company shall be liable to any Non-Claiming Holder for any disbursements Parent
received from the Indemnity Escrow Amount made in accordance with the Agreed
Distribution Methodology and paid (or for any other amount paid) to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
1.8.8
No
Other Obligation to Pay Indemnity Escrow Amount.
Neither
Parent nor any Affiliate of Parent, nor the Surviving Company will have any
obligations to pay any amounts to the Stockholders with respect to the Indemnity
Escrow Amount beyond the amounts expressly provided for above in Section
1.8.
1.9
Post-Closing
Adjustment to Working Capital.
1.9.1
Working
Capital Adjustment.
No
later than one hundred twenty (120) days after the Effective Time, Parent shall
cause to be prepared and delivered to Stockholders’ Agent a statement (the
“Post-Closing Statement”) setting forth the calculation of JJI’s Working Capital
as of the Effective Time.
1.9.2
Post-Closing
Statement.
1.9.2.1
The Post-Closing Statement shall be prepared in good faith in a manner
consistent with the methodology for calculating working capital as reflected
on
Exhibit
D.
The
Stockholders’ Agent shall cooperate in all reasonable respects with Parent (and
its representatives).
17
1.9.2.2
The Stockholders’ Agent shall have twenty (20) days after the receipt of the
Post-Closing Statement (the “Review Period”) to review the information and
calculations provided therein. During the Review Period and the period any
dispute is pending pursuant to Section 1.9.3, Parent shall afford the
Stockholders’ Agent (and its representatives) reasonable access to all books and
records and all financial and accounting personnel used to prepare the
Post-Closing Statement under control of or in the possession of Parent or the
Surviving Company.
1.9.3
Disputes.
The
Stockholders’ Agent may dispute the calculation of the Working Capital contained
in the Post-Closing Statement by providing written notice to Parent of such
dispute within the Review Period, setting forth in detail the particulars of
such dispute, including the Stockholders’ Agent’s calculation of Working Capital
based on the methodology in Exhibit
D
(a
“Dispute Notice”). In the event that the Stockholders’ Agent does not deliver a
Dispute Notice within the Review Period, then the Working Capital set forth
in
the Post-Closing Statement shall be deemed final and binding on the parties.
In
the event a Dispute Notice is timely provided, Parent and the Stockholders’
Agent shall use their reasonable best efforts for a period not to exceed thirty
(30) days (or such longer period as to which they shall mutually agree) to
agree
on the Working Capital. If, at the end of such period, the Stockholders’ Agent
and Parent have not agreed on a final and binding Working Capital calculation,
the determination of the Working Capital shall be made by the Accounting Firm.
The Parent shall utilize commercially reasonable efforts to cause the Accounting
Firm to make such determination within sixty (60) days of the end of such
period. The Accounting Firm’s determination of Working Capital shall be based on
the methodology set forth in Exhibit
D.
The
Working Capital determination made by the Accounting Firm shall be final and
binding upon the parties. All fees and disbursements of the Accounting Firm
shall be paid one-half (1/2) by Parent and one-half (1/2) as a deduction from
the Working Capital Escrow Amount. The determination of the Accounting Firm
shall be reflected in a written report which shall be delivered promptly by
the
Accounting Firm to the Stockholders’ Agent and Parent. The Working Capital which
is deemed final and binding on the parties, whether by expiration of the Review
Period without a Dispute Notice, by mutual agreement of the parties, or by
determination of the Accounting Firm, shall be called the “Final Working
Capital”. The
date
on which the Final Working Capital is determined, whether by expiration of
the
Review Period without a Dispute Notice, by mutual agreement of the parties,
or
by determination of the Accounting Firm, shall be called the “Determination
Date”.
1.9.4
Payment
of Working Capital Adjustment.
1.9.4.1
Increase
of Merger Consideration and Related Payment.
If the
Final Working Capital is greater than the Estimated Working Capital, the Merger
Consideration shall be increased by an amount equal to such excess unless the
amount of such excess exceeds the Initial Working Capital Escrow Amount in
which
case the Merger Consideration shall be increased only by an amount equal to
the
Initial Working Capital Escrow Amount (the amount of such increase is the
“Working Capital Excess”). Parent shall cause the Working Capital Excess to be
paid promptly to the Escrow Agent following the Determination Date for deposit
into the escrow account designated for the Working Capital Escrow Amount. If
there is a Working
18
Capital
Excess, the Parent and the Stockholders’ Agent shall promptly direct the Escrow
Agent to disburse (and the intended recipient shall be entitled to demand from
the Escrow Agent and receive) the full amount of the Working Capital Escrow
Amount (after any required deduction for fees and disbursements of the
Accounting Firm in accordance with Section 1.9.3) in accordance with the Agreed
Escrow Distribution Methodology.
The
Working Capital Excess payable from the Working Capital Escrow Amount shall
be
the sole source of payment for holders of Merger Consideration Rights for any
increase in Merger Consideration relating to the Final Working
Capital.
1.9.4.2
Decrease
of Merger Consideration and Related Payment.
If the
Final Working Capital is less than the Estimated Working Capital, the Merger
Consideration shall be decreased by an amount equal to such shortfall unless
such shortfall exceeds the Initial Working Capital Escrow Amount in which case
the Merger Consideration shall be decreased only by an amount equal to the
Initial Working Capital Escrow Amount (the amount of such decrease is the
“Working Capital Shortfall”). If there is a Working Capital Shortfall, the
Parent and the Stockholders’ Agent shall direct the Escrow Agent to disburse
(and the intended recipient shall be entitled to demand from the Escrow Agent
and receive) the Working Capital Escrow Amount (after any required deduction
for
fees and disbursements of the Accounting Firm in accordance with Section 1.9.3)
as follows:
1.9.4.2.1
No
Working Capital Payment to Stockholders.
If the
Working Capital Shortfall is equal to or greater than the Working Capital Escrow
Amount (after any required deduction for fees and disbursements of the
Accounting Firm in accordance with Section 1.9.3), then the holders of Merger
Consideration Rights shall not receive any disbursement from the Working Capital
Escrow Amount. The Parent shall be entitled to receive from the Escrow Agent,
by
wire transfer, the full amount of the Working Capital Escrow Amount. The Working
Capital Escrow Amount shall be the sole source of payment for any Working
Capital Shortfall.
1.9.4.2.2
Working
Capital Payment to Stockholders.
If the
Working Capital Shortfall is less than the Working Capital Escrow Amount (after
any required deduction for fees and disbursements of the Accounting Firm in
accordance with Section 1.9.3) then Parent shall be entitled to receive from
the
Escrow Agent, by wire transfer, the Working Capital Shortfall. The Escrow Agent
shall disburse the remaining balance of the Working Capital Escrow Amount (after
any required deduction for fees and disbursements of the Accounting Firm in
accordance with Section 1.9.3) in accordance with the Agreed Escrow Distribution
Methodology.
1.9.4.3
No
Change in Merger Consideration.
If the
Final Working Capital is equal to the Estimated Working Capital, the Merger
Consideration shall not be adjusted. The Parent and the Stockholders’ Agent
shall direct the Escrow Agent to disburse (and the intended recipient shall
be
entitled to demand from the Escrow Agent and receive) the full amount of
the
19
Working
Capital Escrow Amount in accordance with the Agreed Escrow Distribution
Methodology.
1.9.4.4
Payments
to Non-Claiming Holders.
1.9.4.4.1
If a Non-Claiming Holder surrenders his, her or its Certificate(s) and duly
tenders his, her or its duly executed Letter(s) of Transmittal (with such
modifications, if any, made in accordance with Section 1.4.6.3) in accordance
with Section 1.4.6 following the Parent’s receipt of any disbursements from the
Working Capital Escrow Amount made in accordance with the Agreed Distribution
Methodology, then the Surviving Company will cause to be paid to any such
Non-Claiming Holder (subject to Sections 1.4.6.8 and 1.8.7.2) an amount equal
to
the amount (without interest and reduced for any amounts required to be withheld
under the Code with respect to the making of such payment) such Non-Claiming
Holder would have otherwise received but did not receive as a result of being
a
Non-Claiming Holder.
1.9.4.4.2
Notwithstanding the provisions of Sections 1.9.4.4.1, neither Parent, nor any
Affiliate of Parent, nor the Surviving Company shall be liable to any
Non-Claiming Holder for any disbursements Parent received from the Working
Capital Escrow Amount made in accordance with the Agreed Distribution
Methodology and paid (or for any other amount paid) to a public official
pursuant to applicable abandoned property, escheat or similar laws.
1.9.4.5
No
Other Obligation to Pay Working Capital Escrow Amount.
Neither
Parent nor any Affiliate of Parent, nor the Surviving Company will have any
obligations to pay any amounts to the Stockholders with respect to the Working
Capital Escrow Amount beyond the amounts expressly provided for above in Section
1.9.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF JJI
JJI
hereby represents and warrants to the Parent and Merger Sub, both as of the
date
of execution of this Agreement and as of the Effective Time (except when a
different date or dates is expressly provided, in which event the representation
or warranty will be as of that date or dates), as follows:
2.1
Organization,
Powers, Good Standing and Capitalization.
2.1.1
Organization,
Powers and Good Standing.
JJI is
duly organized, validly existing and in good standing under the laws of the
State of Delaware and qualified to do business in all states where such
qualification is required except where failure to be so qualified would not
have
a Material Adverse Effect or expose JJI to Adverse Consequences in excess of
$50,000 in the aggregate. The jurisdiction of organization of JJI and each
of
its Subsidiaries and all jurisdictions in which JJI or any Subsidiary of JJI
is
qualified to do business are set forth on Schedule 2.1.1. JJI, the German
Parent, ▇▇▇▇▇▇▇▇▇▇▇ and each other Subsidiary of JJI has all requisite
organizational power and authority to own and operate its properties, to carry
on its
20
business
as now conducted and proposed to be conducted, and in the case of JJI to enter
into this Agreement and each Transaction Document to which it is a party. Each
Subsidiary of JJI, including the German Parent and ▇▇▇▇▇▇▇▇▇▇▇, is a duly
organized and validly existing corporation or legal entity in good standing
(with respect to jurisdictions that recognize such concept) under the Laws
of
its jurisdiction of formation. JJI, the German Parent, ▇▇▇▇▇▇▇▇▇▇▇ and each
other Subsidiary of JJI is duly qualified and in good standing (with respect
to
jurisdictions that recognize such concept) as a foreign corporation or other
entity authorized to do business in each of the jurisdictions in which such
qualification is required except where failure to be so qualified would not
have
a Material Adverse Effect or expose JJI and its Subsidiaries collectively to
Adverse Consequences in excess of $50,000 in the aggregate. JJI and its
Subsidiaries, including the German Parent and ▇▇▇▇▇▇▇▇▇▇▇, have heretofore
made
available to Parent’s Representatives accurate and complete copies of its
Governing Documents, none of which have been modified or added to since November
1, 2005. All outstanding shares of capital stock (or equivalent equity interests
of entities other than corporations) of each of JJI’s Subsidiaries, including
the German Parent and ▇▇▇▇▇▇▇▇▇▇▇, are beneficially owned, directly or
indirectly, exclusively by JJI.
2.1.2
Capitalization.
2.1.2.1
As of the date of this Agreement, the Closing Date and immediately prior to
the
Effective Time:
2.1.2.1.1
the authorized JJI Stock and Class B Common Stock Warrants and the
capitalization of each of its Subsidiaries is as set forth on Schedule 2.1.2;
2.1.2.1.2
all issued and outstanding JJI Stock and the capital stock of each of its
Subsidiaries is duly authorized and validly issued, fully paid, nonassessable,
and free and clear of all Liens except for Liens which will be terminated upon
payment of the Senior Debt Payments in accordance with Section
1.7.1.1;
2.1.2.1.3
the identity of the holders of JJI Stock and Class B Common Stock
Warrants and
the
percentage of their fully-diluted ownership of the JJI Stock is set forth on
Schedule 2.1.2;
2.1.2.1.4
no JJI Stock, nor any capital stock of any of its Subsidiaries, other than
as
described above, is issued and outstanding;
2.1.2.1.5
except as provided in Schedule 2.1.2, there are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from JJI or any of its
Subsidiaries of any capital stock or other equity interest; and
21
2.1.2.1.6
the accrued and unpaid dividends with respect to JJI Stock (none of which
dividends have been declared or are or will be payable) are set forth on
Schedule 2.1.2; and
2.1.2.1.7
there are no declared and unpaid dividends with respect to JJI
Stock.
2.1.2.2
Assuming (i) the Surviving Company files the Certificate of Merger, (ii) the
Merger and the Merger Agreement have been duly and validly authorized by Parent,
Merger Sub and the parent of Merger Sub, (iii) that the parent of Merger Sub
is
an Affiliate of Parent and (iv) that the parent of Merger Sub is the sole
shareholder of the Merger Sub immediately prior to the Effective Time, then
at
the Effective Time no Person other than the parent of Merger Sub shall have
any
right in or to any capital stock (or any other equity interest) of JJI. No
Person other than JJI (or in the case of ▇▇▇▇▇▇▇▇▇▇▇, the German Parent which
is
a Subsidiary of JJI) has any right in or to any capital stock (or any other
equity interest) of any of JJI’s Subsidiaries. There shall be no Options or
Warrants outstanding immediately prior to the Effective Time.
2.2
Authorization;
Binding Obligation.
2.2.1
The
execution, delivery and performance of this Agreement by JJI and the
consummation of the Transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other proceedings on its
part are necessary to authorize the execution, delivery or performance of this
Agreement, except for the affirmative vote or written consent in favor of the
Merger of the holders of a majority of the JJI Stock entitled to vote. This
Agreement and the Transactions have been approved by JJI’s board of directors
and by the holders of over 87% of the shares of JJI entitled to vote on such
matters.
2.2.2
This Agreement is, and the other Transaction Documents when executed and
delivered will be, the legally valid and binding obligations of JJI and
Stockholder’s Agent, each enforceable against JJI and Stockholders’ Agent in
accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other Laws
affecting creditors’ rights generally and the effects of general principles of
equity.
2.2.3
Immediately prior to and at the Effective Time, this Agreement and each of
the
Transactions will have been duly and irrevocably authorized in such a manner
that no additional authorization of the stockholders of JJI or any of the
Stockholders is required for this Agreement and the Transactions to be fully
effective.
2.3
No
Material Adverse Effect.
Except
as set forth in Schedule 2.3, since December 31, 2005,
22
2.3.1 Neither JJI or any of its Subsidiaries has conducted its business or
engaged in any transaction other than in the ordinary course of its business
and
in substantially the same manner as previously conducted, and
2.3.2
Except for the matters set forth in the immediately following sentence, there
have been no events or changes in the business, results of operations, assets,
financial condition, facts or circumstances affecting JJI or any of its
Subsidiaries which individually or in the aggregate have had or could reasonably
be expected to have a Material Adverse Effect. None of the following, either
alone or in combination, shall be taken into account in determining whether
the
representation in the immediately preceding sentence is accurate: (i)
any
failure by JJI to meet internal projections or forecasts or published revenue
or
earnings predictions for any period ending (or for which revenues or earnings
are released) on or after the date of this Agreement; or (ii) any adverse
change, effect, event, occurrence, state of facts or development attributable
to, resulting from, or relating to (A) the announcement or pendency of the
transactions contemplated by this Agreement; (B) conditions affecting the
industry in which JJI participates, the U.S. economy as a whole or the capital
markets in general or the markets in which JJI operates which do not
disproportionately affect JJI; (C) compliance with the terms of, or the taking
of any action required by, this Agreement; (D) any change in accounting
requirements or principles or any change in applicable laws, rules or
regulations or the interpretation thereof; (E) actions required to be taken
after the Closing under applicable laws, rules, regulations, contracts or
agreements; or (F) acts of terrorism or military action or the threat thereof
which do not disproportionately affect JJI.
2.4
No
Conflict.
Subject
to any filings and approvals required under the Merger Filing Laws, the
execution and delivery and performance of this Agreement by JJI and the
consummation of the Transactions contemplated hereby do not and will
not
2.4.1
violate or conflict with any Laws, or
2.4.2
violate, conflict with, result in a Breach of, or constitute a default (with
due
notice or lapse of time or both) under any Governing Documents of JJI or any
of
its Subsidiaries.
2.5
Financial
Statements.
The
financial statements described in Sections 2.5.1 and 2.5.2 and to be delivered
pursuant to Section 4.17 (the “Financial Statements”) concerning JJI and its
Subsidiaries have been prepared in accordance with GAAP and sound business
practices (including the maintenance of an adequate system of internal controls
taking into account that JJI currently is not a public company subject to the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act). The Financial Statements referenced in Section 2.5.1 fairly
present the financial condition and the results of operations, changes in
Stockholders’ equity and cash flows of JJI, on a consolidated basis, as of the
respective dates of and for the periods referred to in such Financial
Statements, all in accordance with GAAP. The Financial Statements described
in
Section 2.5.2 fairly present (and the Financial Statements delivered pursuant
to
Section 4.17 will fairly present) the financial condition and the results of
operations, changes in Stockholders’ equity and cash flows of JJI, on a
consolidated basis, as of the respective dates of and for the periods referred
to in such Financial Statements, all in accordance with GAAP except as set
forth
in Schedule 2.5. The Financial
23
Statements
referred to in this Section 2.5 and delivered pursuant to Section 4.17 reflect
and will reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
Financial Statements. The Financial Statements include:
2.5.1
the
consolidated balance sheets at December 31, 2005 and 2004 and the related
statements of income and cash flow of JJI and
its
Subsidiaries, for the years then ended, audited by Deloitte & Touche LLP;
and
2.5.2
the
consolidated balance sheets at the end of March 31, 2006 and the related
statements of income and cash flow of JJI and its Subsidiaries for the period
then ended.
2.6
Investment
Bankers.
Except
as set forth on Schedule 2.6, neither JJI nor its Subsidiaries have incurred
any
liability, contingent or otherwise, for any investment banking fee, commission
or financial advisory fee in connection with the Transactions contemplated
by
this Agreement.
2.7
Compliance
with Laws.
Except
for matters which would not have a Material Adverse Effect, (i) JJI represents
and warrants that it is in compliance and each of its Subsidiaries is in
compliance with the requirements of all applicable Laws and (ii) there is no
basis for the assertion of any claim for any violation of applicable Law against
JJI or any of its Subsidiaries. No representation or warranty is given under
this Section 2.7 with respect to Environmental Laws, ERISA or Laws relating
exclusively to Taxes.
2.8
Intellectual
Property.
2.8.1
List
of Material Contracts Relating to Intellectual Property and Certain Other
Intellectual Property Matters.
Schedule 2.8.1 contains a complete and accurate list of all licenses and
material contracts to which JJI and each of its Subsidiaries is a party that
relate to any of the Intellectual Property used by JJI or any Subsidiary of
JJI
in any business. To JJI’s Knowledge, there are no outstanding or threatened
disputes with respect to any such license or contract. Except as otherwise
noted
on Schedules 2.8.1, 2.8.2, 2.8.3 and 2.8.4, JJI or its Subsidiaries is the
owner
of all right, title and interest in and to the Intellectual Property listed
on
such Schedules free and clear of all Liens, and has the right to use, without
payment to a third party, all of such listed Intellectual Property. To JJI’s
Knowledge, the Intellectual Property listed on Schedules 2.8.2, 2.8.3 and 2.8.4
and the Intellectual Property that is the subject of the contracts and licenses
listed on Schedule 2.8.1 include all of the Intellectual Property necessary
for
or used in the operation of the businesses of JJI and its Subsidiaries as such
businesses are currently operated or have been operated at any time on or after
January 1, 2004.
2.8.2
Patents.
Schedule 2.8.2 contains a complete and accurate list of all issued Patents
which
are still in effect and owned or now used by JJI or any of its Subsidiaries
and
all pending Patent applications (including ▇▇▇▇▇ patents and industrial design
registrations) of JJI and its Subsidiaries.
24
2.8.2.1
Except as set forth on Schedule 2.8.2.1, all of the issued Patents listed on
Schedule 2.8.2 are currently in compliance with all formal legal requirements
(including, if applicable, payment of filing, examination and maintenance fees
and proofs of working or use), are, to the Knowledge of JJI, valid and
enforceable, list JJI or a Subsidiary of JJI as the sole current owner in the
records of the Appropriate Governmental Authority and are not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Effective Time.
2.8.2.2
Except for matters which would not have a Material Adverse Effect, no Patent
listed on Schedule 2.8.2 has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To JJI’s Knowledge, there is
no potentially interfering patent or patent application of any third
party.
2.8.2.3
To JJI’s Knowledge, except as set forth on Schedule 2.8.2, no Patent listed on
Schedule 2.8.2 is infringed or has been challenged or threatened in any way,
except where the infringement, challenge or threat would not have a Material
Adverse Effect. None of the products manufactured or sold, nor any process
used,
by JJI or its Subsidiaries infringes or, to JJI’s Knowledge, is alleged to
infringe any Patent or other proprietary right of any other Person.
2.8.3
Trademarks.
Schedule 2.8.3 contains a complete and accurate list of all (i) registered
Trademarks currently or at any time since January 1, 2003 owned or used by
JJI
or any of its Subsidiaries and each office or other location where each of
such
Trademarks has been registered and (ii) the five most significant unregistered
Trademarks for each of the thirteen divisions of JJI and its
Subsidiaries.
2.8.3.1
Except as set forth on Schedule 2.8.3.1, all Trademarks listed on Schedule
2.8.3
are owned exclusively by JJI or its Subsidiaries and are currently in compliance
with all formal Laws (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), and, except
as
set forth in Schedule 2.8.3, are not subject to any maintenance fees or taxes
or
actions falling due within ninety (90) days after the Effective
Time.
2.8.3.2
Except for matters which would not have a Material Adverse Effect, no Trademark
listed on Schedule 2.8.3 has been or is now involved in any opposition,
invalidation or cancellation proceeding and, to JJI’s Knowledge, no such action
is threatened with respect to any of such Trademarks.
2.8.3.3
To JJI’s Knowledge, except as set forth on Schedule 2.8.3.3, no Trademark listed
on Schedule 2.8.3 is infringed or has been challenged or threatened in any
way,
except where the infringement, challenge or threat would not have a Material
Adverse Effect. None of the Trademarks listed on Schedule 2.8.3, to JJI’s
Knowledge, is alleged to infringe any trade name, trademark or service ▇▇▇▇
of
any other Person.
25
2.8.4
Copyrights.
Schedule 2.8.4 contains a complete and accurate list of all registered
Copyrights owned or used by JJI or any of its Subsidiaries.
2.8.4.1
All of the registered Copyrights are currently in compliance with formal legal
requirements, list JJI or a Subsidiary of JJI as the sole current owner in
the
records of the appropriate Governmental Authority, are valid and enforceable,
and, except as set forth on Schedule 2.8.4.1, are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days after the Effective
Time.
2.8.4.2
To JJI’s Knowledge, no Copyright listed on Schedule 2.8.4.2 is infringed or has
been challenged or threatened in any way, except where the infringement,
challenge or threat would not result in a Material Adverse Effect. None of
the
subject matter of any of the Copyrights used in JJI’s or its Subsidiaries’
business infringes or, to JJI’s Knowledge, is alleged to infringe any Copyright
of any third party or is a derivative work based upon the work of any other
Person.
2.8.5
Trade
Secrets.
Except
as
set
forth
on Schedule 2.8.5, (i) no Trade Secret of JJI or any Subsidiary of JJI has
been
disclosed or authorized to be disclosed to any third party other than pursuant
to written non-disclosure agreements for the benefit of JJI, and, to the
Knowledge
of JJI,
no
employee or third party is in Breach or default of any such agreement and (ii)
JJI and each of its Subsidiaries have taken all reasonable precautions to
protect the secrecy, confidentiality and value of each of their Trade
Secrets.
2.8.6
No
Settlements, Restrictions or Third Party Use.
Except
as set forth on Schedule 2.8.6, there are no settlements, forbearances to ▇▇▇,
consents, judgments, orders or other obligations that do or may: (i) restrict
any rights of JJI or any Subsidiary of JJI to use any Owned Intellectual
Property or other JJI Intellectual Property, (ii) restrict the conduct of the
business of JJI or any Subsidiary of JJI in order to accommodate a third party’s
Intellectual Property, or (iii) permit any third party to use any Owned
Intellectual Property.
2.8.7
Employee
Contracts.
Except
as set forth in Schedule 2.8.7, all former employees (who have been an employee
of JJI or its Subsidiaries at any time on or after January 1, 2004) and all
current employees of JJI and its Subsidiaries have executed written contracts
with JJI or its Subsidiaries that assign to JJI or its Subsidiaries all rights
to any inventions, improvements, discoveries or information relating to the
business of JJI or its Subsidiaries. No employee of JJI or any of its
Subsidiaries has entered into any Contractual Obligation that restricts or
limits in any way the scope or type of work in which the employee may be
engaged, requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than JJI or its Subsidiaries, or limits
the
ability of any such employee to assign to JJI, its Subsidiaries or any other
Person any rights to any invention, improvement or discovery.
2.8.8
Impact
of Agreement.
The
execution of this Agreement and the consummation of the Transaction will not
result in the loss or impairment of any of JJI’s rights in or to any Owned
Intellectual Property or any other JJI Intellectual Property.
26
2.9
Employee Matters.
2.9.1
Schedule 2.9.1:
2.9.1.1
contains a complete and accurate list of the following information for each
employee, director, independent contractor and consultant of JJI and its
Subsidiaries, including each employee on leave of absence or layoff status:
employer; name; job title; date of hiring or engagement; current compensation
paid or payable and any change of 5% or more in compensation since December
31,
2005; sick and vacation leave that is accrued but unused; 2005 MIC bonuses,
estimated 2006 MIC bonuses and any other partially or fully accrued bonuses;
health insurance options; and service credited for purposes of vesting and
eligibility to participate under any Plan, or any other employee or director
benefit plan;
2.9.1.2
contains a complete and accurate list of the following information for each
retired employee or director of JJI and its Subsidiaries, or their dependents,
receiving benefits or scheduled to receive benefits in the future: name; pension
benefits; pension option election; retiree medical insurance coverage; retiree
life insurance coverage; and other benefits;
2.9.1.3
states the number of employees terminated by JJI and its Subsidiaries since
December 31, 2004, and contains a complete and accurate list of the following
information for each such employee of JJI and its Subsidiaries who has been
terminated or laid off, or whose hours of work have been reduced by more than
fifty percent (50%) by JJI and its Subsidiaries: (i) the date of such
termination, layoff or reduction in hours; (ii) the reason for such termination,
layoff or reduction in hours; and (iii) the location to which the employee
was
assigned.
2.9.2
JJI
and its Subsidiaries have not violated the Worker Adjustment and Retraining
Notification Act or any similar foreign, state or local Law.
2.9.3
To
the Knowledge of JJI, no former or current employee, officer, director, agent,
consultant or contractor of JJI or any of its Subsidiaries is a party to, or
is
or has been otherwise bound by, any Contractual Obligation that in any way
adversely affected, affects, or will affect the ability of JJI or its
Subsidiaries or Parent to conduct the business as heretofore carried on by
JJI
and its Subsidiaries.
2.9.4
Except as set forth on Schedule 2.9.4,
2.9.4.1
neither JJI nor any Subsidiary of JJI nor any of the respective employees of
any
of them is subject to any collective bargaining agreement,
2.9.4.2
no petition for certification or union election is pending with respect to
the
employees of JJI or any of its Subsidiaries and no union or collective
bargaining unit has sought such certification or recognition with respect to
the
employees of JJI or any of its Subsidiaries in the last five (5)
years,
27
2.9.4.3
there are no strikes, slowdowns, work stoppages or material controversies
pending or, to the Knowledge of JJI, threatened between JJI or any of its
Subsidiaries and its respective employees, other than employee grievances
arising in the ordinary course of business,
2.9.4.4
hours worked by and payment made to employees of JJI comply with the Fair Labor
Standards Act and each other federal, state, provincial, local or foreign Law
applicable to such matters; and
2.9.4.5
neither JJI nor any Subsidiary of JJI is party to any employment
contracts.
2.9.5
Upon payment of the amount established in connection with Section 1.7.1.1.9,
neither the Surviving Company nor any Subsidiary of the Surviving Company (other
than ▇▇▇▇▇▇▇▇▇▇▇) will have any obligation to pay severance benefits except
the
standard severance benefits provided by Parent’s Affiliates.
2.10
Litigation;
Adverse Facts.
Except
as set forth on Schedule 2.10, there are no judgments, orders, writs,
injunctions or decrees outstanding against JJI or any Subsidiary of JJI or
affecting any property of JJI or any of its Subsidiaries as
of the
Effective Time, nor is there any Litigation pending, or to the Knowledge of
JJI
threatened, against JJI or any of its Subsidiaries or their respective officers,
directors, or employees in their capacities as such. To JJI’s Knowledge, there
are no facts that would reasonably be expected to give rise to Litigation that,
individually or in the aggregate, has had or, if adversely determined, would
reasonably be expected to result in any Material Adverse Effect, taken as a
whole, or materially impair the ability of JJI to consummate the Merger or
other
Transactions contemplated hereby.
2.11
Ownership
of Property and Assets; Liens.
2.11.1
The real estate (“Real Estate”) listed in Schedule 2.11 constitutes all of the
real property owned, leased, subleased, or used by JJI or any of its
Subsidiaries. Schedule 2.11 further describes any Real Estate with respect
to
which JJI or any of its Subsidiaries is a lessor or sublessor. A true and
complete copy of each lease has heretofore been made available to Parent. Use
of
the Real Estate for the various purposes for which it is presently being used
is
permitted as of right under all applicable zoning legal requirements and is
not
subject to “permitted nonconforming” use or structure classifications.
2.11.2
All Improvements on the Owned Real Estate are (i) in compliance with all
applicable Laws, including those pertaining to zoning, building and the
disabled, (ii) in good repair and in good condition, ordinary wear and tear
excepted, and (iii) free from latent and patent defects. No part of any
Improvement on the Owned Real Estate encroaches on any real property not
included in the Owned Real Estate, and there are no buildings, structures,
fixtures or other improvements primarily situated on adjoining property which
encroach on any part of the
28
Owned
Real Estate. The land which is a part of the Owned Real Estate (i) abuts on
and
has direct vehicular access to a public road or has access to a public road
via
a permanent, irrevocable, appurtenant easement benefiting such land and
comprising a part of the Owned Real Estate, (ii) is supplied with public or
quasi-public utilities and other services appropriate for the operations located
thereon and (iii) is not located within any flood plain or area subject to
wetlands regulation or any similar restriction. There is no existing or proposed
plan to modify or realign any street or highway or any existing or proposed
eminent domain proceeding that would result in the taking of all or any part
of
any Owned Real Estate or that would prevent or hinder the continued use of
any
Owned Real Estate as heretofore used in the conduct of the business of JJI
and
its Subsidiaries.
2.11.3
To
JJI’s Knowledge, all Improvements on the Leased Real Estate are (i) in
compliance with all applicable Laws, including those pertaining to zoning,
building and the disabled, (ii) in good repair and in good condition, ordinary
wear and tear excepted, and (iii) free from latent and patent defects. To JJI’s
Knowledge, no part of any Improvement on the Leased Real Estate encroaches
on
any real property not included in the Leased Real Estate, and there are no
buildings, structures, fixtures or other improvements primarily situated on
adjoining property which encroach on any part of the Leased Real Estate. To
JJI’s Knowledge, the land which is a part of the Leased Real Estate (i) abuts on
and has direct vehicular access to a public road or has access to a public
road
via a permanent, irrevocable, appurtenant easement benefiting such land and
comprising a part of the Leased Real Estate, (ii) is supplied with public or
quasi-public utilities and other services appropriate for the operations located
thereon and (iii) is not located within any flood plain or area subject to
wetlands regulation or any similar restriction. To JJI’s Knowledge, there is no
existing or proposed plan to modify or realign any street or highway or any
existing or proposed eminent domain proceeding that would result in the taking
of all or any part of any Leased Real Estate or that would prevent or hinder
the
continued use of any Leased Real Estate as heretofore used in the conduct of
the
business of JJI and its Subsidiaries.
2.11.4
Each of JJI or one of its Subsidiaries has, and at the Effective Time will
have,
good and valid fee simple title to all the Real Estate reflected on Schedule
2.11 except for Real Estate described as leased on Schedule 2.11 and with
respect to the Real Estate described as leased on Schedule 2.11, JJI or one
of
its Subsidiaries has, and at the Effective Time will have, a good and valid
leasehold interest in each parcel of such Real Estate.
2.11.5
Except as set forth on Schedule 2.11.5, each of JJI and its Subsidiaries has
good title to, or valid leasehold interests in, all personal property (in each
case, tangible and intangible) used by JJI or necessary to permit JJI and its
Subsidiaries to conduct their businesses as currently conducted. The personal
properties (in each case, tangible and intangible), owned or used by JJI and
its
Subsidiaries are in satisfactory condition and repair for their continued use
as
they have been used and adequate in all material respects for their current
use,
subject to reasonable wear and tear.
2.11.6
Except as set forth on Schedule 2.11.6, to the Knowledge of JJI, the buildings,
plants and structures (collectively, the “Improvements”) and equipment of JJI
and its
29
Subsidiaries,
whether owned or leased by JJI or its Subsidiaries, are structurally sound,
are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such Improvements or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
that
are not material in nature or cost. To the Knowledge of JJI, the Improvements
and equipment of JJI and its Subsidiaries are sufficient for the continued
use
by JJI and its Subsidiaries after the Closing in substantially the same manner
as used by JJI and its Subsidiaries prior to the Closing. No portion of JJI’s or
any of its Subsidiaries’ Real Estate has suffered any material damage by fire or
other casualty loss that has not heretofore been repaired and restored in all
material respects to its original condition or otherwise remedied.
2.11.7
Except as set forth on Schedule 2.11.7, none of the Real Estate, Improvements,
or personal property of JJI or any of its Subsidiaries is subject to any Liens
other than Permitted Encumbrances, and there are no facts, circumstances or
conditions that, to the Knowledge of JJI, are reasonably likely to result in
any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances against the Real Estate or personal property of JJI or any of
its
Subsidiaries. Except as would not have a Material Adverse Effect, each of JJI
and each of its Subsidiaries has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale
and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect JJI’s and each such Subsidiary’s
right, title and interest in and to all such Real Estate and material personal
property. Schedule 2.11 also describes any purchase options, rights of first
refusal or other similar contractual rights or obligations pertaining to any
Real Estate and material personal property. All material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied
and
used have been lawfully issued and are in full force and effect.
2.12
Environmental
Matters.
2.12.1
Except as set forth in Schedule 2.12 with respect to Germany and except for
matters related to the Other Agreed U.S. Environmental Issues, the Omega
Chemical Site and the ▇▇▇▇▇▇ Valley Site:
2.12.1.1
(i) neither JJI nor any Subsidiary has caused or permitted any Release of
Hazardous Materials on, at, under, or from any of their Real Estate, and (ii)
neither JJI nor any Subsidiary of JJI has any liability for the disposal or
contamination of any Hazardous Materials on any third party
property;
2.12.1.2
JJI, each of Subsidiary of JJI and the Real Estate are in compliance with all
Environmental Laws;
2.12.1.3
JJI and each Subsidiary of JJI has obtained, and is in compliance with, all
Environmental Permits required by Environmental Laws for the operation of the
Real
30
Estate
and their respective businesses as presently conducted, and all such
Environmental Permits are in effect;
2.12.1.4
to the Knowledge of JJI there are no events, occurrences or conditions,
including any Releases of Hazardous Materials, which would reasonably be
expected to result in any Environmental Liabilities of JJI or any Subsidiary
of
JJI;
2.12.1.5
there is no Litigation arising under any Environmental Laws or Environmental
Permits that (i) seeks damages, penalties, fines, costs or expenses, (ii) could
result in injunctive relief against JJI or any of Subsidiary of JJI, or (iii)
alleges criminal misconduct by JJI or any Subsidiary of JJI;
2.12.1.6
no written notice has been received by JJI or any Subsidiary of JJI identifying
any of them as a “potentially responsible party” or requesting information under
CERCLA or analogous state statutes, and, to the Knowledge of JJI, there are
no
facts, circumstances or conditions that would reasonably be expected to result
in any of JJI or its Subsidiaries being identified as a “potentially responsible
party” under CERCLA or analogous state statutes; and
2.12.1.7
JJI has provided to Parent copies of all existing environmental reports, reviews
and audits and all material written information pertaining to actual or
potential Environmental Liabilities, in each case in possession of JJI or any
of
its Subsidiaries and relating to any of JJI, any of its Subsidiaries or any
of
the Real Estate.
2.12.2
With respect to the Other Agreed U.S. Environmental Issues, the Omega Chemical
Site and the ▇▇▇▇▇▇ Valley Site:
2.12.2.1
To JJI’s Knowledge, JJI has provided to Parent copies of all existing
environmental reports, reviews and audits and all material written information
pertaining to actual or potential Environmental Liabilities, in each case in
possession of JJI or any of its Subsidiaries and relating to any of JJI, any
of
its Subsidiaries or any of the Real Estate.
2.12.2.2
To JJI’s Knowledge, JJI has provided Parent with all such other material
information and knowledge as JJI or any of its Subsidiaries may have or know
regarding the potential Adverse Consequences to JJI and its
Subsidiaries.
2.12.2.3
The amount set forth in Section 1.7.1.2.5 for the ▇▇▇▇▇▇ Valley Site Estimated
Costs is the collective amount that JJI and Yort, Inc. will be required to
pay
with respect to the ▇▇▇▇▇▇ Valley Site.
2.13
ERISA.
2.13.1
Schedule 2.13.1 contains a true and complete list of each “employee benefit
plan” (within the meaning of Section 3(3) of ERISA) and all other employee
benefit
31
plans,
contracts, agreements, practices, policies or arrangements, written or oral
and
whether or not subject to ERISA, which JJI or any of its Subsidiaries maintains,
contributes to, is a party to or otherwise has or could have any obligation
under, with respect to any current or former officer, director, employee and/or
independent contractor of JJI or its Subsidiaries, as of the Effective Time
(collectively, the “Plans”), including the following plans: all employment,
severance, change-in-control and fringe benefit plans; all stock option, stock
bonus and stock purchase programs; all retirement income, pension benefit or
other retirement plan or benefit; all bonus, profit sharing, gain sharing,
deferred compensation, retention bonus, or other similar plans.
2.13.2
Each Plan (and each related trust or insurance contract) complies in form and
in
operation in all material respects with the applicable requirements of ERISA
and
the Code. All
required reports and descriptions (including but not limited to Form 5500 annual
reports and required attachments, Forms 1099-R, summary annual reports, Forms
PBGC-1 and summary plan descriptions) have been filed or distributed
appropriately with respect to each Plan. All required Tax filings with respect
to each Plan have been made, and any Taxes due in connection with such filings
have been paid. All
contributions (including all employer contributions and employee salary
reduction contributions), premiums and expenses which are due have been paid
to
or on behalf of each Plan and appropriate accruals have been made for amounts
not yet due but accrued. Each Plan that is an “employee pension benefit plan”
(within the meaning of Section 3(2) of ERISA) and is intended to be qualified
under Section 401(a) of the Code (a “Pension Benefit Plan”), has timely applied
for or received a determination letter from the IRS or the prototype sponsor
with respect to any prototype plan has timely applied for or received an opinion
letter from the IRS to the effect that it meets the requirements of Section
401(a) of the Code and, to JJI’s knowledge, no facts exist that would adversely
affect the qualified status of any such Pension Benefit Plan other than the
failure to make any required amendments, the time for the adoption of which
has
not expired. The trusts maintained under such Pension Benefit Plans are exempt
from taxation under Section 501(a) of the Code. Neither JJI nor any of its
Subsidiaries nor any trustee or any fiduciary of any of the Plans has engaged
in
any prohibited transaction within the meaning of Sections 406 or 407 of ERISA
or
Section 4975 of the Code with respect to any of the Plans that could result
in
the imposition of any material liability on such Plan or JJI or for which no
exemption exists under Section 408 of ERISA or Section 4975(d) of the Code.
2.13.3
Except
as
set forth in Schedule 2.13.3, neither JJI nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Plan, other than
coverage as may be required under Section 4980B of the Code or Part 6 of Title
I
of ERISA. To JJI’s Knowledge, no event or condition exists with respect to a
Plan that could subject JJI to Tax under Section 4980B of the Code.
2.13.4
Except as set forth in Schedule 2.13.4, as of the last day of the most recent
prior plan year, the market value of assets under each Pension Benefit Plan
subject to Title IV of ERISA (a “Defined Benefit Pension Plan”), other than any
Multiemployer Plan, equaled or exceeded the present value of benefit liabilities
thereunder (determined in accordance with the
32
actuarial
valuation assumptions described on Schedule 2.13.4). No Defined Benefit Pension
Plan (other than any Multiemployer Plan) has, in the past five years, 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 Defined Benefit Pension Plan (other than any
Multiemployer Plan) has been instituted. In the past five years, neither JJI
nor
any Subsidiary has incurred any liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
liability) with respect to any Defined Benefit Pension Plan that JJI or any
Subsidiary maintains or to which JJI or any Subsidiary contributes for the
benefit of any current or former employee.
2.13.5
Except as provided in Schedule 2.13.5, (i) no transaction or event has occurred
with respect to any Plan which would be reasonably likely to result in a
liability which would, individually or in the aggregate, have a Material Adverse
Effect; (ii) neither JJI nor its Subsidiaries has any commitment, intention
or
understanding to create, modify, terminate or adopt any Plan that would result
in any additional liability to Parent or its Subsidiaries; and (iii) since
the
beginning of the current fiscal year of any Plan, no event has occurred and
no
condition or circumstance has existed which would be reasonably likely to result
in a material increase in the benefits under or the expense of maintaining
such
Plan maintained by JJI and/or its Subsidiaries from the level of benefits or
expenses incurred for the most recently completed fiscal year of such
Plan.
2.13.6
At
all times on and after the effective date of ERISA, neither JJI nor any of
JJI’s
Subsidiaries has maintained, contributed to or otherwise had any obligation
with
respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA)
(“Multiemployer Plan”) except as set forth on Schedule 2.13.6, and neither JJI
nor any of its Subsidiaries has any withdrawal or other liability or exposure
under any Multiemployer Plan except as set forth on Schedule
2.13.6.
2.13.7
Except as provided in Schedule 2.13.7, the execution and performance of the
Transactions contemplated by this Agreement will not (either alone or upon
the
occurrence of any additional or subsequent events) constitute an event under
any
Plan or agreement that will or may reasonably be expected to result in any
payment (whether of severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee, former employee or director
or officer of JJI, or its Subsidiaries.
2.13.8
THIS SECTION INTENTIONALLY LEFT BLANK.
2.13.9
To
the Knowledge of JJI, neither JJI nor its Subsidiaries maintained any Plan
which
is a “group health plan” (as such term is defined in Section 5000(b)(1) of the
Code) that has not been administered and operated in all respects in compliance
with the applicable requirements of Section 601 of ERISA and Section 4980(b)
of
the Code, and JJI and its Subsidiaries are not subject to any liability,
including, without limitation, additional contributions, fines, penalties or
loss of tax deduction as a result of such administration and
operation.
33
2.13.10
With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of JJI or any Subsidiary as of
the
Effective Time under any such insurance policy or ancillary agreement with
respect to such insurance policy in the nature of a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability arising wholly
or partially out of events occurring prior to the Effective Time.
2.13.11
No charge, complaint, action, suit, proceeding, hearing, investigation, claim
or
demand with respect to the investment of the assets or the administration of
any
Plan that JJI or any Subsidiary maintains or to which JJI or any Subsidiary
contributes or the benefit of any current or former employee of JJI or any
Subsidiary (other than a routine claim for benefit) is pending.
2.13.12
Except as set forth on Schedule 2.13.12, neither JJI nor any entity considered
under common control with JJI (within the meaning of Section 414(b), (c), (m)
or
(o) of the Code) has incurred any liability in connection with the termination
of a Pension Benefit Plan subject to Title IV of ERISA, the complete or partial
withdrawal from a Multiemployer Plan subject to Title IV of ERISA, or the
failure to make contributions due under Section 412 of the Code or premiums
due
to the PBGC under Title IV of ERISA, which liability will not have been
satisfied as of the Effective Time.
2.13.13
With respect to all operations of JJI and its Subsidiaries other than those
operations in the United States, the Plans have at all times substantially
complied with and been administered in accordance with applicable Laws,
regulations and government taxation or funding requirements. In particular,
but
without limitation, JJI does not have Knowledge of any failure to comply with
any applicable Law, regulation or requirement, or any other circumstance, which
would or is likely to result in the loss of tax approval or other regulatory
approval for any of the Plans which are intended to have such
approval.
2.14
Agreements
and Other Documents.
2.14.1
Except for the documents specifically identified in Schedule 2.14, neither
JJI
nor any of its Subsidiaries is a party to or bound by or subject to, in each
case whether written or oral: (i) any Contractual Obligation relating to the
incurrence of indebtedness from a third party (including sale and leaseback
transactions, capitalized lease transactions, and other similar financing
transactions), including any such contract that contains provisions that in
any
non-de-minimis manner restrict, or may restrict, the conduct of business of
the
issuer thereof as currently conducted, (ii) any non-competition contract or
any
other Contractual Obligation or material obligation that purports to limit
in
any respect the manner or the localities in which the business of JJI or any
of
its Subsidiaries, or following consummation of the Merger, any business of
Parent or any Subsidiary or Affiliate of Parent, is or would be conducted,
(iii)
any Contractual Obligation or other agreement that relates primarily to
indemnification by JJI or any of its Subsidiaries of any Person, (iv) any joint
venture or partnership Contractual Obligation, (v) any Contractual Obligation
that grants any right of first refusal or right of first offer or similar right,
or that limits or purports to limit the ability of JJI or any of its
Subsidiaries to own, operate, sell,
34
transfer,
pledge, or otherwise dispose of any material amount of assets or business of
JJI
and its Subsidiaries, taken as a whole, (vi) any Contractual Obligation
providing for any future payments that are conditioned, in whole or in part,
on
a change of control of JJI or any of its Subsidiaries or similar event, (vii)
any Contractual Obligation that contains a “most favored nation” clause or
requires any type of exclusive dealing or similar arrangement by JJI or any
of
its Subsidiaries, (viii) any agency, sales representative or similar Contractual
Obligation which is not either (A) entirely in the form of one of JJI’s standard
agreements provided to Parent and listed on Schedule 2.14.1 or (B) both
substantially in the form of one of JJI’s standard agreements (so provided to
Parent and listed on Schedule 2.14.1) and a copy of each specific agreement
has
been provided to Parent (except for any agreement entered into in the ordinary
course of JJI’s business which is terminable by JJI without cause on 90 days or
less notice and without any termination payment or penalty being required from
JJI or any Subsidiary of JJI), (ix) any guarantee agreement or arrangement,
(x)
any “stop loss” agreement or arrangement, (xi) any Contractual Obligation with,
or restriction imposed by, a Governmental Authority or other third party
relating to the payment of dividends or maintenance of capital by JJI or any
of
its Subsidiaries, (xii) any Contractual Obligation to make any loan, advance,
or
capital contribution to, or investment in, any Person other than a direct or
indirect wholly owned Subsidiary of JJI, (xiii) any lease of personal property
where the annual payments exceed $25,000, any lease of Real Estate and any
lease
of personal property which is a capital lease, (xiv) any Contractual Obligation
granting or obtaining any right to use or practice any rights in connection
with
any Intellectual Property (other than licenses for readily available commercial
software having aggregate acquisition prices of less than $50,000), (xv) any
material outsourcing Contractual Obligation, (xvi) any Contractual Obligation
with any labor union or other employee representative of a group of employees
relating to wages, hours or other conditions of employment, (xvii) any
Contractual Obligation (however named) involving a sharing of profits, losses,
costs or liabilities by JJI with any other Person, (xviii) any Contractual
Obligation providing for payments to or by any Person based on sales (except
for
any standard sales representative agreement in a form referenced in Schedule
2.14.1 pursuant to which the sales representative is not entitled to any
commission or other payment not provided for in such standard sales
representative agreement), purchases or profits, other than direct payments
for
goods, (xix) any power of attorney of JJI or any of its Subsidiaries that is
currently effective and outstanding, except for freight forwarding and U.S.
Customs related powers of attorney entered into in the ordinary course of
business and consistent with JJI’s past practices, (xx) any Contractual
Obligation entered into other than in the ordinary course of business and
consistent with JJI’s past practices that contains or provides for an express
undertaking by JJI or any of its Subsidiaries to be responsible for
consequential damages, (xxi) any Contractual Obligation for capital expenditures
by JJI or any of its Subsidiaries (except for Contractual Obligations for
capital expenditures less than $50,000 as long as the aggregate of any
Contractual Obligations for capital expenditures by JJI or any Subsidiary of
JJI
not listed pursuant to the exception in this parenthetical clause does not
exceed $300,000), (xxii) any other Contractual Obligation or Contractual
Obligations of JJI not listed above that involve annual sales by or revenues
of
JJI or its Subsidiaries in excess of $1,000,000, (xxiii) any other Contractual
Obligation of JJI not listed above that involve annual expenditures in excess
of
$50,000, (xxiv) any distributor or similar Contractual Obligation or (xxv)
any
other Contractual Obligation not listed above that is material
35
to
JJI
and its Subsidiaries taken as a whole (the Contractual Obligations of a type
covered by clauses (i) to (xxv), including all standard form agency agreements,
sales representative agreements, distributor agreements and any other form
Contractual Obligations used by JJI or any of its Subsidiaries, being referred
to as the “Material Contracts”). JJI has listed in Schedule 2.14 or 2.14.1 and
made available to Parent true, correct and complete copies of each such Material
Contract. Schedule 2.14 also lists, respectively, all parties, other than JJI
or
any of its Subsidiaries, to JJI’s agency agreements, sales representative
agreements and distributor agreements.
2.14.2
Each Material Contract is a legal, valid, and binding obligation of JJI or
the
applicable Subsidiary of JJI (as the case may be) and, to the Knowledge of
JJI,
of each other party thereto, enforceable against each party in accordance with
its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar Laws generally affecting the rights of creditors and subject to general
equity principles.
2.14.3
Except as set forth in Schedule 2.14 or as would not reasonably be expected
to
have a Material Adverse Effect, (i) since January 1, 2004, no other party to
a
Material Contract has canceled or otherwise terminated any Material Contract
or
has provided written or oral notice to JJI or any of its Subsidiaries of its
intent to do so and (ii) to the Knowledge of JJI, no third party to any Material
Contract is unable to continue to perform its obligations
thereunder.
2.14.4
Neither JJI nor any Subsidiary of JJI is in default under any Contractual
Obligation, agreement, commitment, arrangement, lease, insurance policy or
other
instrument to which it is a party, by which its assets, business, or operations
may be bound or affected, or under which it or its respective assets, business
or operations receives benefits, and there has not occurred any event that,
with
the lapse of time or the giving of notice or both, would constitute such a
default or give any party other than JJI or a Subsidiary of JJI the right to
exercise any remedy under, or to accelerate the maturity or performance of,
or
to cancel, terminate, or modify such contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument.
To the
Knowledge of JJI, except as would not have a Material Adverse Effect, no party
other than JJI or a Subsidiary of JJI is in default under any Contractual
Obligation, agreement, commitment, arrangement, lease, insurance policy or
other
instrument to which it is a party, by which its assets, business, or operations
may be bound or affected, or under which it or its respective assets, business
or operations receives benefits, and there has not occurred any event that,
with
the lapse of time or the giving of notice or both, would constitute such a
default or give JJI or any Subsidiary of JJI or any other party the right to
exercise any remedy under, or to accelerate the maturity or performance of,
or
to cancel, terminate, or modify such contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument.
2.14.5
None of the Transactions will conflict with, result in a Breach of, or
constitute a default (with due notice or lapse of time or both), under any
Contractual Obligation binding on JJI or any of its Subsidiaries where such
violations, conflicts, breaches or defaults
36
will
have
(or a fully informed Person would reasonably expect then to have) in the
aggregate, Adverse Consequences in excess of $50,000.
2.14.6
Except as set forth on Schedule 2.14.6 and matters which would not have a
Material Adverse Effect, none of the Transactions will trigger a consent
requirement under any Contractual Obligation binding on JJI or any of its
Subsidiaries or result in the termination of any Contractual Obligation binding
on JJI or any of its Subsidiaries.
2.14.7
Following the payment of the amount specified in each Pay Off Letter relating
to
a Terminated Contract at or within a reasonable time following the Effective
Time (i) neither JJI nor any Subsidiary of JJI will have any obligation
following the Effective Time in connection with any Terminated Contract except
an obligation to provide employee benefits (including any applicable severance
benefits) in accordance with Parent’s applicable policy at the relevant time,
awarding credit for service of such employee with JJI and (ii) the obligations
of the employee which existed under such Terminated Contract with respect to
any
period prior to the Effective Time shall continue to be fully enforceable by
JJI
and its Subsidiaries.
2.15
Insurance.
Schedule 2.15 lists all insurance policies of any nature maintained, as of
the
Effective Time, for current occurrences by JJI, as well as a summary of the
key
business terms of each such policy such as deductibles, coverage limits and
term
of policy.
2.16
Taxes
and Tax Returns.
All Tax
Returns required to be filed (taking into account all applicable extensions)
by
JJI and its Subsidiaries have been timely and properly filed. All Taxes that
are
due and payable (other than Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided for in accordance
with GAAP) have been paid. All such Tax Returns and amendments thereto are
true,
complete and correct in all material respects. No Governmental Authority has
asserted (either in the form of a communication directed specifically to JJI
or
any of its Subsidiaries or in connection with any audit, examination,
investigation, administrative proceeding or court proceeding) in writing any
claim or adjustment for Taxes, or to JJI’s Knowledge, threatened to assert any
claim or adjustment for Taxes that was not fully satisfied prior to December
31,
2005. All Taxes required by Law to be withheld or collected and remitted
(including, without limitation, income tax, unemployment insurance and workers’
compensation premiums) with respect to JJI and each of its Subsidiaries have
been withheld or collected and paid to the appropriate Governmental Authorities
(or are properly being held for such payment).
2.16.1
JJI and each of its Subsidiaries have made adequate provision as reflected
on
their Financial Statements for any Taxes that are not yet due and payable for
all taxable periods, or portions thereof, required by GAAP to be reflected
on
the balance sheets included in the Financial Statements or provided pursuant
to
Section 4.17. The unpaid Taxes of JJI and its Subsidiaries (i) did not, as
of
the most recent Financial Statements of JJI and its Subsidiaries, exceed to
any
material extent 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 such Financial Statements (rather than in
any
notes thereto), and (ii) do not exceed that
37
reserve
as adjusted for the passage of time since the date of such Financial Statements
in accordance with the past custom and practice of JJI and its Subsidiaries
in
filing their Tax Returns.
2.16.2
Except as set forth on Schedule 2.16, no Federal, state, local or foreign
audits, examinations, investigations or other administrative proceedings or
court proceedings are presently pending or threatened in writing with regard
to
any Taxes or Tax Returns filed by or on behalf of JJI or any of its
Subsidiaries.
2.16.3
There are no liens for Taxes upon any property or assets of JJI or any of its
Subsidiaries, except for liens for Taxes not yet due or for Taxes being
contested in good faith for which adequate reserves have been made on the
Financial Statements.
2.16.4
Neither JJI nor any of its Subsidiaries maintains any compensation plans,
programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m)
of
the Code or the regulations issued thereunder.
2.17
Inactive
Subsidiary.
Yort
does not have assets having an aggregate value in excess of $50,000, and
conducts no business and does not have any Liabilities or obligations other
than
Liabilities relating to the Omega Chemical Site or ▇▇▇▇▇▇ Valley
Site.
2.18
Stockholders’
Agent.
Upon
consummation of the Merger, the Stockholders’ Agent will serve as the
representative of the Stockholders who have delivered Letters of Transmittal
as
contemplated by this Agreement and act on behalf of the Stockholders who have
delivered Letters of Transmittal as contemplated by this Agreement with respect
to matters expressly set forth in this Agreement to be or which may be performed
by the Stockholders’ Agent. Parent and Merger Sub shall be entitled to rely upon
any action taken by the Stockholders’ Agent as if it is the action of the
Stockholders who have delivered Letters of Transmittal as contemplated by this
Agreement.
2.19 Disclaimer
of Other Representations and Warranties.
Except
as otherwise provided in this Agreement:
2.19.1 JJI
HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY
NATURE WHATSOEVER RELATING TO JJI OR THE BUSINESS OF JJI OR OTHERWISE IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT.
2.19.2 Without
limiting the generality of the foregoing, except for the representations and
warranties set forth in this Agreement, (i) neither JJI nor any representative
of JJI has made, and shall not be deemed to have made, any representations
or
warranties in the materials relating to the business of JJI made available
to
Parent and Merger Sub, including due
38
diligence
materials, or in any presentation of the business of JJI by management of JJI
or
others in connection with the Transactions contemplated hereby, and (ii) no
statement contained in any of such materials or made in any such presentation
shall be deemed a representation or warranty hereunder or otherwise or deemed
to
be relied upon by Parent or Merger Sub in executing, delivery and performing
this Agreement and the Transactions contemplated hereby. Except for the
representations and warranties set forth in this Agreement, it is understood
that (i) any cost estimates, projections or other predictions, any data, any
financial information or any memoranda or offering materials or presentations,
including but not limited to any offering memorandum or similar materials made
available by JJI and its representatives (“JJI’s Representatives”), are not and
shall not be deemed to be or to include representations or warranties of JJI,
and (ii) such matters are not and shall not be deemed relied upon by Parent
or
Merger Sub in executing, delivering and performing this Agreement and the
Transactions contemplated hereby.
2.20
No
Undisclosed Liabilities.
Except
for liabilities and obligations incurred in the ordinary course of business
and
consistent with past practice or
except
as set forth on Schedule 2.20, since December 31, 2005, neither JJI nor any
of
its Subsidiaries has incurred any Liabilities of any nature, whether or not
accrued, contingent or otherwise. As of the Closing Date and immediately prior
to the Effective Time, JJI (on a consolidated basis with all of its
Subsidiaries) does not and will not have any Liabilities other than Pay Off
Liabilities, Price Reduction Liabilities, Working Capital Liabilities,
Liabilities which are Agreed Deductions, or the Liabilities specified in part
(i), (ii) or (iii) of Section 1.7.1.3.5, all of which Pay Off Liabilities,
Price
Reduction Liabilities and Liabilities which are Agreed Deductions shall be
fully
and accurately disclosed to Parent in certificates delivered at the Closing
pursuant to Section 5.2.4. Neither JJI nor any Subsidiary of JJI will have
any
Liability in connection with the subject matter of any Pay Off Liability which
is paid in accordance with the Pay Off Letter relating to that Pay Off
Liability.
2.21
Inventory.
Except
as set forth in Schedule 2.21, all of the Inventory of JJI and each of its
Subsidiaries consists of a quality and quantity usable and salable in the
ordinary and usual course of business, except for items of obsolete materials
and materials of below-standard quality, all of which items have been written
off or written down on the applicable balance sheet to fair market value or
for
which adequate reserves have been provided therein. All Inventories not written
off have been and will be valued in each of the Financial Statements and will
be
valued in calculating Working Capital at the lower of cost or market on a first
in first out basis, all in accordance with GAAP. To the Knowledge of JJI, all
of
JJI’s finished goods inventory is free of any material defect or other
deficiency.
2.22
Accounts
Receivable.
All
Accounts Receivable of JJI and its Subsidiaries that are reflected on each
balance sheet included in the Financial Statements represent or will represent
as of the effective date of each such balance sheet valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Except as set forth in Schedule 2.22, there is no contest, claim,
defense or right of set-off, other than routine returns in the ordinary course
of business where the aggregate volume thereof is consistent with normal prior
practice, under any Contractual Obligation with any obligor of any Accounts
Receivable
39
relating
to the amount or validity of such Accounts Receivable or otherwise with respect
to any Accounts Receivable. The reserve for bad debts set forth in the balance
sheets included in the Financial Statements has been (or in the case of the
Financial Statement referenced in Section 4.17 will, when delivered pursuant
to
this Agreement, be) established in accordance with GAAP applied on a consistent
basis.
2.23
Takeover
Statutes Inapplicable.
The
Board of Directors of JJI has taken all necessary action so that no “fair
price,” “moratorium,” “control share acquisition” or other anti-takeover Law
(each, a “Takeover Statute”) (including the interested stockholder provisions
codified in Section 203 of the DGCL) or any anti-takeover provision in JJI’s
certificate of incorporation or bylaws is applicable to this Agreement, the
Merger or any of the Transactions contemplated by this Agreement. To
JJI’s
Knowledge, no other Takeover Statute or similar Law, applies or purports to
apply to the Merger, this Agreement or any of the Transactions contemplated
by
this Agreement.
2.24
Related
Party Transactions.
Except
as set forth in Schedule 2.24, there are no outstanding amounts payable to
or
receivable from, or advances by JJI, any of its Subsidiaries or any Related
Person of JJI to, and neither JJI nor any of its Subsidiaries is otherwise
a
creditor or debtor to, or party to any Contractual Obligation with, any
stockholder, director, officer, employee, Affiliate of JJI or any of its
Subsidiaries or any Related Person of any of them, or any relative of any of
the
foregoing.
2.25
Required
Vote of Company Stockholders.
The
only action of the stockholders of JJI required to adopt the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this Agreement
and
approve the Merger is the affirmative consent of the holders of a majority
of
the outstanding JJI Stock, consenting as a single class, as of the date of
the
consent. Immediately prior to the Effective Time such consent shall have been
obtained from the holders of not less than 87% of the JJI Stock and no other
vote, consent or action of the stockholders of JJI will be required by Law,
the
certificate of incorporation or bylaws of JJI as currently in effect and in
effect immediately prior to the Effective Time or otherwise to adopt the
agreement of merger (within the meaning of Section 251 of the DGCL) contained
in
this Agreement and approve the Merger.
2.26
Books
and Records.
The
books and records of JJI and each of its Subsidiaries have been fully, properly
and accurately maintained in material compliance with applicable legal and
accounting requirements, and such books and records accurately reflect in all
material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of JJI and each of its Subsidiaries. The minute
books of JJI and each of its Subsidiaries contain accurate and complete records
in all material respects of all meetings held of, and corporate action taken
by,
the stockholders, the Boards of Directors, and committees of the Boards of
Directors of JJI and each of its Subsidiaries, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
2.27
Product
Liability and Warranties.
40
2.27.1
Except as set forth in Schedule 2.27.1, there are no presently pending or,
to
the Knowledge of JJI, threatened, and since December 31, 2004, there were at
no
time pending, any civil, criminal, or administrative actions, proceedings,
suits, demands, claims, hearings, notices of violation, investigations, or
demand letters, based on any legal or equitable theory of recovery whatsoever,
relating to any alleged defect in design, manufacture, materials or workmanship,
including any failure to warn or alleged Breach of express or implied warranty,
representation, or condition relating to any product designed or manufactured
by
or on behalf of JJI or any of its Subsidiaries; provided,
however,
JJI is
not required to list in Schedule 2.27.1 any such matter that involves a claim
or
potential claim of less than $10,000 as long as the aggregate of the claims
and
potential claims for matters not listed pursuant to this proviso does not exceed
$100,000.
2.27.2
Except as set forth in Schedule 2.27.2, there have not been any product recalls
or post-sale warnings since or in effect any time after December 31, 2004 by
JJI, any Subsidiary of JJI or any Affiliate of JJI relating to a product
designed, manufactured or sold by or on behalf of JJI.
2.27.3
To
the Knowledge of JJI, no circumstances exist affecting the safety of the
products of JJI or any of its Subsidiaries that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
In
the five (5) years immediately prior to the date of this Agreement, neither
JJI
nor any of its Subsidiaries has received any notices or communications from
any
Governmental Authority relating to any product that any of them manufacture
or
sell or manufactured or sold, except as noted on Schedule 2.27.3.
2.27.4
Schedule 2.27.4 contains a complete and correct statement of all warranties,
warranty policies, service agreements and maintenance agreements of JJI and
any
of its Subsidiaries in effect as of the date of this Agreement that provide
for
warranty coverage for a period in excess of 12 months. All products designed
or
manufactured by JJI or any of its Subsidiaries and any services rendered in
the
conduct of the business of JJI or any of its Subsidiaries have been in material
conformity with all applicable standards, contractual commitments, and all
express or implied warranties. To JJI’s Knowledge, JJI has provided to Parent
(i) all existing reports and material written information regarding the High
Mast Issue and (ii) all other material information and knowledge as JJI or
any
of its Subsidiaries may have or know regarding the High Mast Issue or Adverse
Consequences which may result therefrom.
2.28
Absence
of Certain Changes and Events.
Except
as set forth in Schedule 2.28, since the date of December 31, 2004, JJI and
each
of its Subsidiaries has conducted each of their businesses only in the ordinary
course of business and there has not been any: (i) change in ownership of JJI
or
any of its Subsidiaries; (ii) amendment to the organizational documents of
JJI
or any of its Subsidiaries; (iii) payment or increase (or the adoption of a
plan
to make any payment or increase) by JJI or any of its Subsidiaries of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the ordinary course of business) employee or entry into any
employment, severance, or similar Contractual Obligation with any director,
officer, or employee; (iv) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or
41
other
Plan for or with any employees of JJI or any of its Subsidiaries; (v) damage
to
or destruction or loss of any material asset or property of JJI or any of its
Subsidiaries, whether or not covered by insurance; (vi) entry into, termination
of, or receipt of notice of termination of any license, distributorship, dealer,
sales representative, joint venture, credit, or similar agreement; (vii) sale
(other than sales of Inventory in the ordinary course of business), lease,
or
other disposition of any asset or property of JJI or any of its Subsidiaries
or
mortgage, pledge, or imposition of any lien or other encumbrance, other than
Permitted Encumbrances, on any material asset or property of JJI or any of
its
Subsidiaries, including the sale, lease, or other disposition of any of the
Intellectual Property; (viii) cancellation or waiver of any claims or rights
with a value to JJI or any of its Subsidiaries in excess of $100,000 in the
aggregate; (ix) material change in the accounting methods used by JJI or any
of
its Subsidiaries; (x) issue or sale of any of its capital stock (except for
the
issuance of shares of JJI Common Stock in connection with the exercise in
accordance with the terms of any Option or Warrant outstanding on the date
of
this Agreement and identified in Schedule 2.1.2), (xi) issue, sale or grant
of
any securities or rights convertible into, or options with respect to, warrants
to purchase or rights to subscribe for, any of its capital stock, (xii) any
recapitalization, reclassification, stock dividend, stock split or like change
in its capitalization, or (xiii) agreement, whether oral or written, by JJI
or
any of its Subsidiaries to do any of the foregoing. Except as set forth in
Schedule 2.28, since the date of December 31, 2005, there has not been any
entry
into, termination of, or receipt of notice of termination of any Contractual
Obligation or transaction involving a total remaining commitment by or to JJI
or
its Subsidiaries of at least $100,000.
2.29
THIS
SECTION INTENTIONALLY LEFT BLANK.
2.30
Relationships
with Related Persons.
No
Related Person of JJI or any Subsidiary of JJI (other than JJI or any Subsidiary
of JJI) has, or since December 31, 2004 has had, any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used
in
or pertaining to the business of JJI or any Subsidiary of JJI. Neither JJI,
any
Subsidiary of JJI nor any Related Person of JJI owns, or since December 31,
2004
has owned (of record or as a beneficial owner), an equity interest or any other
financial or profit interest in a Person that has (i) had business dealings
or a
material financial interest in any transaction with JJI or any Subsidiary of
JJI
or the business of JJI or any Subsidiary of JJI, or (ii) engaged in competition
with JJI or any Subsidiary of JJI or the business of JJI or any Subsidiary
of
JJI with respect to any line of the products or services of JJI or any
Subsidiary of JJI in any market presently served by JJI or any Subsidiary of
JJI. Except as set forth in Schedule 2.30, neither JJI, any Subsidiary of JJI
nor any Related Person of JJI or any Subsidiary of JJI is a party to any
contract with, or has any claim or right against, JJI or any Subsidiary of
JJI,
except for expense advancements made in the ordinary course.
2.31
Customers.
Schedule 2.31 lists customers with aggregate sales for each listed customer
for
the three (3) year period 2002-2005 the (“Period”) for each division and
Subsidiary of JJI to (i) Governmental Authorities (ii) customers that purchase
directly from JJI or its Subsidiaries with sales for the Period in excess of
$1,300,000, and (ii) to the seven lighting
42
distributors
in the United States with the highest amount of sales during the Period. No
buying groups are included.
2.32
Foreign
Corrupt Practices Act and Export Control and Antiboycott Laws
2.32.1
JJI, its Subsidiaries and their authorized representatives have not, to obtain
or retain business, directly or indirectly offered, paid or promised to pay,
or
authorized the payment of, any money or other thing of value (including any
fee,
gift, sample, travel expense or entertainment with a value in excess of one
hundred dollars ($100) in the aggregate to any one individual in any year)
or
any commission payment in any amount payable, to:
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(i)
|
any
person who is an official, officer, agent, employee or representative
of
any Governmental Authority;
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(ii)
any
political party or official thereof;
(iii)
any
candidate for political or political party office; or
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(iv)
|
any
other individual or entity while knowing or having reason to believe
that
all or any portion of such money or thing of value would be offered,
given, or promised, directly or indirectly, to any such official,
officer,
agent, employee, representative, political party, political party
official
or candidate.
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2.32.2
JJI, its Subsidiaries and their authorized representatives have made all
payments to third parties by check mailed to such third parties’ principal place
of business or by wire transfer to a bank located in the same jurisdiction
as
such party’s principal place of business.
2.32.3
Each transaction is properly and accurately recorded on the books and records
of
JJI and each of its Subsidiaries, and each document upon which entries in JJI’s
and each of its Subsidiaries’ books and records are based is complete and
accurate in all respects. JJI and each of its Subsidiaries maintain a system
of
internal accounting controls adequate to insure that JJI and each of its
Subsidiaries maintain no off-the-books accounts and that JJI’s and each of its
Subsidiaries’ assets are used only in accordance with JJI’s and each of its
Subsidiaries’ management directives.
2.32.4
JJI and each of its Subsidiaries has at all times been in compliance with all
Laws, regulations and rules relating to export control and trade embargoes.
No
product sold or service provided by JJI or any Subsidiary of JJI during the
last
five (5) years has been, directly or indirectly, sold to or performed on behalf
of Cuba, Iraq, Iran, Libya or North Korea.
2.32.5
Neither JJI nor any Subsidiary of JJI has violated the antiboycott prohibitions
contained in 50 U.S.C. sect. 2401 et seq. or taken any action that can be
penalized under § 999 of the Code. During the last five (5) years, except as set
forth on Schedule 2.32.5, neither JJI nor any Subsidiary of JJI has been a
party
to, is a beneficiary under or has performed any service or sold any product
under any Contractual Obligation under which a product has
43
been
sold
to customers in Bahrain, Kuwait, Lebanon, Libya, Oman, Quatar, Saudi Arabia,
Sudan, Syria, United Arab Emirates or the Republic of Yemen. Schedule 2.32.5
describes all transactions (including gross sales amounts, type of products
sold
and other details including the detailed description of each involved
Contractual Obligation) and relationships in which either JJI or any Subsidiary
of JJI has been a party to, beneficiary under or performed any service or sold
any product under any Contractual Obligation under which a product has been
sold
to any customer in Bahrain, Kuwait, Lebanon, Libya, Oman, Quatar, Saudi Arabia,
Sudan, Syria, United Arab Emirates or the Republic of Yemen.
2.33
Certain
Miscellaneous Matters.
2.33.1
JJI owns a life insurance policy on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and has
entered into the Deferred Compensation Agreement. The net cash value (reduced
by
outstanding policy loans) of such life insurance policy exceeds the amount
of
the obligations under the Deferred Compensation Agreement.
2.34
Consents.
Subject
to any filings and approvals required under the Merger Filing Laws, and except
as set forth on Schedule 2.34, no material consent, approval, permit or license
from or filing with any Governmental Authority or other Person is required
to be
obtained or made by JJI or any of its Subsidiaries in connection with the
execution, delivery and performance by JJI or any of its Subsidiaries of this
Agreement or the consummation of any of the transactions contemplated
hereby.
2.35
Pay
Off Liabilities.
Attached hereto as Schedule 2.35 (“Pay Off Liabilities Schedule”) is a true,
accurate and complete schedule of the Pay Off Liabilities as of the date of
this
Agreement. JJI shall deliver a schedule (“Effective Date Pay Off Liabilities
Schedule”) of the Pay Off Liabilities as of the Effective Time to Parent at
least forty-eight (48) hours prior to the Effective Time. The aggregate amount
of such Pay Off Liabilities as of the Effective Time shall not exceed the
amounts set forth in the Effective Date Pay Off Liabilities Schedule. Schedule
2.35 sets forth the amount of principal and unpaid interest outstanding under
each instrument evidencing indebtedness of JJI or any of its Subsidiaries which
will accelerate or become due or result in a right of redemption or repurchase
on the part of the holder of such indebtedness (with or without due notice
or
lapse of time) as a result of this Agreement, the Merger or the other
Transactions contemplated hereby or thereby.
2.36
Agreed
Deductions Subject Matter.
To
JJI’s Knowledge, JJI has provided Parent with all material information and
knowledge JJI or any of its Subsidiaries may have or know regarding the Agreed
Deductions Subject Matter and the High Mast Issue. The parties agree that no
representations are made in this Article II regarding the Agreed Deductions
Subject Matter or the High Mast Issue other than as set forth in Sections
2.12.2, 2.27.4 and this 2.36.
2.37
Disclosure.
The
representations and warranties contained in this Agreement, when considered
as a
whole, do not contain any untrue statement of a material fact or omit to state
any
44
material
fact necessary in order to make the statements and information contained in
this
Agreement not misleading.
2.38
Foreign
Stockholders.
Except
as set forth in Schedule 2.38, all of the Stockholders are citizens of the
United States of America with U.S. taxpayer identifying numbers.
2.39
Section
306 Stock.
None of
the JJI Stock is “Section 306 stock” within the meaning of
Section 306(c) of the Code.
2.40
Real
Property Holding Company.
Neither JJI nor any of its Subsidiaries is or, during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code, has been
a
U.S. real property holding company within the meaning of Code Section
897.
2.41
Withholding.
The
Merger Consideration is not subject to withholding (i) under any section of
the
Code, including sections 1441, 1442, 1445 or 3406, or regulations thereunder
or
(ii) otherwise as a result of or with respect to the Transactions.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub jointly and severally hereby represent and warrant to JJI, both
as of the date of execution of this Agreement and as of the Effective Time,
as
follows:
3.1
Organization.
Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the laws of its jurisdiction of organization and qualified
to do business in all states where such qualification is required except where
failure to be so qualified would not either prohibit consummation of the
Transactions by the Parent or Merger Sub as contemplated by this Agreement
or
have a material adverse effect on the Persons who are the Stockholders
immediately prior to the Effective Time. Each of Parent and Merger Sub has
all
requisite organizational power and authority to own and operate its properties,
to carry on their business as now conducted and proposed to be conducted, and
to
enter into this Agreement and each Transaction Document to which it is a party.
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3.2
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Authorization;
Binding Obligation.
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3.2.1
The
execution, delivery and performance of this Agreement by Parent and Merger
Sub
and the consummation of the Transactions contemplated hereby have been duly
and
validly authorized by all requisite corporate action, and no other proceedings
on their part are necessary to authorize the execution, delivery or performance
of this Agreement.
3.2.2
This Agreement is, and the other Transaction Documents when executed and
delivered will be, the legally valid and binding obligations of Parent and
Merger Sub, each enforceable against Parent and Merger Sub in accordance with
their respective terms, except as
45
may
be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws affecting, creditors’ rights generally and the effects
of general principles of equity.
3.3
No
Conflict.
Subject
to any filings and approvals required under the Merger Filing Laws, the
execution and delivery and performance of this Agreement by Parent and Merger
Sub and the consummation of the Transactions contemplated hereby do not and
will
not
3.3.1
violate or conflict with any laws, rules, regulations or orders of any
Governmental Authority or
3.3.2
violate, conflict with, result in a Breach of, or constitute a default (with
due
notice or lapse of time or both) under any (i) Contractual Obligation or (ii)
Governing Documents of Parent or Merger Sub,
except,
in the case of clause 3.3.2(i) as would not reasonably be expected to either
prohibit consummation of the Transactions by the Parent or Merger Sub as
contemplated by this Agreement or have a material adverse effect on the Persons
who are the Stockholders immediately prior to the Effective Time.
3.4
Consents.
Subject
to any filings and approvals required under the Merger Filing Laws, no material
consent, approval, permit or license from or filing with any Governmental
Authority or other Person pursuant to any material contract to which Parent
or
Merger Sub is a party is required to be obtained or made by Parent or Merger
Sub
in connection with the execution, delivery and performance by Parent or Merger
Sub of this Agreement or the consummation of any of the transactions
contemplated hereby.
3.5
Litigation.
There
are no claims, demands, causes of action, actions, suits or proceedings or,
to
the Knowledge of Parent or Merger Sub, investigations pending or threatened
against Parent or Merger Sub at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau
or
agency, domestic or foreign, which would either prohibit consummation of the
Transactions by the Parent or Merger Sub as contemplated by this Agreement
or
have a material adverse effect on the Persons who are the Stockholders
immediately prior to the Effective Time.
3.6
Disclosure.
Each of
Parent and Merger Sub has had an opportunity to ask questions of and receive
answers from JJI concerning the terms and conditions of this Agreement and
to
obtain any additional information relating to the JJI Stock and Class B Common
Stock Warrants.
3.7
Investment
Bankers.
Except
for fees payable to Sagent Advisors Inc. neither Parent nor Merger Sub has
incurred any liability, contingent or otherwise, for any investment banking
fee,
commission or financial advisory fee in connection with the transactions
contemplated by this Agreement.
3.8
Investigation.
Each of
Parent and Merger Sub has conducted such investigation of JJI as it has deemed
necessary in order to make an informed decision concerning the
46
Transactions
contemplated hereby. Each of Parent and Merger Sub has received the documents,
records, reports and other materials identified in the Schedules. Neither Parent
nor Merger Sub has relied upon any oral information or statement. Neither Parent
nor Merger Sub has any outstanding questions remaining or other pending requests
relating to its due diligence investigation of JJI.
3.9
Merger
Sub.
Merger
Sub is an Affiliate of Parent formed solely for the purpose of engaging in
the
transactions contemplated by this Agreement.
ARTICLE
IV
COVENANTS
OF THE PARTIES
4.1
Conduct
of the Business.
4.1.1
From the date hereof until the earlier of the Effective Time or the termination
of this Agreement pursuant to Article VI, JJI shall, and shall cause each of
its
Subsidiaries to, carry on its business in the ordinary and usual course of
business and consistent with past practice, and JJI will use, and will cause
each of its Subsidiaries to use, commercially reasonable efforts to preserve
intact its business organization, to keep available the services of its current
officers and employees and to preserve the goodwill of and maintain satisfactory
relationships with those Persons having business relationships with JJI or
any
of its Subsidiaries, unless Parent shall have consented in writing, which
consent will not be unreasonably withheld or delayed.
4.1.2
From the date hereof until the earlier of the Effective Time or the termination
of this Agreement pursuant to Article VI, except as consented to in writing
by
Parent, which consent will not be unreasonably withheld or delayed, neither
JJI
nor any Subsidiary of JJI will:
4.1.2.1
issue, sell or grant any of its capital stock (except for the issuance of shares
of JJI Common Stock in connection with the exercise in accordance with the
terms
of any Option or Warrant outstanding on the date of this Agreement and expressly
identified in Schedule 2.1.2, which issuance and exercise will not adversely
affect Parent or Merger Sub);
4.1.2.2
issue, sell or grant any securities convertible into, or options with respect
to, warrants to purchase or rights to subscribe for, any of its capital
stock;
4.1.2.3
effect any recapitalization, reclassification, stock dividend, stock split
or
like change in its capitalization;
4.1.2.4
amend its Governing Documents except with respect to the certificate of
incorporation of JJI as set forth in the Certificate of Merger;
47
4.1.2.5
make or offer to make any acquisition, by means of a purchase, merger or
otherwise, of any business, assets or securities or any sale, lease, encumbrance
or other disposition of assets or securities, except for purchases or sales
of
supplies, equipment and Inventory made in the ordinary course of business and
consistent with past practice or (ii) enter into a Material Contract or
amend any Material Contract (including any amendments to extend any Material
Contract) or grant any release or relinquishment of any rights under any
Material Contract except, in each case, in the ordinary course of business
and
consistent with past practice or (iii) make any payments of cash, pay off any
Liabilities or incur any obligation either outside the ordinary and usual course
of business or in a manner which is not consistent with past
practice;
4.1.2.6
permit any material insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated without notice to Parent, except
in
the ordinary course of business and consistent with past practice;
4.1.2.7
incur or assume any debt except for short-term debt incurred in the ordinary
course of business consistent with past practice;
4.1.2.8
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
except in the ordinary course of business and consistent with past
practice;
4.1.2.9
(i) make any loans, advances or capital contributions to, or investments in,
any
other Person (other than wholly-owned Subsidiaries of JJI or in the ordinary
course of JJI’s business in a manner consistent with prior practice) or (ii)
make any loans to any of its officers, directors, employees, agents or
consultants or make any changes in its existing borrowing or lending
arrangements for or on behalf of any of such persons, whether contingent on
the
Merger or otherwise;
4.1.2.10
(i) grant any increase in the compensation payable or to become payable by
JJI
or any of its Subsidiaries to any of its officers, directors, employees, agents
or consultants or (ii) enter into any, or amend any existing, employment or
severance agreement with or, except in accordance with the existing written
policies of JJI and its Subsidiaries previously delivered to Parent, grant
any
severance or termination pay to any officer, director or employee of JJI or
any
of its Subsidiaries;
4.1.2.11
change any of the accounting methods, principles or practices used by it except
as required by Law or GAAP;
4.1.2.12
except as set forth on Schedule 4.1.2.12, (i) make any deposits or contributions
of cash or other property to or take any other action to fund or in any other
way secure the payment of compensation or benefits under any Plan, except as
required by Law or the terms of the Plans currently in effect or (ii) adopt
or
enter into any new plan, policy, agreement
48
or
arrangement that would constitute a Plan, or amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become payable
under any existing Plan;
4.1.2.13
except as required by applicable Law or pursuant to any collective bargaining
or
other labor agreement currently in effect, enter into, amend, or extend any
collective bargaining or other labor agreement;
4.1.2.14
except as set forth on Schedule 4.1.2.14, settle or agree to settle any suit,
action, claim, proceeding or investigation that is material to JJI or any of
its
Subsidiaries (including any suit, action, claim, proceeding or investigation
relating to this Agreement or the transactions contemplated hereby) or pay,
discharge or satisfy or agree to pay, discharge or satisfy any claim, liability
or obligation (absolute or accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction of liabilities
(i)
to the extent reflected or reserved against in the financial statements as
at
December 31, 2005, (ii) payable with insurance or incurred in the ordinary
course of business subsequent to December 31, 2005 or (iii) which are legally
required to be paid, discharged or satisfied (provided,
however,
that if
such claims, liabilities or obligations referred to in this clause are
legally required to be paid and are also not otherwise payable in accordance
with (i) and (ii) above, JJI will notify Parent in writing if such claims,
liabilities or obligations exceed, individually or in the aggregate, $100,000
in
value, reasonably in advance of their payment);
4.1.2.15
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of JJI
or
any of its Subsidiaries or any agreement relating to a Takeover Statute (other
than the Merger);
4.1.2.16
take any action that would result or is reasonably likely to result in any
of
the conditions to the Merger set forth in Article V not being satisfied or
that
would make any representation or warranty of JJI or any of its Subsidiaries
contained herein inaccurate in any material respect at, or as of any time prior
to, the Effective Time;
4.1.2.17
make or offer to make any donation or gift to any Person which is not in the
ordinary course of business and consistent with JJI’s past practice if the
aggregate amount of all such donations or gifts exceeds $5,000; or
4.1.2.18
agree in writing or otherwise to take any of the foregoing actions, or
authorize, recommend, propose or announce an intention to do any of the
foregoing.
4.1.3
From the date hereof until the earlier of the Effective Time and the termination
of this Agreement pursuant to Article VI, except with the prior written consent
of Parent, which consent shall not be unreasonably withheld or delayed, neither
JJI nor any Subsidiary of JJI will make or change any Tax election, change
an
annual accounting period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement (as described in Section
7121 of the Code),
settle
any Tax claim or assessment, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the
49
limitation
period applicable to any Tax claim or assessment, or take any other similar
action relating to the filing of any Tax Return or the payment of any Tax,
except as consented to in writing by Parent, which consent will not be
unreasonably withheld or delayed.
4.2
Completion
of Transactions.
Subject
to the terms and conditions herein provided, each of the parties hereto agrees
to use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws or otherwise, or to remove any injunctions
or
other impediments or delays, legal or otherwise, to satisfy the conditions
set
forth in, and to consummate and make effective the transactions contemplated
by,
this Agreement.
4.3
Notification.
4.3.1
From the date hereof until the earlier of the Effective Time and the termination
of this Agreement pursuant to Article VI, JJI shall disclose to Parent in
writing (in the form of updated Schedules provided in accordance with the notice
provisions of Section 9.1) any variances from the representations and warranties
contained in Article II, the covenants contained in Article IV or the conditions
contained in Article V promptly upon discovery thereof; provided,
however,
that
such disclosures shall not be deemed to amend the appropriate Schedule delivered
on the date hereof or to cure any Breach of a representation or warranty.
Notwithstanding any provision in this Agreement to the contrary, unless Parent
provides JJI with a termination notice within five (5) Business Days after
delivery by JJI of an updated Schedule pursuant to this Section 4.3, Parent
shall be deemed to have waived its rights to terminate this Agreement or prevent
the consummation of the Transactions contemplated by this Agreement pursuant
to
Article VI hereof as a result of any matter clearly disclosed
therein.
4.3.2
From the date hereof until the earlier of the Effective Time and the termination
of this Agreement pursuant to Article VI, Parent shall disclose to JJI in
writing any variances from Parent and Merger Sub’s representations and
warranties contained in Article III, the covenants contained in Article IV
or
the conditions contained in Article V promptly upon discovery thereof;
provided,
however,
that
such disclosures shall not be deemed to amend or supplement any disclosure
schedule or cure any Breach of any representation and warranty. Notwithstanding
any provision in this Agreement to the contrary, unless JJI provides Parent
with
a termination notice within five (5) Business Days after delivery by Parent
of
such a written disclosure pursuant to this Section 4.3.2, JJI shall be deemed
to
have waived its right to terminate this Agreement or prevent consummation of
the
Transactions contemplated by this Agreement pursuant to Article VI hereof as
the
result of any matter clearly disclosed therein.
4.4
Access
to Information; Confidentiality.
4.4.1
Access
to Information.
From
the date hereof until the earlier of the Effective Time and the termination
of
this Agreement pursuant to Article VI, each of JJI and JJI’s Representatives
shall provide, and will cause JJI and its Subsidiaries to provide, Parent and
its authorized representatives (“Parent’s Representatives”) with full access at
all reasonable times
50
and
upon
reasonable notice to the offices, properties, personnel and, subject to
applicable Law, books, contracts, commitments, reports, correspondence,
documents and records of JJI and its Subsidiaries in order for Parent to have
the opportunity to make such investigation as it shall reasonably desire to
make
of the affairs of JJI and its Subsidiaries; provided,
however,
that
such access shall not include any sampling of the air, soil, ground water or
building materials of any of the properties, and provided further, however,
that
the activities of Parent and Parent’s Representatives shall be conducted in a
manner as not to interfere unreasonably with the operation of the business
of
JJI.
4.4.2
Confidentiality.
Between
the date of this Agreement and the Closing Date, the parties to this Agreement
each agree to maintain in confidence, and will cause its respective directors,
officers, employees, agents, and advisors to maintain in confidence, any
written, oral, or other information obtained in confidence from another party
in
connection with this Agreement or the Transactions, unless (i) such information
is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (ii) the use of such information is necessary or appropriate
in
making any filing or obtaining any consent or approval required for the
consummation of the Transactions, (iii) the disclosure relates to a press
release, public announcement or other disclosure of matters relating to this
Agreement or the Transactions of a type which is addressed in Section 4.9 (and
such disclosures permitted only by this part (iii) shall be subject to the
limitations in Section 4.9), or (iv) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
or to comply with any Law.
4.5
Regulatory
Filings.
4.5.1
Parent, Merger Sub and JJI shall cooperate with one another (i) in promptly
determining whether any filings are required to be or should be made or
consents, approvals, permits or authorizations are required to be or should
be
obtained under any other Laws or whether any consents, approvals or waivers
are
required to be or should be obtained from other parties to loan agreements
or
other contracts or instruments material to JJI’s or any of its Subsidiaries’
business in connection with the consummation of the transactions contemplated
by
this Agreement and (ii) in promptly making any such filings, furnishing
information required in connection therewith and seeking to obtain timely any
such consents, permits, authorizations, approvals or waivers.
4.5.2
Notwithstanding Section 4.5.1, the parties shall promptly make any required
submissions under the Merger Filing Laws and any other Laws which Parent
reasonably determines should be made, in each case, with respect to this
Agreement, the Merger and the Transactions contemplated hereby. Parent and
JJI
shall take or undertake all such further reasonable action as may be necessary
to resolve such objections, if any, as the U.S. Federal Trade Commission, the
Antitrust Division of the Department of Justice, the
German Federal Cartel Office (Bundeskartellamt),
state
antitrust enforcement authorities or competition authorities of any other nation
or jurisdiction (each, a “Government Antitrust Entity”) may assert under
relevant antitrust or competition Laws or Merger Filing Laws with respect to
the
Transactions contemplated hereby.
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4.5.3
Notwithstanding this Section 4.5 or any other provision of this Agreement,
neither Parent nor Merger Sub shall be required, whether before or after the
Effective Time, to hold separate (including by trust or otherwise) or divest
any
of its business or assets or any of the businesses or assets of JJI, or enter
into any consent decree or other agreement that would restrict Parent or JJI
in
the conduct of its respective businesses as heretofore conducted, or oppose
any
motion or action for a temporary, preliminary or permanent injunction against
the Transaction or any of the parties. Each of JJI and Parent shall keep the
other informed of any material communication and provide to the other copies
of
all correspondence, between it (or its advisors) and any Government Antitrust
Entity relating to this Agreement or any of the matters described in this
Section 4.5, and each of JJI and Parent shall permit the other to review any
material communication to be given by it to, and shall consult with each other
in advance of any telephonic calls, meetings or conferences with, any Government
Antitrust Entity and, to the extent permitted, give the other party the
opportunity to attend and participate in such telephonic calls, meetings or
conferences with, any Government Antitrust Entity and, to the extent permitted,
give the other party the opportunity to attend and participate in such
telephonic calls, meetings and conferences. Notwithstanding any of the
foregoing, no failure to obtain termination of the waiting period under the
HSR
Act, if applicable, shall be deemed to be a Breach hereunder by any party to
this Agreement. Subject to the foregoing, Parent shall be principally
responsible for and in control of the process of dealing with any Government
Antitrust Entity relating to its obligations under this Section
4.5.3.
4.6
Consents
and Approvals; Cooperation.
The
parties hereto each will cooperate with one another and will use all reasonable
commercial efforts to prepare all necessary documentation to effect promptly
all
necessary filings and to obtain all necessary permits, consents, approvals,
orders and authorizations of or any exemptions by, all third parties and
governmental, quasi-governmental and regulatory bodies necessary to consummate
the Transactions contemplated herein. Each party hereto will keep the other
parties hereto apprised of the status of any inquiries made of such party by
any
governmental, quasi-governmental and regulatory agency or authority or members
of their respective staffs before the Closing with respect to this Agreement
or
the Transactions contemplated hereby. Provided, further, each of the parties
agrees to reasonably cooperate and to take the actions contemplated by Section
1.6 and Article VII to enable the other parties to receive the benefits
contemplated by this Agreement.
4.7
Access
to Books and Records
and
the Surviving Company Personnel.
From and
after the Closing, Parent shall, and shall cause the Surviving Company to,
provide the Stockholders’ Agent and its authorized representatives (subject to
the foregoing executing reasonable confidentiality agreements)
with:
4.7.1
reasonable access (for the purpose of examining and copying), during normal
business hours, to the books and records of the Surviving Company with respect
to periods prior to and including the Effective Time; and
52
4.7.2
reasonable access, during normal business hours, to the Surviving Company’s
senior management in connection with any matter relating to or arising out
of
this Agreement or the Transactions contemplated hereby. Unless otherwise
consented to in writing by the Stockholders’ Agent, Parent shall not permit the
Surviving Company, for a period of seven (7) years following the Effective
Time,
to destroy, alter or otherwise dispose of any books and records of the Surviving
Company, or any portions thereof, relating to periods prior to and including
the
Effective Time without first giving reasonable prior written notice to the
Stockholders’ Agent and offering to surrender to the Stockholders’ Agent such
books and records or such portions thereof.
4.8
Director
and Officer Liability and Indemnification.
For a
period of six (6) years after the Closing, Parent shall not, and shall not
permit the Surviving Company to, amend, repeal or modify any provision in JJI’s
organizational documents to provide less exculpation coverage or indemnification
of any officers and/or directors (unless required by law), it being the intent
of the parties that the officers and/or directors of JJI shall continue to
be
entitled to such exculpation and indemnification to the full extent of JJI’s
organizational documents.
4.9
Public
Announcements.
Any
public announcement, press release or similar publicity with respect to this
Agreement or the Transactions will be issued, if at all, at such time and in
such manner as Parent determines. Except with the prior consent of Parent or
as
permitted by this Agreement, neither JJI, any of its Subsidiaries, the
Stockholders or their respective representatives shall disclose to any Person
(i) the fact that any confidential information of JJI, any of its Subsidiaries
or Stockholders has been disclosed to Parent or Parent’s Representatives, that
Parent or Parent’s Representatives have inspected any portion of the
confidential information of JJI, any of its Subsidiaries, the Stockholders
or
their respective representatives, or that JJI, any of its Subsidiaries,
Stockholders or their respective representatives have inspected any portion
of
the confidential information of Parent or Parent’s Affiliates or (ii) any
information about the Transactions, including the status of such discussions
or
negotiations, the execution of any documents (including this Agreement) or
any
of the terms of the Transactions or the related documents (including this
Agreement). Parent and JJI will consult with each other concerning the means
by
which JJI’s or its Subsidiaries’ employees, customers, suppliers and others
having dealings with JJI or any of its Subsidiaries will be informed of the
Transactions during the period prior to Closing, and Parent will have the right
to be present for any such communication. Notwithstanding the above, nothing
in
this Section 4.9 will preclude any party from making any disclosures if such
party in good faith determines that (i) the use of such information is necessary
or appropriate in making any filing or obtaining any consent or approval
required for the consummation of the Transactions, or (ii) the furnishing or
use
of such information is required by or necessary or appropriate in connection
with legal proceedings or to comply with any Law or otherwise necessary and
proper in conjunction with the filing of any Tax Return or other document
required to be filed with any Governmental Authority.
4.10
Stockholders
Approval.
53
4.10.1
Stockholders’
Agent’s Representation and Agreement.
The
Stockholders’ Agent hereby represents and warrants to the Parent and Merger Sub,
both as of the date of execution of this Agreement and as of the Effective
Time,
that (i) it owns Seventy-nine and 85/100 percent (79.85%) of the JJI Stock,
(ii)
it has duly and validly approved and been authorized to enter into this
Agreement and the Transaction and (iii) it agrees to cause the Transaction
to be
duly and validly authorized and approved by JJI.
4.10.2
JJI’s
Efforts.
JJI
shall take all action necessary under its certificate of incorporation and
bylaws and the DGCL to, as soon as reasonably practicable after the date of
this
Agreement, call, give notice of, convene and duly hold a meeting of the holders
of JJI Stock or otherwise take action by consent to duly and properly consider,
act upon and vote upon the approval of this Agreement and the
Merger.
4.11 No
Solicitations.
Immediately after the execution of this Agreement, JJI will terminate and cease
any discussions or negotiations with any parties relating to an Acquisition
Transaction, and thereafter until the earlier of the Effective Time or the
termination of this Agreement, JJI shall not, directly or indirectly, initiate,
solicit, or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to,
an
Acquisition Transaction, or negotiate with any person in furtherance of such
inquiries or to obtain an Acquisition Transaction, or agree to or endorse any
Acquisition Transaction, or authorize or permit any of its officers, directors,
or employees or any investment banker, financial advisor, attorney, accountant,
or other representative retained by JJI to take any such action, and JJI shall
promptly notify Parent orally and in writing of all of the relevant details
relating to all inquiries and proposals which it may receive relating to any
of
such matters.
4.12
Tax
Matters.
4.12.1
Cooperation.
Parent
and the Stockholders’ Agent shall cooperate to the extent reasonably requested
by the other party in connection with any audit, litigation, refund claim or
other proceeding with respect to Taxes of JJI and withholding tax. Such
cooperation shall include the retention and, upon the other party’s request, the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding. Parent shall use commercially reasonable
efforts to provide to Stockholders’ Agent for comment, at least one week before
the intended filing date, a draft of any U.S. federal income Tax Return of
JJI
which JJI expects to file to the extent such Tax Return relates exclusively
to
tax periods ending before the Effective Time.
4.12.2
Audits.
Parent
shall notify the Stockholders’ Agent in writing within a reasonable time of
receipt by Parent or any Affiliate of Parent (including the Surviving Company)
of notice of any pending or threatened Tax audits or assessments that may affect
the Tax liabilities of JJI for which the Stockholders would be liable under
this
Agreement. The Stockholders’ Agent shall be kept reasonably informed of the
status of any such audit or assessment. Neither Parent nor the Surviving Company
may compromise or settle any such Tax audits or assessments without the
Stockholders’ Agent’s consent (which consent shall not be
54
unreasonably
withheld or delayed) unless (i) there is no finding or admission of any
violation of Law or any violation of the rights of any Person; (ii) the sole
relief provided is monetary damages that are paid in full by the Parent or
Parent’s Affiliate (including the Surviving Company); and (iii) the Stockholders
shall have no liability with respect to any compromise or settlement of such
Tax
audit or assessment.
4.12.3
Amended
Returns.
Parent
shall not file or cause to be filed any amended Tax Returns of JJI with respect
to a taxable period or portion thereof ending on or before the Effective Time
without the consent of the Stockholders’ Agent (which consent shall not be
unreasonably withheld or delayed).
4.12.4
Transfer
Taxes.
Any
real estate or other transfer Taxes arising from the Merger shall be borne
one-half (1/2) by Parent and one-half (1/2) by the Stockholders.
4.12.5
No
Tax
Withholding.
Based
on information provided by JJI, the parties do not believe that under current
Law the payment of the Merger Consideration is subject to withholding Tax except
for any payments of any Merger Consideration which is compensatory in nature.
All payments of Merger Consideration under this Agreement to the Stockholders
will be made without any deduction or withholding for or on account of any
Taxes, except for any such deduction or withholding that is required (and any
payment of the Merger Consideration shall be net of any payment required) (i)
as
a result of a change in Law or change in the interpretation of Law by any court
or other Governmental Authority after the date of this Agreement or (ii) in
connection with any payments of any Merger Consideration which is compensatory
in nature.
4.12.6
Tax
Treatment.
For tax
purposes, each of the parties shall treat the Transaction as a taxable purchase
of the JJI Stock and Class B Common Stock Warrants and shall not take any
inconsistent position on any Tax Return or in any audit or administrative or
judicial proceeding.
4.13
Anti-Takeover
Statutes.
If any
Takeover Statute is or may become applicable to the Merger, each of Parent
and
JJI shall take such commercially reasonable actions as are necessary so that
the
transactions contemplated by this Agreement may be consummated as promptly
as
reasonably practicable on the terms contemplated hereby and to the extent
commercially reasonable otherwise act to eliminate or minimize the effects
of
any Takeover Statute on the Merger.
4.14
Stockholder
Litigation.
The
parties to this Agreement shall cooperate and consult with one another in
connection with any stockholder litigation against any of them or any of their
respective directors or officers with respect to the transactions contemplated
by this Agreement. In furtherance of and without in any way limiting the
foregoing, each of the parties shall use its respective commercially reasonable
best efforts to prevail in such litigation so as to permit the consummation
of
the transactions contemplated by this Agreement in the manner contemplated
by
the Agreement. Notwithstanding the foregoing, JJI agrees that it will not
compromise or settle any litigation commenced against it or its directors and
officers relating to this Agreement
55
or
the
Transactions contemplated hereby (including the Merger) without Parent’s prior
written consent, not to be unreasonably withheld or delayed.
4.15
Forward
Contracts.
If on
or before three (3) Business Days prior to the Closing Date, JJI or the
Stockholders’ Agent requests Parent to purchase forward contract(s) that will
establish the Pay Off Liability in U.S. dollars for any one or more of the
▇▇▇▇▇▇▇▇▇▇▇ Debt Payments, ▇▇▇▇▇▇▇▇▇▇▇ Family Expense or any Change of Control
Obligations payable in Euros, then Parent agrees to use reasonable efforts
to
obtain such forward contract(s) that sell U.S. dollars to exchange for Euros
on
a specified date, which specified date shall be the Closing Date or such later
date as agreed to by the parties (the “Forward Contracts”).
4.16
Termination
of Stock Option Plans, SERP and Employee’s Pension Plan of JJI and Its
Subsidiaries.
4.16.1
Stock
Option Plans.
JJI
shall terminate any and all stock option plans, including the Stock Incentive
Plans, of JJI and its Subsidiaries, effective not later than the day immediately
preceding the Closing Date, unless Parent, in its sole discretion, elects to
maintain such plan in which event Parent shall provide JJI with written notice
of such election at least three (3) days prior to the Closing Date. Unless
Parent provides such notice to JJI, Parent shall receive from JJI evidence
that
JJI’s stock option plans have been terminated pursuant to resolution of JJI’s
Board of Directors (the form and substance of such resolution shall be subject
to review and approval by Parent), not later than the day immediately preceding
the Closing Date.
4.16.2
SERP.
JJI
shall terminate the SERP, effective not later than the day immediately preceding
the Closing Date, unless Parent, in its sole discretion, elects to maintain
such
plan in which event Parent shall provide JJI with written notice of such
election at least three (3) days prior to the Closing Date (or such lesser
time
as may be acceptable to Parent). Unless Parent provides such notice to JJI,
Parent shall receive from JJI evidence that the SERP has been terminated
pursuant to resolution of JJI’s Board of Directors (the form and substance of
such resolution shall be subject to review and approval by Parent), not later
than the day immediately preceding the Closing Date.
4.16.3
Employees
Pension Plan of JJI and Its Subsidiaries.
4.16.3.1
Redemption
of Class A Common Stock.
JJI
shall acquire all of the Class A Common Stock held by the Employees Pension
Plan
of JJI and its Subsidiaries for $4.00 per share before the earlier of (i) the
termination of the Employees Pension Plan of JJI and its Subsidiaries and (ii)
two (2) Business Days prior to the Closing Date.
4.16.3.2
Termination.
JJI
shall terminate the Employees Pension Plan of JJI and its Subsidiaries,
effective not later than the day immediately preceding the Closing Date, unless
Parent, in its sole discretion, elects to maintain such plan in which event
Parent shall provide JJI with written notice of such election at least three
(3)
days prior to the Closing Date. Unless Parent provides such notice to JJI,
Parent shall receive from JJI evidence that the
56
Employees
Pension Plan of JJI and its Subsidiaries has been terminated pursuant to
resolution of JJI’s Board of Directors (the form and substance of such
resolution shall be subject to review and approval by Parent), not later than
the day immediately preceding the Closing Date.
4.17
Financial
Statements.
As soon
as reasonably practicable but no later than five (5) days before the Closing
Date (or such lesser time as may be acceptable to Parent), JJI shall provide
Parent with consolidated balance sheets and related statements of income and
cash flow as of the end of each month beginning with the month of January,
2006
and for each month ending more than ten (10) Business Days before the Closing
Date. Such monthly financial statements shall be prepared in accordance with
GAAP and shall consistently apply the same methodologies and principles in
all
respects as the methodologies and principles used or applied in connection
with
the December 31, 2005 Financial Statements.
4.18
Tax
Refund.
To the
extent JJI irrevocably receives any refunds of Taxes after the Effective Time
as
a result of U.S. federal, state and local income Taxes paid by JJI prior to
the
Effective Time and losses included on a JJI income Tax return for a period
ending prior to the Effective Time (other than losses relating to or resulting
from the subject matter of the Defined Benefit Pension Plan Funding or any
payment or accrual relating thereto) which exceed the credit provided in Final
Working Capital pursuant to part (f) of Exhibit
D,
then
JJI will, subject to the limitations referenced below, pay to the Escrow Agent
an amount equal to such excess; provided,
however,
for
purposes of calculating such excess (i) any refunds will be disregarded to
the
extent such refunds result from or relate to the Defined Benefit Pension Plan
Funding, the subject matter of the Defined Benefit Pension Plan or any payment
or accrual relating to the Defined Benefit Pension Plan, and (ii) the sum of
payments pursuant to this Section 4.18, the Final Working Capital plus any
amount which increased the Indemnity Escrow Amount pursuant to part (g) of
Exhibit
D
shall
not in any event be more than $32,000,000. Within a reasonable time of any
payment being made to the Escrow Agent pursuant to the immediately preceding
sentence the Stockholders’ Agent and Parent will direct the Escrow Agent to
distribute such payment according to the Agreed Escrow Distribution
Methodology.
ARTICLE
V
CONDITIONS
TO THE MERGER
5.1
Conditions
to Obligation of Each Party to Effect the Merger.
The
respective obligations of each party to effect the Merger shall be subject
to
the satisfaction at or prior to the Effective Time of the following
conditions:
5.1.1
No
Injunctions or Restraints; Illegality.
No
temporary restraining order, preliminary or permanent injunction, or other
order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, and
no
litigation by any Governmental Authority seeking any of the foregoing shall
have
been commenced. There shall not be any action taken, or any statute, rule,
regulation, or order
57
enacted,
entered, enforced, or deemed applicable to the Merger that makes the
consummation of the Merger illegal.
5.1.2
Approvals.
All
authorizations of Governmental Authorities required to consummate the
Transactions contemplated by this Agreement, including the Merger, shall have
been obtained, all such authorizations shall remain in full force and effect,
no
appeal shall have been filed challenging any such authorizations, all statutory
waiting periods in respect thereof shall have expired or been terminated or
waived.
5.1.3
Certificate
of Merger.
The
Certificate of Merger shall have been duly executed by JJI and filed with the
Delaware Secretary of State.
5.1.4
Maximum
Merger Consideration.
The
parties are satisfied that the Merger Consideration will in any event be less
than Fifty Million Dollars ($50,000,000), taking into account all possible
adjustments pursuant to this Agreement (including those contemplated by Section
1.7.1).
5.2
Additional
Conditions to Obligations of Parent and Merger Sub.
The
obligations of Parent and Merger Sub to effect the Merger are also subject
to
the following conditions (any or all of which conditions may be waived by Parent
at or prior to the Closing):
5.2.1
Representations
and Warranties; Performance of Obligations.
All of
the representations and warranties of JJI contained in this Agreement shall
be
true and correct in all material respects on and as of the date hereof, the
Closing Date and the Effective Time as if made on and as of each such date
or
time (except for those representations and warranties made as of a particular
date, which shall have been true and correct as of such date), except
that,
Parent
and Merger Sub shall not be obligated to effect the Merger, if Parent
determines, in its sole discretion, that any one or more of the changes in
the
representations and warranties of JJI that occurs after the date of the
execution of this Agreement is adverse to JJI or its Subsidiaries and material.
JJI and the Stockholders shall have performed or complied (or cured any
noncompliance) in all material respects with all covenants required by this
Agreement to be performed or complied with by them at or prior to the Effective
Time.
5.2.2
Consents
Obtained.
All
consents, waivers, clearances, approvals and authorizations from third parties
under the contracts of JJI listed in Schedule 2.14 as being required to be
obtained prior to the Effective Time shall have been obtained.
5.2.3
Secretary’s
Certificate.
Parent
and Merger Sub shall have received a certificate signed by the Secretary of
each
of JJI and Stockholders’ Agent which shall: (i) certify the names of the
officers of each of JJI and Stockholders’ Agent authorized to sign this
Agreement and the other documents, instruments or certificates to be delivered
pursuant to this Agreement by each of JJI and Stockholders’ Agent or any of its
officers, together with the true signatures of such officers; (ii) attach a
copy
of the certificate of incorporation of JJI, as amended, certified by the
Secretary of State of Delaware; (iii) attach a copy of the current
bylaws
58
of
JJI,
certified by the Secretary to be correct and complete; (iv) attach a certified
copy of the resolutions of the Board of Directors and the Stockholders of JJI
evidencing the adoption of the approval of this Agreement and the other matters
contemplated hereby; (v) attach recent good standing certificates for JJI from
the States of Delaware, California, Connecticut, Illinois, Missouri, New York,
North Carolina and the Commonwealth of Pennsylvania; and (vi) certify the
Transactions have been duly authorized by the Board of Directors of each of
JJI
and Stockholders’ Agent and by the shareholders of JJI.
5.2.4
Closing
Deliveries by JJI.
5.2.4.1
Resignation
Letters.
JJI
shall have delivered to Parent resignations of all directors and officers of
JJI.
5.2.4.2
Liabilities
Certificate.
JJI
shall have delivered to Parent a certificate of the Chief Executive Officer
and
Chief Financial Officer of JJI certifying (i) the amount of each of the Pay
Off
Liabilities and each of the Price Reduction Liabilities, (ii) the amount of
each
category of Agreed Deductions in a manner consistent with Section 1.7.1.2,
(iii)
a best good faith estimate of the amount of the Working Capital Liabilities,
itemized by category in a manner reasonably acceptable to Parent, (iv) that
neither JJI nor any of its Subsidiaries has any Liabilities other than Working
Capital Liabilities, the Pay Off Liabilities, the Price Reduction Liabilities,
Liabilities which are Agreed Deductions and the Liabilities specified in part
(i), (ii) or (iii) of Section 1.7.1.3.5, and (v) such other matters as Parent
may reasonably request with respect to Liabilities.
5.2.4.3
Payoff
Letters.
For
each of the Pay Off Liabilities, all notes and other indebtedness for borrowed
money, all capital leases, and all payments due prior to the Effective Time,
all
Taxes (including any Taxes related to the Transactions), and each other
Liability for which Parent reasonably requests a payoff letter before the
Closing Date, JJI shall have delivered to Parent a Pay Off Letter from all
applicable creditors or lenders.
5.2.4.4
Representations
and Warranties Certificate.
JJI
shall have delivered to Parent a certificate of the Chief Executive Officer
and
Chief Financial Officer of JJI certifying that all representations and
warranties by JJI contained in this Agreement are accurate as of the Effective
Time except as expressly otherwise set forth in such certificate.
5.2.4.5
Compliance
Certificate.
JJI
shall have delivered to Parent a certificate of the Chief Executive Officer
and
Chief Financial Officer of JJI certifying that the conditions set forth in
this
Article V with respect to JJI and its Subsidiaries have been fully
satisfied.
5.2.4.6
Escrow
Agreement.
JJI,
the Stockholders’ Agent and the Escrow Agent shall have executed and delivered
the Escrow Agreement to Parent.
59
5.2.4.7
Indemnification
Agreement.
Stockholders’ Agent shall have executed and delivered to Parent an
indemnification agreement from Stockholders’ Agent and the parent entity of
Stockholders’ Agent, which indemnification agreement shall be in form and
substance acceptable to Parent.
5.2.4.8
Evidence
of Termination of Options and Warrants and Terminated Contracts.
JJI
shall have delivered to Parent a certificate of the Chief Executive Officer
and
Chief Financial Officer of JJI certifying that (i) all the Options and Warrants
have been terminated (and JJI released with respect thereto) prior to the
Effective Time, (ii) all the Terminated Contracts have been terminated (and
JJI
released) prior to the Effective Time and the Surviving Company and its
Subsidiaries will not suffer any Adverse Consequences relating to the Terminated
Contracts after the Effective Time in excess of the amount which reduced the
Merger Consideration pursuant to Section 1.7.1.1.9 and (iii) there will not
be
any amounts due at or after the Effective Time in connection with Change of
Control Obligations in excess of the amount which reduced the Merger
Consideration pursuant to Section 1.7.1.1.8. JJI shall have delivered to Parent
such other documentation as Parent may reasonably request relative to the
termination of the Options and Warrants, the termination of the Terminated
Contracts and the Change of Control Obligations.
5.2.5
Stockholder
Approval.
This
Agreement and the Transactions contemplated hereby shall have been approved
by
the Stockholders in accordance with the DGCL.
5.2.6
No
Material Adverse Affect.
Since
December 31, 2005, JJI and its Subsidiaries shall not have suffered any Material
Adverse Effect.
5.2.7
FIRPTA
Certificate.
Parent
shall have received a certificate establishing that neither JJI nor any
Subsidiary has been a United States real property holding corporation within
the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
5.2.8
No
Proceedings.
Since
the date of this Agreement, there must not have been commenced or threatened
against Parent, or against any Affiliate of Parent, any proceeding (i) involving
a challenge to, or seeking damages or other relief in connection with, any
of
the Transactions, or (ii) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the
Transactions.
5.2.9
Right
in JJI Capital Stock.
As long
as the assumptions set forth in the first sentence of Section 2.1.2.2 are true,
the Parent must be reasonably satisfied that no Person other than Parent, an
Affiliate of Parent or Persons who acquired rights from Parent or an Affiliate
of Parent will have any right in or to any capital stock (or any other equity
interest) of JJI or any right to acquire any capital stock (or other equity
interest) of JJI and no Person other than the Surviving Company, will have
any
right in or to or right to acquire any capital stock (or other equity interest)
of any of its Subsidiaries.
60
5.2.10 Stock
Plans.
JJI
shall have taken (or cause to be taken) all actions necessary to cancel and
terminate as of the Effective Time any stock option plan, the Stock Incentive
Plans and any other plan or agreement relating to the JJI Stock, Options and
Warrants or other equity of JJI (other than this Agreement).
5.2.11
Opinion
of Counsel.
JJI
shall have received and provided to Parent an opinion of counsel from counsel
reasonably acceptable to Parent, which opinion shall state that the actions
of
each of JJI and its majority stockholder in connection with the Merger and
Transaction have been duly authorized, that this Agreement has been duly
authorized, executed and delivered, that all necessary actions have been taken
by JJI and its Stockholders and their respective directors to make the Merger
effective, that the Merger will be effective at the Effective Time and such
other matters as reasonably requested by the Parent.
5.2.12
Other
Documents and Certificates.
Parent
and JJI shall have received such other documents, certificates and approvals
as
may have been reasonably requested by Parent and Parent shall have reasonably
determined Stockholders’ Agent, the Stockholders and JJI have taken all actions
required by Law in connection with the Transactions.
5.2.13
Delivery
of Exhibit B and Certificate.
JJI has
delivered Schedule 5.2.13 to Parent to describe the methodology JJI is
to use in completing Exhibit
B.
All of the dollar amounts in Schedule 5.2.13 are subject to the other provisions
of this Agreement and are subject to change and none of such dollar amounts
are
binding on any party in connection with establishing Merger Consideration except
to the extent binding as a result of a provision of this Agreement other than
Schedule 5.2.13. In the event of a conflict between Schedule 5.2.13 and
any other provision of this Agreement the other provision will govern.
Parent is not agreeing to be bound by any provision of Schedule 5.2.13. Parent
and JJI shall have received Exhibit
B
prepared
in accordance with the methodology set forth in Schedule 5.2.13 to allocate
the
Merger Consideration to the holders of JJI Stock and Class B Common Stock
Warrants. Exhibit
B
shall
clearly identify (i) each Stockholder by name and the amount of Merger
Consideration such Stockholder will receive, (ii) the Net Merger Consideration
that shall be paid at the Effective Time in U.S. dollars to each Stockholder
(which shall be in a total amount equal to the Net Merger Consideration) and
(iii) the percentage that will be applied to each Escrow Fund distribution
for
each Stockholder entitled to receive a portion of such distribution (to the
extent there are distributions to Stockholders) in order to calculate the amount
of such Escrow Fund distribution to be paid to each Stockholder (and the total
of all such percentages shall equal 100%). JJI shall have delivered to Parent
a
certificate of the Chief Executive Officer, Chief Financial Officer and
Secretary of JJI certifying that the Exhibit
B
delivered at Closing sets forth the name of each Stockholder or other Person
entitled to Merger Consideration Rights pursuant to this Agreement and conforms
in all respects with the foregoing provisions of this Section 5.2.13.
Notwithstanding anything in this Agreement to the contrary, the references
in
Articles I, VII and VIII to Exhibit
B
means
the Exhibit
B
delivered pursuant to this Section 5.2.13 at Closing. Exhibit
B
shall
also be in the form contemplated in the document attached hereto as “Form of
Exhibit
B”.
61
5.2.14
Purchase
of Class A Common Stock held by Employees Pension Plan of JJI and its
Subsidiaries.
The
Employees Pension Plan of JJI and its Subsidiaries shall not own any Class
A
Common Stock immediately prior to the Effective Time and such Class A Common
Stock that it held after the date of this Agreement shall have been purchased
in
accordance with Section 4.16.3.1 and be treasury stock at the Effective
Time.
5.2.15
Notices
to Stockholders Pursuant to Delaware Law.
JJI
shall have (i) sent all of the notices required by or contemplated by DGCL
to
the Stockholders in connection with Transactions, which notices shall include
those required by Sections 228(e) and 262(d)(2) of the DGCL and (ii) delivered
to Parent a certificate of the Secretary of JJI certifying that all of the
notices required by DGCL in connection with the Transactions have been sent
prior to Closing, which certificate shall include copies of such notices.
5.3
Additional
Conditions to Obligations of JJI.
The
obligation of JJI to effect the Merger is also subject to the following
conditions (any or all of which conditions may be waived by JJI at or prior
to
the Closing):
5.3.1
Representations
and Warranties; Performance of Obligations.
All of
the representations and warranties of Parent and Merger Sub contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof, the Closing Date and the Effective Time as if made as of each
such
date or time (except for those representations and warranties made as of a
particular date, which shall have been true and correct as of such date),
except
that,
JJI
shall not be obligated to effect the Merger, if JJI determines, in its sole
discretion, that any one or more of the changes in the representations and
warranties of Parent and Merger Sub or of JJI that occurs after the date of
the
execution of this Agreement is material to the Stockholders or materially
increases the exposure of the Indemnity Escrow Amount to Parent Claims. Parent
and Merger Sub shall have performed or complied (or cured any noncompliance)
in
all material respects with all covenants required by this Agreement to be
performed or complied with by them at or prior to the Effective
Time.
5.3.2
Consents
Obtained.
All
material consents required to be obtained or made by Merger Sub for the
authorization, execution, and delivery of this Agreement and the consummation
by
it of the transactions contemplated hereby shall have been obtained and made
by
Merger Sub and shall be in full force and effect.
5.3.3
Secretary’s
Certificate.
JJI
shall have received a certificate signed by the Secretary of each of Parent
and
Merger Sub which shall: (i) certify the names of the officers of each of Parent
and Merger Sub authorized to sign this Agreement and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by each
of Parent and Merger Sub or any of its officers, together with the true
signatures of such officers and (ii) certify the Transactions have been duly
authorized by the Board of Directors of each of Parent and Merger
Sub.
62
ARTICLE
VI
TERMINATION
6.1
Termination.
This
Agreement may be terminated at any time prior to the Closing by:
6.1.1
the
mutual written consent of Parent and JJI;
6.1.2
Parent, if there has been a violation or Breach by JJI of any covenant,
representation or warranty contained in this Agreement which has a Material
Adverse Effect, which violation or Breach has not been waived by Parent or
cured
by JJI within thirty (30) days after written notice by Parent or which Breach
cannot by its nature reasonably be cured prior to the Expiration
Date;
6.1.3
JJI, if there has been a violation or Breach by Parent of any covenant,
representation or warranty contained in this Agreement which has a Material
Adverse Effect which violation or Breach has not been waived by JJI or cured
by
Parent within thirty (30) days after written notice by JJI (provided that the
failure of Parent to deliver the Merger Consideration as required hereunder
shall not be subject to cure hereunder) or which Breach cannot by its nature
reasonably be cured prior to the Expiration Date; or
6.1.4
either Parent or JJI if the Transactions contemplated hereby have not been
consummated by June 30, 2006 (the “Expiration Date”); provided
that
neither Parent nor JJI shall be entitled to terminate this Agreement pursuant
to
this Section 6.1 if such Person’s Breach of this Agreement has prevented the
consummation of the Transactions contemplated hereby; or
6.1.5 either
JJI or Parent, by written notice to the other, if a Governmental Authority
shall
have issued an order, decree or ruling or taken any other action, in any case,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable; or
6.1.6
if
either JJI or Parent is entitled not to close under Section 5.2.1 or 5.3.1
and
notifies the other in writing of its election not to close pursuant to Section
5.2.1 or 5.3.1, as applicable.
In
the
event JJI has a right to terminate this Agreement under any of the foregoing
provisions, this Agreement may be terminated by the board of directors of JJI
as
provided above at any time prior to the Certificate of Merger becoming effective
in accordance with Section 103 of the DGCL, notwithstanding approval of this
Agreement by the holders of JJI Stock.
6.2
Effect
of Termination.
In the
event of termination of this Agreement by either Parent or JJI as provided
above, the provisions of this Agreement shall immediately become void and of
no
further force and effect (other than this Section 6.2, Section 4.4.2
(Confidentiality), Section 4.9 (Public Announcements), Section 9.7 (Governing
Law) and Section 9.9 (Fees and Expenses), which shall each survive the
termination of this Agreement) except as provided in the
63
immediately
following sentence. Notwithstanding the foregoing, either party may seek
specific performance with respect to the obligations of any other party pursuant
to this Agreement including any obligation to complete the Transactions, but
any
party exercising its rights to terminate this Agreement pursuant to this Article
VI may not bring a claim for monetary damages against any other party based
on
such other party’s failure to comply with an obligation to complete the
Closing.
ARTICLE
VII
INDEMNIFICATION
7.1
Survival;
Right to Indemnification Not Affected by Knowledge.
All
representations, warranties, covenants, and agreements contained in this
Agreement, and in any certificate or schedule shall be deemed to have been
relied upon by the parties hereto, and shall survive the Closing; provided
that any
such representations, warranties, covenants, and agreements shall be fully
effective and enforceable after the Closing for a period of twenty-one (21)
months after the Effective Time for all matters, including claims relating
to
Environmental Liabilities, Taxes and all other matters (the “General Survival
Period”) and for an additional period of twenty-one (21) months after the
General Survival Period for Parent Claims relating to Taxes and German
Environmental Issues (the “Tax and German Environmental Issue Survival Period”),
and shall thereafter be of no further force or effect except as provided in
this
Agreement. Following the end of the General Survival Period and of the Tax
and
German Environmental Issue Survival Period and notwithstanding anything in
this
Agreement to the contrary, the indemnification obligations set forth in this
Article VII shall continue to survive with respect to (i) any Surviving Claim
or
Stockholder Claim which was not fully resolved at the end of the General
Survival Period and (ii) any Continuing Surviving Claim which was not fully
resolved at the end of the Tax and German Environmental Issue Survival Period,
until finally resolved as provided in this Article VII and the Escrow Agreement.
By way of example, if notice of a Parent Claim is sent within the applicable
survival period, then subject to the terms of this Agreement and the Escrow
Agreement the
Parent Indemnified Party or Parent, as applicable, shall be entitled to be
reimbursed from the Indemnity Escrow Amount until all Adverse Consequences
(whether arising before or after the end of the applicable survival period)
relating to such timely asserted Parent Claim have been fully resolved and
Parent or the Parent Indemnified Party, as applicable, has been indemnified
therefor. The
right
to indemnification, payment of Adverse Consequences or other remedy based on
the
representations, warranties, covenants, and obligations of the parties hereto
or
in any schedule, certificate or other document delivered in connection herewith
will not be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time, whether before
or
after the execution and delivery of this Agreement or the Effective Time, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right
to
indemnification, payment of Adverse Consequences, or other remedy based on
such
representations, warranties, covenants, and obligations. Provided, however,
the
limitations contained in this Section shall not limit (i) the ability of any
party to obtain specific performance
64
with
respect to any obligation of the other party or parties and each party to this
Agreement shall be entitled to specifically enforce the obligations of each
other party in this Agreement to the maximum extent permitted by Law, (ii)
any
Parent Indemnified Party in being paid for indemnifiable Adverse Consequences
for claims for which notice was sent in the applicable time period or (iii)
any
party from enforcing its right to obtain or require distributions in accordance
with Section 1.8.
7.2
Indemnification
of Parent.
Subject
to the limitations of Sections 7.4 and 7.6, each Stockholder, severally with
respect to such Stockholder’s portion of the Merger Consideration, shall be
deemed to have agreed, by virtue of the approval of this Agreement and the
Merger by JJI’s Board of Directors and the approval of this Agreement by the
Stockholders under JJI’s Governing Documents and the DGCL to indemnify, defend,
and save Parent and the Surviving Company, and their directors, officers,
employees, owners, agents, Affiliates, and their respective successors and
assigns (each a “Parent Indemnified Party”) harmless on an after-tax basis from
and against, and to promptly pay to a Parent Indemnified Party or reimburse
a
Parent Indemnified Party for any and all Adverse Consequences arising from
or in
connection with:
7.2.1
any
violation or Breach of any representation or warranty made by JJI in (i) this
Agreement, (ii) the Schedules hereto (without giving effect to any supplement
to
the Schedules hereto), (iii) the documents and certificates delivered pursuant
to Section 5.2, or (iv) any other certificate, document, writing or instrument
delivered by JJI pursuant to this Agreement; provided,
however,
for
purposes of determining the indemnity obligations pursuant to this Section
7.2,
any representation or warranty which is qualified or otherwise limited by a
term
such as “Material Adverse Effect”, “materiality”, “material” or any other
similar term shall be interpreted as if such qualification or limitation were
not included (thus, a Breach will be deemed to exist based on a reading as
though such qualification or limitation did not exist), each Stockholder will
be
obligated to indemnify Parent Indemnified Parties as though that qualification
or limitation did not exist and indemnifiable Adverse Consequences will be
determined as if such qualification or limitation were not
included;
7.2.2
any
failure of JJI to perform, fulfill or satisfy any covenant or agreement
contained herein or in any certificate or schedule delivered by JJI pursuant
to
this Agreement;
7.2.3
any
brokerage or finder’s fees or commissions or similar payments based upon any
agreement or understanding made, or alleged to have been made, by any Person
with JJI (or any other Person acting on their behalf) in connection with the
Transactions contemplated hereby;
7.2.4
any
matter disclosed on, referenced in or resulting from or in connection with
the
subject matter of (i) numerical paragraphs 1, 3, 4 or 5 of Schedule 2.10 or
(ii)
the audit referenced in numerical paragraph (1) of Schedule 2.13.1.
7.2.5
any
German Environmental Issues;
65
7.2.6
any
failure by JJI or any Subsidiary of JJI to comply with any Law at any time
prior
to the Effective Time;
7.2.7
any
Contract Termination Expense or Change of Control Obligation;
7.2.8
any
Terminated Contract;
7.2.9
the
amount required to resolve the Austrian Director Issue exceeding $50,800;
7.2.10
(i) the anticipated Tax refunds credited to Final Working Capital pursuant
to
part (f) of Exhibit
D
being
more than those claimed
by JJI (but only to the extent of such refunds claimed by JJI which relate
only
to the subject matter of the refunds credited to Final Working Capital pursuant
to part (f) of Exhibit
D
and
exclusive of any claimed refunds relating to the Defined Benefit Pension Plan
Funding, the subject matter of the Defined Benefit Pension Plan or any
benefit relating to the Defined Benefit Pension Plan) on its U.S. federal,
state and local income Tax returns filed after the Effective Time for periods
ending prior to the Effective Time or
(ii)
the amount of any disallowance or recovery by the Internal Revenue Service
of
any such refunds so credited to Final Working Capital as reasonably
determined by Parent; and
7.2.11
the purchase of shares of JJI pursuant to Section 4.16.3.1 to the extent not
deducted from the Merger Consideration pursuant to Section
1.7.1.1.7.
Notwithstanding
the fact that the obligations or the duties of the Stockholders under this
Section 7.2 are several rather than joint and several, the fact that all
Stockholders may not have entered into Transmittal Letters or expressly
appointed the Stockholders’ Agent as their agent or any other limitation
contained in this Agreement, the Parent Indemnified Parties shall be entitled
to
receive from the Indemnity Escrow Amount the full amount of Adverse Consequences
for the matters set forth in Section 7.2.1 through Section 7.2.11 subject only
to the limitations of Sections 7.4 and 7.6. Accordingly, notwithstanding any
other provision of this Agreement, it is understood and agreed that the total
consideration which each Stockholder (other than a Dissenting Stockholder)
is entitled to receive pursuant to the Merger as a result of the conversion
of
the Stockholder's shares into the right to receive cash shall be such
Stockholder's respective portions (determined as set forth on Exhibit
B)
of the
Merger Consideration Rights. Rights to payments from the Working Capital
Escrow Amount or the Indemnity Escrow Amount (whether to
Stockholders, Stockholders' Agent or a Parent Indemnified Party) pursuant to
this Agreement or the Escrow Agreement are, thus, (i) part of the
methodology for determining the Stockholders' rights to consideration in
connection with the Merger and (ii) binding on all the Stockholders (except
those who become Dissenting Stockholders) at the Effective Time.
7.3
Indemnification
of Stockholders. Parent
agrees to indemnify, defend, and save the Stockholders and, as applicable,
their
directors, managers, officers, employees, owners, agents, trustees, Affiliates,
and their respective successors and assigns or heirs and personal
representatives, as the case may be (each, a “Stockholder Indemnified Party”),
harmless on an
66
after-tax
basis from and against, and to promptly pay to such Stockholder Indemnified
Party or reimburse such Stockholder Indemnified Party for, any and all Adverse
Consequences arising from or in connection with:
7.3.1
any
violation or Breach of any representation or warranty made by Parent or Merger
Sub in (i) this Agreement, (ii) the Schedules hereto (without giving effect
to
any supplement to the Schedules hereto), (iii) the documents and certificates
delivered pursuant to Section 5.3, or (iv) any other certificate, document,
writing or instrument delivered by Parent or Merger Sub pursuant to this
Agreement;
7.3.2
any
failure of Parent or Merger Sub to perform, fulfill or satisfy any covenant
or
agreement contained herein or in any certificate delivered by Parent or Merger
Sub pursuant to this Agreement;
7.3.3
any
brokerage or finder’s fees or commissions or similar payments based upon any
agreement or understanding made, or alleged to have been made, by any Person
with Parent or Merger Sub (or any other Person acting on their behalf) in
connection with the Transactions contemplated hereby; and
7.3.4
any
election by Parent under Section 338 of the Code with respect to its acquisition
of the capital stock of JJI in connection with the Merger.
The
Stockholder Indemnified Parties are not entitled to receive any payment from
the
Indemnity Escrow Amount for any Adverse Consequences suffered by one or more
Stockholder Indemnified Parties. Provided, however, this provision is not
intended to limit the rights of Stockholder Indemnified Parties to receive
payments from the Indemnity Escrow Amount to the extent expressly provided
in
Section 1.8.
7.4
Basket;
Limitation on Indemnification
7.4.1
Parent’s
Basket.
Notwithstanding anything else herein to the contrary, subject only to the
provisions of this Section 7.4.1, the Parent Indemnified Parties shall only
be
entitled to indemnification pursuant to Section 7.2 to the extent that the
aggregate amount of the Parent Indemnified Parties Adverse Consequences exceeds
Five Hundred Thousand Dollars ($500,000) (the “Parent Basket”). In the event the
aggregate Adverse Consequences under Section
7.2 exceed the Parent Basket, then each Stockholder, severally in accordance
with such Stockholders’ portion of the Merger Consideration, shall indemnify,
defend, and save harmless the Parent Indemnified Parties for all Adverse
Consequences exceeding the Parent Basket up to the amount of the Cap (if
applicable). Notwithstanding the foregoing, the Parent Basket and Cap do not
apply to (i) adjustments relating to Working Capital, which adjustments, if
any,
are provided solely out
of
the Working Capital Escrow Amount or (ii) Adverse Consequences relating to
any
Parent Limitation Exception.
7.4.2
THIS
SECTION INTENTIONALLY LEFT BLANK.
67
7.4.3
Cap.
Except
as otherwise provided in this Section 7.4.3, the maximum liability of the
Stockholders on the one hand and Parent and Merger Sub on the other hand, for
all Adverse Consequences suffered by an Indemnified Party with respect to the
subject matter of this Agreement and the Transactions contemplated hereby is,
and shall be limited to, an amount equal to the Indemnity Escrow Amount (the
“Cap”); provided,
however,
the Cap
shall not apply to or take into account (i) Adverse Consequences related to
adjustments
relating to Working Capital, (ii)
Adverse
Consequences suffered by a Stockholder Indemnified Party relating to any
Stockholders Limitation Exception or (iii) Adverse Consequences suffered by
a
Parent Indemnified Party relating to any Parent Limitation
Exception.
7.4.4
Agreed
Deductions.
No
claim may be made by the Parent or Merger Sub for Adverse Consequences suffered
as a result of (i) the Adverse Consequences associated with the Agreed
Deductions Subject Matter exceeding the amount taken into account for Agreed
Deductions pursuant to Section 1.7.1 except to the extent such claim is based
on
a misrepresentation or inaccurate statement contained in Section 2.12.2,
Schedule 2.12 or Section 2.36 or Section 7.2.9 or (ii) the Adverse Consequences
associated with the High Mast Issue exceeding the amount taken into account
in
calculating Final Working Capital except to the extent such claim is based
on a
misrepresentation or inaccurate statement contained in Section 2.27.4, Schedule
2.27.4 (including the attachment) or Section 2.36.
7.5
Indemnification
Procedure for Third Party Claims Against Indemnified Parties.
7.5.1
Notice.
7.5.1.1
Duty
to Notify.
In the
event that subsequent to the Closing any Parent Indemnified Party or Stockholder
Indemnified Party (each, an “Indemnified Party”) receives notice of the
assertion of any claim or of the commencement of any action or proceeding by
any
entity who is not a party to this Agreement (including, but not limited to,
any
Governmental Authority) (a “Third Party Claim”) against such Indemnified Party,
with respect to which Parent or the Stockholders (“Indemnifying Party”) are
required to provide indemnification under this Agreement, the Indemnified Party
shall promptly give written notice together with a statement of any reasonably
available information regarding such claim to the Indemnifying Party within
ten
(10) Business Days after learning of such Third Party Claim (or within such
shorter time as may be necessary to give the Indemnifying Party a reasonable
opportunity to respond to such claim); provided,
that no
failure of the Indemnified Party to provide such notice shall relieve the
Indemnifying Party of its obligation to indemnify and defend the Indemnified
Party, except to the extent that the Indemnifying Party is prejudiced thereby.
If a Third Party Claim is being made against a Parent Indemnified Party, the
Stockholders’ Agent shall be given reasonable access to all books and records in
the possession or under the control of Parent which the Stockholders’ Agent
reasonably determines to be related to such claim.
7.5.2
Defense
by Indemnifying Party.
Subject
to Section 7.5.3.2, if
an
Indemnified Party gives notice to the Indemnifying Party pursuant to Section
7.5.1 of the
68
assertion
of a Third-Party Claim, the Indemnifying Party shall be entitled to participate
in the defense of such Third-Party Claim and, to the extent that it wishes
(unless (i) the Indemnifying Party is also a Person against whom the Third-Party
Claim is made and the Indemnified Party determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying Party fails
to
provide reasonable assurance to the Indemnified Party of its financial capacity
to defend such Third-Party Claim and provide indemnification with respect to
such Third-Party Claim), to assume the defense of such Third-Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After notice from
the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such Third-Party Claim, the Indemnifying Party shall not, so long
as
it diligently conducts such defense, be liable to the Indemnified Party under
this Article VII for any fees of other counsel or any other expenses with
respect to the defense of such Third-Party Claim, in each case subsequently
incurred by the Indemnified Party in connection with the defense of such
Third-Party Claim, other than reasonable costs incurred to provide any support
requested by the Indemnifying Party. The Indemnifying Party shall have ninety
(90) days after notice is given pursuant to Section 7.5.3.1 of the Indemnifying
Party’s election to assume defense of the Third Party Claim to change its
decision (and return the defense of the Third Party Claim to the Indemnified
Party) regarding the defense of the Third Party Claim if and only if the
Indemnifying Party has not done anything to prejudice the Indemnified Party’s
position or prevent the Indemnified Party from taking over the defense of the
Third Party Claim. If the Indemnifying Party assumes the defense of a
Third-Party Claim, and provided the Indemnifying Party has not returned the
defense of a Third Party Claim to the Indemnified Party in accordance with
the
terms of the immediately preceding sentence, then (i) such assumption will
conclusively establish for purposes of this Agreement that the claims made
in
that Third-Party Claim are within the scope of and subject to indemnification,
and (ii) no compromise or settlement of such Third-Party Claims may be effected
by the Indemnifying Party without the Indemnified Party’s Consent unless (A)
there is no finding or admission of any violation of Law or any violation of
the
rights of any Person; (B) the sole relief provided is monetary damages that
are
paid in full by the Indemnifying Party (none of which monetary damages shall
be
paid or reimbursed from the Indemnity Escrow Amount without Parent’s consent,
which consent shall not be unreasonably withheld or delayed); and (C) the
Indemnified Party shall have no liability (including any continuing obligation
or restriction) with respect to any compromise or settlement of such Third-Party
Claims effected without its prior written consent. Further, any fees of counsel
or other out of pocket expenses (other than amounts paid to third parties,
with
Parent’s prior written consent) incurred by any Stockholders or the
Stockholders’ Agent (either as the Indemnifying Party or as the Indemnified
Party) may not be reimbursed from the Indemnity Escrow Amount except to the
limited extent expressly provided in Sections 1.8.
7.5.3
Defense
by Indemnified Party.
7.5.3.1
If
an
Indemnified Party gives notice to the Indemnifying Party pursuant to Section
7.5.1 of the assertion of a Third-Party Claim, and the Indemnifying Party does
not, within twenty (20) days after the Indemnified Party’s notice is given, give
notice to the Indemnified Party of its election to assume the defense of such
Third-Party Claim or if the
69
Indemnifying
Party changes its decision regarding the defense of the Third Party Claim within
the ninety (90) day period provided in Section 7.5.2, then in any such event
the
Indemnified Party shall have the right to conduct such defense in good faith
at
the expense of the Indemnifying Party and the Indemnifying Party will be bound
by any determination made in such Third-Party Claim or any compromise or
settlement effected by the Indemnified Party with the prior written consent
of
Stockholders’ Agent, which consent shall not be unreasonably withheld or
delayed.
7.5.3.2
Notwithstanding the foregoing Section 7.5.2, if an Indemnified Party determines
in good faith that there is a reasonable probability that a Third-Party Claim
may adversely affect it or any of its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise or settle such Third-Party
Claim, but the Indemnifying Party will not be bound by any compromise or
settlement of any Third-Party Claim effected without its prior written consent
(which may not be unreasonably withheld or delayed).
7.5.4
Duty
to Keep Other Party Informed.
With
respect to any Third-Party Claim subject to indemnification under this Article
VII: (i) both the Indemnified Party and the Indemnifying Party, as the case
may
be, shall keep the other Person reasonably informed of the status of such
Third-Party Claim and any related Litigation at all stages thereof where such
Person is not represented by its own counsel, and (ii) the parties agree, at
the
expense of the party defending the claim, to render to each other such
assistance as they may reasonably require of each other and to cooperate in
good
faith with each other in order to ensure the proper and adequate defense of
any
Third-Party Claim.
7.5.5
Confidentiality.
With
respect to any Third-Party Claim subject to indemnification under this Article
VII, the parties agree to cooperate in such a manner as to preserve in full
(to
the extent possible) the confidentiality of all confidential information and
the
attorney-client and work-product privileges. In connection therewith, each
party
agrees that: (i) it will use its best efforts, in respect of any Third-Party
Claim in which it has assumed or participated in the defense, to avoid
production of confidential information (consistent with applicable law and
rules
of procedure), and (ii) all communications between any party hereto and counsel
responsible for or participating in the defense of any Third-Party Claim shall,
to the extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege.
7.5.6 Reimbursement
Payments for Third-Party Claims.
Any
Adverse Consequences that Parent or a Parent Indemnified Party suffers that
are
subject to indemnification pursuant to this Article VII shall be paid. The
parties shall cooperate reasonably and in good faith to cause the Parent or
Parent Indemnified Party to be paid, without unreasonable delay, from the
Indemnity Escrow Amount (which is held pursuant to the Escrow Agreement) with
respect to any amounts the Parent or Parent Indemnified Party is entitled to
be
paid in accordance with the immediately preceding sentence. Any Adverse
Consequences that a
70
Stockholder
Indemnified Party suffers that is subject to indemnification pursuant to this
Article VII shall be paid as provided in Section 7.8.
7.6
Limitation
of Remedies.
7.6.1
Limits
on Indemnity Escrow Amount.
All
Adverse Consequences sustained by a Parent Indemnified Party shall be payable
solely from the Indemnity Escrow Amount except for claims or other matters
relating to (i) payments due under Section 1.9.4 for Working Capital (which
payments shall come only from the Working Capital Escrow Amount) or (ii) any
Parent Limitation Exception. Further, notwithstanding anything to the contrary
in this Agreement, no Person other than Parent or Parent Indemnified Parties
shall be entitled to any or all of the Indemnity Escrow Amount except as
expressly provided in Section 1.8. The parties to this Agreement shall cooperate
in every reasonable way to enable Parent Indemnified Parties to timely recover
from the Indemnity Escrow Amount all amounts for which a Parent Indemnified
Party is entitled to indemnification under this Article VII or is otherwise
entitled or to which the Stockholders are bound pursuant to this Article VII.
7.6.2
Application
of Insurance Proceeds.
The
parties shall use commercially reasonable efforts to collect the proceeds of
any
insurance which would have the effect of reducing any Adverse Consequences.
To
the extent any Adverse Consequence of an Indemnified Party is reduced by receipt
of payment (i) under insurance policies which are not subject to retroactive
adjustment or other reimbursement to the insurer in respect of such payment,
or
(ii) from third parties not affiliated with the Indemnified Party, such payments
(net of the expenses of the recovery thereof) shall be credited against any
such
Adverse Consequences, and, if indemnification payments shall have been received
prior to the collection of such proceeds, the Indemnified Party shall remit
to
the Indemnifying Party the amount of such proceeds (net of the cost of
collection thereof) to the extent the indemnification payments received in
respect of such Adverse Consequences would otherwise result in a duplicative
recovery to the Indemnified Party.
7.6.3
Limitations
on Remedy.
Except
for claims or other matters relating to Working Capital, any Stockholders
Limitation Exception, any Parent Limitation Exception or the Escrow Agreement
or
Escrow Fund Amount (including asserting rights thereto), the remedies provided
for in this Article VII (and as limited by this Article VII) shall be the sole
basis for making a claim for damages against any party to this Agreement with
respect to matters for which indemnification is available under Section 7.2
or
Section 7.3. However, neither this limitation nor any other provision of this
Article VII is intended to or will be construed to limit any party’s ability to
obtain specific performance with respect to any obligation of the other party
or
parties and each party to this Agreement shall be entitled to specifically
enforce the obligations of each other party in this Agreement to the maximum
extent permitted by Law.
7.6.4
Duty
to Mitigate.
The
Parent shall take all commercially reasonable steps to mitigate all Adverse
Consequences sustained or incurred by the Parent Indemnified Parties, and the
Stockholders’ Agent and the Stockholders shall take all commercially reasonable
steps to
71
mitigate
all Adverse Consequences sustained or incurred by the Stockholder Indemnified
Parties, upon and after becoming aware of any event which would reasonably
be
expected to give rise to Adverse Consequences.
7.7
THIS
SECTION INTENTIONALLY LEFT BLANK.
7.8
Payments
to Stockholder Indemnified Party.
If
a
Stockholder Indemnified Party has notified Parent in writing of one or more
claims or potential claims (within the General Survival Period) for which the
indemnification provisions of Section 7.3 are applicable (each a “Stockholder
Claim” and collectively, the “Stockholder Claims”), then the aggregate amount of
Adverse Consequences (whether arising before or after the notice referenced
in
this sentence) suffered by the Stockholder Indemnified Party for which the
indemnification provisions of Section 7.3 are applicable (so the Stockholder
Indemnified Party is entitled to indemnification from Parent thereunder) shall
be paid by Parent without unreasonable delay to the applicable Stockholder
Indemnified Party, in accordance with this Agreement (but subject to any
applicable express limitations in this Article VII). None of the Adverse
Consequences suffered by any Stockholder Indemnified Party or Stockholders’
Agent shall be paid from the Indemnity Escrow Amount.
7.9
Payments
from the Indemnity Escrow Amount.
If a
Parent Indemnified Party has notified the Escrow Agent and Stockholders’ Agent
in writing of one or more claims or potential claims (within the applicable
time
period permitted by Section 7.1) for which the indemnification provisions of
Section 7.2 are applicable (each a “Parent Claim” and collectively, the “Parent
Claims”), then the aggregate amount of Adverse Consequences (whether arising
before or after the notice referenced in this sentence) for which the Parent
Indemnified Party is or becomes entitled to indemnification under Section 7.2
shall be paid to the Parent or Parent Indemnified Party, as applicable, from
the
Indemnity Escrow Amount upon demand by the Parent Indemnified Party or Parent,
as applicable, in accordance with this Agreement (but subject to any applicable
express limitations in this Article VII). The
parties shall direct the Escrow Agent to pay the Parent or Parent Indemnified
Party, without unreasonable delay, from the Indemnity Escrow Amount held
pursuant to the Escrow Agreement with respect to any amounts the Parent or
Parent Indemnified Party is entitled to be paid in accordance with the
immediately preceding sentence. Such
payments from the Indemnity Escrow Amount to Parent Indemnified Party or Parent
shall be permanently retained by the Parent Indemnified Party or Parent, as
applicable, and the Indemnity Escrow Amount shall be deemed to be reduced
accordingly.
7.10
Treatment
of Payments.
Amounts
paid to or on behalf of a Stockholder Indemnified Party or a Parent Indemnified
Party as indemnification shall be treated as adjustments to the Merger
Consideration unless otherwise required by a change in Law or a final
unappealable determination.
7.11
Cooperation
Relating to German Environmental Issue.
In the
event there is any claim by any Governmental Authority against Parent, JJI,
any
Subsidiary of JJI or any Affiliate of Parent relating to the German
Environmental Issue,
the
Surviving Company and the
72
Stockholders’
Agent shall use commercially reasonable efforts to cooperate with each other
to
(i) minimize the Adverse Consequences relating to the German Environmental
Issue
and (ii) cause the Escrow Agent to timely pay the Adverse Consequences relating
to the German Environmental Issue which are indemnifiable under this Agreement
from the Indemnity Escrow Amount.
7.12
INDEMNIFICATION
IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE.
THE
INDEMNIFICATION PROVISIONS IN THIS ARTICLE VII SHALL BE ENFORCEABLE REGARDLESS
OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT)
ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE
OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.
ARTICLE
VIII
DEFINITIONS
For
the
purposes of this Agreement, the term:
“Accountant
Continuing Surviving Claim” has the meaning set forth in the second grammatical
paragraph of Section 1.8.4.3.
“Accountant
Surviving Claim” has the meaning set forth in the second grammatical paragraph
of Section 1.8.2.3.
“Accounting
Firm” means ▇▇▇▇▇ ▇▇▇▇▇▇ and Company LLC, but if such accounting firm is unable
to accept engagement pursuant to the terms of this Agreement, then the Parent
and Stockholders’ Agent shall select another accounting firm chosen by mutual
agreement of the Parent and Stockholders’ Agent acting in good faith and, in
such event, such other accounting firm so selected shall be the “Accounting
Firm.”
“Accounts
Receivable” means (i) all rights of payment
from customers of JJI and its Subsidiaries arising from the sale by JJI and
its
Subsidiaries of Inventory or services to such customers in the ordinary course
of business, (ii) all other accounts or notes receivable of JJI and its
Subsidiaries and the full benefit of all security for such accounts or notes
and
(iii) any claim, remedy or other right related to any of the
foregoing.
“Acquisition
Transaction” means any (i) merger, consolidation or similar transaction
involving JJI, (ii) sale, lease or other disposition, directly or indirectly,
by
merger, consolidation, share exchange or otherwise, of any assets of JJI
representing 15% or more of the assets of JJI, (iii) issuance, sale or other
disposition of (including by way of merger, consolidation, share exchange or
any
similar transaction) securities (or options, rights or warrants to purchase,
or
securities convertible into, such securities) representing 15% or more of the
votes of the
73
outstanding
JJI Stock, (iv) tender offer or exchange offer in which any person or “group”
(as such term is defined under the Securities Exchange Act of 1934, as amended
(“Exchange Act”) shall acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the outstanding JJI Stock, (v) recapitalization,
restructuring, liquidation, dissolution, or other similar type of transaction
with respect to JJI, or (vi) transaction which is similar in form, substance
or
purpose to any of the foregoing transactions; provided,
however,
that
the term “Acquisition Transaction” shall not include the Merger or the other
transactions contemplated by this Agreement.
“Adjustment
Amount” has the meaning set forth in the second grammatical paragraph of Section
1.8.2.3.
“Adjusted
Indemnity Escrow Amount” means at the time such term is being used in this
Agreement, the amount of funds in the Indemnity Escrow Amount as it has been
adjusted as provided in this Agreement and in the Escrow Agreement.
“Adverse
Consequences” means (whether or not involving a third-party claim) each and
every loss, damage, cost, expense (including court costs, reasonable costs
of
investigation, reasonable attorneys’ fees or costs, or other expenses, including
those arising out of the enforcement of this Agreement), suit, action, demand,
claim, cause of action, assessment, deficiency, liability, judgment, award,
fine, penalty, sanction, obligation, charges and amounts paid in settlement,
including reasonable costs, fees and expenses of attorneys; provided,
however, notwithstanding
any other provision of this Agreement, (i) no party shall be entitled to recover
from any other party (and “Adverse Consequences” shall not include) either (A)
punitive damages other than punitive damages asserted by the way of
indemnification for punitive damages paid or required to be paid to a third
party in connection with a Third Party Claim or (B) incidental or consequential
damages for Genlyte Specific Losses other than incidental or consequential
damages for Genlyte Specific Losses asserted by the way of indemnification
for
Genlyte Specific Losses paid or required to be paid to a third party in
connection with a Third Party Claim and (ii) “Adverse Consequences” shall
include (A) all incidental, consequential and punitive damages, asserted by
the
way of indemnification for incidental, consequential or punitive damages paid
or
required to be paid to a third party in connection with a Third Party Claim
and
(B) all incidental and consequential damages which are not Genlyte Specific
Losses.
“Affiliate”
means a Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
Person;
“Agreed
Deductions” has the meaning set forth in Section 1.7.1.2.
“Agreed
Deductions Subject Matter” means (i) the rental costs the Surviving Company may
incur related to the ▇▇▇▇▇▇▇▇▇▇▇ Lease that exceeds the rental costs necessary
and appropriate for ▇▇▇▇▇▇▇▇▇▇▇’▇ reasonable business needs (the “▇▇▇▇▇▇▇▇▇▇▇
Lease Support”), (ii) any costs and business interruption the Surviving Company
may incur in relocating tangible personal property from the ▇▇▇▇▇▇▇▇▇▇▇ Facility
upon termination of the ▇▇▇▇▇▇▇▇▇▇▇ Lease
74
(“▇▇▇▇▇▇▇▇▇▇▇
Relocation Costs”), (iii) any severance costs (other than severance costs
relating to any representation in Article II not being accurate immediately
prior to the Effective Time) the Surviving Company may incur after the Effective
Time resulting from the termination by JJI or any of its Subsidiaries of the
14
specific employees identified on Schedule 8.1 in 2004 and 2005 (“▇▇▇▇▇▇▇▇▇▇▇
Personnel Severance Costs”), (iv) any Environmental Liability of JJI and its
Subsidiaries arising directly from the Omega Chemical Site or any Regional
Response Work arising directly from the occurrences at the Omega Chemical Site
(“Omega Chemical Site Estimated Costs”), (v) any Environmental Liability of JJI
and its Subsidiaries arising directly from the ▇▇▇▇▇▇ Valley Site (“▇▇▇▇▇▇
Valley Site Estimated Costs”) and (vi) any Environmental Liability of JJI and
its Subsidiaries arising directly from the Other Agreed U.S. Environmental
Issues (“Other Agreed U.S. Environmental Issues Estimated Costs”); provided,
however,
the
Agreed Deductions Subject Matter shall not include the subject matter of any
of
the Pay Off Liabilities, any of the Price Reduction Liabilities, or any of
the
Working Capital Liabilities.
“Agreed
Escrow Distribution Methodology” means the Escrow Agent’s distribution of
differing amounts of the subject distribution calculated and paid in the manner
set forth in Paragraphs A, B and C below.
|
A.
|
Payments
to Parent.
Parent shall be entitled to receive from the Escrow Agent, by wire
transfer, (i) an amount equal to the portion determined in accordance
with
this Agreement and as set forth in the “Escrow Fund Amount Percentage”
column of Exhibit
B
that would have been allocated to Dissenting Shares from the subject
distribution but for the exercise of appraisal or dissenters
rights and
(ii) an amount equal to the portion determined in accordance with
this
Agreement and as set forth in the “Escrow Fund Amount Percentage” column
of Exhibit
B
that would be allocated from the subject distribution to Non-Claiming
Holders.
|
|
B.
|
Payment
to Stockholders’ Agent.
Following the payment to Parent provided for in Paragraph A above,
the
Stockholders’ Agent shall be entitled to receive from the Escrow Agent the
Stockholders’ Agent’s Costs, if any.
|
|
C.
|
Payments
to Holders of Merger Consideration Rights.
Following the payments, if any, to Parent and Stockholders’ Agent provided
for in Paragraphs A and B above, the holders of Merger Consideration
Rights that have surrendered their Certificates and Letters of Transmittal
in accordance with Section 1.4.6 (except Appraisal Rights Stockholders
and
Non-Claiming Holders) shall be entitled to receive from the Escrow
Agent
any remaining portion of the subject distribution allocated in accordance
with this Agreement and as set forth in the “Escrow Fund Amount
Percentage” column of Exhibit
B.
|
“Agreement”
has the meaning set forth in the introduction and the term “Agreement” includes
the text of this document, the Schedules and the Exhibits.
75
“Appraisal
Right Stockholders’ Consideration” means a portion (determined as set forth on
the
“Net
Merger Consideration Payable at the Effective Time” column or the “Escrow Fund
Amount Percentage” column, as appropriate, of Exhibit
B)
of the
Merger Consideration that would have been paid to Appraisal Rights Stockholders
had such Appraisal Rights Stockholders not become Appraisal Rights
Stockholders.
“Appraisal
Rights Stockholders” has the meaning set forth in Section 1.4.5.
“Austrian
Director Issue” means the claims made by ▇▇. ▇▇▇▇▇▇▇, the former general manager
of ▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Gesellschaft m.b.H. against JJI or any of its
Subsidiaries.
“Breach”
means any breach of, or any inaccuracy in, any representation, statement or
warranty or any breach of, or failure to perform or comply with, any covenant
or
obligation, in or of this Agreement or any other contract or
agreement.
“Business
Day” means any
day
other than a Saturday, a Sunday, or a U.S. federal holiday;
“Cap”
has
the meaning set forth in Section 7.4.3.
“Certificate
of Merger” has the meaning set forth in the Recitals.
“Certificates”
has the meaning provided in Section 1.4.6.1.
“Change
of Control Obligations” means amounts paid or agreed or required to be paid
(either before, at or after the Effective Time) based on or in connection with
any promise, assurance or commitment, oral or written, made, assumed by or
otherwise binding on JJI or any Affiliate of JJI prior to the Effective Time,
including those (i) under any bonus, severance, incentive payment or other
payment to or agreement with management or employees, because of this Agreement,
the Merger or the Transactions or (ii) relating to any future change of control,
severance, termination of employment or other event similar to any of the
foregoing. The “Change of Control Obligations” include (i) all oral and written
commitments for success or similar payments and (ii) all Taxes, employer’s share
of FICA and other amounts which are or may become payable to any Governmental
Authority, costs of or related to any Plans and any other costs and expenses
in
connection with any payment relating to any “Change of Control
Obligations”.
“Class
A
Common Stock” means the Class A Common Stock, par value $.01 per share of
JJI.
“Class
A
Common Stock Warrants” means warrants granted by JJI to purchase shares of Class
A Common Stock of JJI.
76
“Class
B
Common Stock” means the Class B Convertible Non-Voting Common Stock, par value
$.01 per share of JJI.
“Class
B
Common Stock Warrants” means warrants granted by JJI to purchase shares of Class
B Common Stock of JJI.
“Closing”
has the meaning set forth in Section 1.2.
“Closing
Date” has the meaning set forth in Section 1.2.
“Closing
Working Capital Adjustment Amount” has the meaning set forth in Section
1.7.1.4.4.
“Code”
has the meaning set forth in the recitals of this Agreement.
“Continuing
Indemnity Escrow” has the meaning set forth in Section 1.8.2.
“Continuing
Surviving Claim” has the meaning set forth in Section 1.8.4.2.
“Contract
Termination Expenses” means all amounts required to be paid to terminate all
duties, obligations and Liabilities of JJI and its Subsidiaries which now exist
or may hereafter arise under or in connection with the Terminated Contracts.
The
“Contract Termination Expenses” include all
Taxes, employer’s share of FICA and other amounts which are or may become
payable to any Governmental Authority, costs of or related to any Plans and
any
other costs and expenses in connection with any payment relating to any
“Terminated Contracts”.
“Contractual
Obligations” means, as applied to any Person, any indenture, mortgage, deed of
trust, contract, lease, undertaking, agreement or instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject including the Transaction
Documents.
“control”
(including the terms “controlled by” and “under common control
with”) means
the
possession, directly or indirectly or as trustee or executor, of the power
to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement, or otherwise.
“Copyright
License” means any and all rights now owned or hereafter acquired by JJI under
any written agreement granting any right to use any Copyright or Copyright
registration.
“Copyrights”
means all of the following: (i) all copyrights and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any
77
state
or
territory thereof, or any other country or any political subdivision thereof;
and (ii) all reissues, extensions or renewals thereof.
“Deferred
Compensation Agreement” means the Supplemental Deferred Compensation Agreement
dated February 1, 1983 with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
“Defined
Benefit Pension Plan” has the meaning set forth in Section 2.13.4.
“Defined
Benefit Pension Plan Funding” means all costs and other Adverse Consequences
(including the amount to be paid for the Class A Common Stock held by the
Employees Pension Plan of JJI Lighting Group, Inc. and its Subsidiaries pursuant
to Section 4.16.3.1 and costs of termination and fully funding) which will
be
incurred by JJI and its Subsidiaries in connection with the termination of
all
Defined Benefit Pension Plans (which Defined Benefit Pension Plans include
the
Employees Pension Plan of JJI Lighting Group, Inc. and its Subsidiaries).
“Determination
Date” has the meaning set forth in Section 1.9.3.
“DGCL”
has the meaning set forth in the Recitals.
“Dispute
Notice” has the meaning set forth in Section 1.9.3.
“Dissenting
Shares” has the meaning set forth in Section 1.4.5.
“Dissenting
Stockholder” has the meaning set forth in Section 1.4.5.
“Dollars”
or “$” means lawful currency of the United States of America.
“Effective
Date” means the day which includes the Effective Time.
“Effective
Date Pay Off Liabilities Schedule” has the meaning set forth in Section
2.35.
“Effective
Time” has the meaning set forth in Section 1.3.
“Environmental
Laws” means all applicable federal, state, local and foreign laws, statutes,
ordinances, codes, rules and regulations, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment relating to the
pollution or protection of human health (to the extent relating to Hazardous
Materials including exposure to Hazardous Materials), the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et
seq.)
(“CERCLA”);
the
Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101
et
seq.);
the
Federal Insecticide, Fungicide, and Rodenticide Act (7
78
U.S.C.
§§
136 et
seq.);
the
Solid Waste Disposal Act (42 U.S.C. §§ 6901 et
seq.);
the
Toxic Substance Control Act (15 U.S.C. §§ 2601 et
seq.);
the
Clean Air Act (42 U.S.C. §§ 7401 et
seq.);
the
Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et
seq.);
the
Occupational Safety and Health Act (29 U.S.C. §§ 651 et
seq.);
and
the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et
seq.),
and
any and all regulations promulgated thereunder.
“Environmental
Liabilities” means, with respect to any Person, all liabilities, costs, losses,
damages, and expenses (including all reasonable fees, disbursements and expenses
of counsel, experts and consultants), fines and penalties, incurred as a result
of any claim, suit, action, investigation, proceeding or demand by any Person,
whether based in contract, tort, strict liability, criminal or civil statute
arising under any Environmental Laws or Environmental Permits.
“Environmental
Permits” means all permits, licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any Environmental
Laws.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Escrow
Agent” means National City Bank.
“Escrow
Agreement” has the meaning set forth in Section 1.7.3.
“Escrow
Fund Amount” means the sum of (i) the Indemnity Escrow Amount, plus (ii) the
Working Capital Escrow Amount.
“Estimated
Unresolved Claims Amount” has the meaning set forth in Section
1.8.2.2.
“Estimated
Working Capital” has the meaning set forth in Section 1.7.1.4.
“Exchange
Agent” has the meaning set forth in Section 1.4.6.1.
“Exchange
Fund” has the meaning set forth in Section 1.4.6.13.
“Exhibits”
means Exhibits to this Agreement identified on the signature page to this
Agreement.
“Expiration
Date” has the meaning set forth in Section 6.1.4.
“Fair
Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et
seq.
“Final
Adjustment Amount” has the meaning set forth in the second grammatical paragraph
of Section 1.8.4.3.
79
“Final
Continuing Indemnity
Escrow”
has the meaning set forth in Section 1.8.4.2.
“Final
Working Capital” has the meaning set forth in Section 1.9.3.
“Financial
Statements” has the meaning set forth in Section 2.5.
“Forward
Contract” has the meaning in Section 4.15.
“GAAP”
means generally accepted accounting principles in the United States of America,
consistently applied.
“General
Survival Period” has the meaning set forth in Section 7.1.
“Genlyte
Specific Losses” means, subject to the proviso contained in this sentence,
losses to Parent and Parent’s Affiliates other than losses to the Surviving
Company or any Subsidiary of the Surviving Company; provided,
however,
if the
value of JJI or any of its Subsidiaries is less than it would have been as
of
the Effective Time had the representations in this Agreement been accurate
then
Adverse Consequences relating to such diminution in value and Breach shall
not
be considered “Genlyte Specific Losses”.
“German
Environmental Issue” means any past, present or future issue or claim that JJI
or any of its Subsidiaries has any Liability, Environmental Liability or duty
in
connection with the condition of or prior actions relating to or involving
the
environment at the ▇▇▇▇▇▇▇▇▇▇▇ Facility at the Effective Time.
“German
Parent” means JJI Lighting Group GmbH Europe, a German corporation wholly-owned
by JJI.
“Governing
Documents” means (i) the articles or certificate of incorporation and the bylaws
of a corporation; (ii) the partnership agreement and any statement of
partnership of a general partnership; (iii) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (iv) any
charter or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (e) any amendment to any of the
foregoing.
“Government
Antitrust Entity” has the meaning set forth in Section 4.5.2.
“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or
pertaining to government.
“Hazardous
Material” means any substance, material or waste that is regulated by, or forms
the basis of liability under, any Environmental Laws, including any material
or
substance that is (i) defined as a “solid waste,” “hazardous waste,” “hazardous
material,” “hazardous
80
substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste” or “toxic substance”
under any Environmental Laws, or (ii) petroleum or any fraction or by-product
thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive
substance.
“High
Mast Issue” means the issues and problems with the high mast fixture as
described in the attachment to Schedule 2.27.4.
“▇▇▇▇▇▇▇▇▇▇▇”
means ▇▇▇▇▇▇▇▇▇▇▇ Leuchten GmbH, a German corporation wholly-owned by the German
Parent.
“▇▇▇▇▇▇▇▇▇▇▇
Debt
Payments” means the principal, accrued but unpaid interest and other obligations
with respect to the debt due to banks or other lenders by ▇▇▇▇▇▇▇▇▇▇▇ or any
of
its subsidiaries.
“▇▇▇▇▇▇▇▇▇▇▇
Employee Pension Liability” means pensions payable to employees of ▇▇▇▇▇▇▇▇▇▇▇
as identified in the Actuarial Report (Item 6a of Schedule 2.13.1) but does
not include any ▇▇▇▇▇▇▇▇▇▇▇ Family Plan Expense.
“▇▇▇▇▇▇▇▇▇▇▇
Facility” means the premises leased from ▇▇▇▇▇ & Remmler GmbH & Co. KG
located at Am Neuen Haus 4-10 and In der ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by lease
dated December 11, 1997, as amended April 5, 2001 and by Court Order dated
August 13, 2004.
“▇▇▇▇▇▇▇▇▇▇▇
Family Plan Expense” means the pension obligations due to ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ set forth in their respective Service Agreements
dated December 12, 1997, and in the Service Agreement of Mr. Hansmartin
▇▇▇▇▇▇▇▇▇▇▇ dated July 1, 1992.
“▇▇▇▇▇▇▇▇▇▇▇
Lease” means the lease of the ▇▇▇▇▇▇▇▇▇▇▇ Facility, a true and complete copy of
which has been provided to Parent by JJI.
“▇▇▇▇▇▇▇▇▇▇▇
Lease Support” has the meaning set forth in the definition of “Agreed Deductions
Subject Matter.”
“▇▇▇▇▇▇▇▇▇▇▇
Personnel Severance Costs” has the meaning set forth in the definition of
“Agreed Deductions Subject Matter.”
“▇▇▇▇▇▇▇▇▇▇▇
Relocation Costs” has
the
meaning set forth in the definition of “Agreed Deductions Subject
Matter.”
“IMC”
means International Mezzanine Capital B.V.
“Improvements”
has the meaning set forth in Section 2.11.6.
81
“Indebtedness” shall
mean indebtedness for borrowed money including principal, accrued interest
and
other amounts due or accrued.
“Indemnified
Party” has the meaning set forth in Section 7.5.1.1.
“Indemnifying
Party” has the meaning set forth in Section 7.5.1.1.
“Indemnity
Escrow Amount” shall mean Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000). Provided, however, the “Indemnity Escrow Amount” may possibly be
increased as provided in part (g) of Exhibit
D.
“Initial
Working Capital Escrow Amount” has the meaning set forth in Section
1.7.1.4.2.
“Intellectual
Property” means any and all Licenses, Patents, Copyrights, Trademarks, the
goodwill associated with such Trademarks, and Trade Secrets.
“Inventory”
means all inventories of JJI and its Subsidiaries, wherever located, including
all finished goods, work in process, raw materials, spare parts and all other
materials and supplies to be used or consumed by JJI and its Subsidiaries in
the
production of finished goods.
“IRS”
means the Internal Revenue Service of the United States.
“JJI”
has
the meaning set forth in the introduction and Section 1.1.
“JJI
Common Stock” means the Class A Common Stock and the Class B Common
Stock.
“JJI
Preferred Stock” means the Series A Preferred Stock and the Series B Preferred
Stock.
“JJI’s
Representatives” has the meaning set forth in Section 2.19.2.
“JJI
Stock” means
the
JJI Common Stock and the JJI Preferred Stock.
“Knowledge”.
An individual will be deemed to have “Knowledge” of a particular fact or other
matter if such individual is aware of such fact or other matter or would have
been aware of such fact or other matter if such individual had conducted a
reasonable inquiry. JJI will be deemed to have “Knowledge” of a particular fact
or other matter if any individual that is an officer or director of JJI or
any
Subsidiary or Affiliate of JJI has or is deemed to have Knowledge of such fact
or other matter. Parent and Merger Sub will be deemed to have “Knowledge” of a
particular fact or other matter if any officer or director of Parent or Merger
Sub has Knowledge of such fact or other matter.
“Law
Against Restraints on Competition” means the German law known as the Act Against
Restraints on Competition (Gesetz gegen Wettbewerbsbeschr’nkungen,
GWB).
82
“Laws”
means, collectively, any law (including common law), ordinance, writ, directive,
judgment, order, decree, injunction, statute, treaty, rule, regulation,
regulatory requirement, or determination of (or an agreement with) a
Governmental Authority.
“Leased
Real Estate” means the Real Estate leased by JJI or its Subsidiaries as listed
on Schedule 2.11.
“Letter
of Transmittal” has the meaning set forth in Section 1.4.6.3.
“Liability”
means,
with respect to any Person, any liability or obligation of such Person of any
kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements
of
such Person.
“License”
means any Copyright License, Patent License, Trademark License or other license
of rights or interests now held or hereafter acquired by JJI.
“Lien”
means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, easement or encumbrance,
or
preference, priority or other security agreement or preferential arrangement
of
any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of
the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Uniform Commercial Code or comparable
law of any jurisdiction).
“Litigation”
means the institution of any action, charge, claim, demand, suit, proceeding,
petition, investigation, or arbitration.
“Material
Adverse Effect” means a material adverse effect or impact upon the assets,
financial condition, results of operations, or business of JJI and its
Subsidiaries taken as a whole, or on the ability of JJI or the Stockholders,
as
a group, to consummate the Merger contemplated hereby; provided,
however,
an
effect or impact will be considered material for purposes of the definition
of
“Material Adverse Effect” if and only if the effect or impact could result in
JJI and its Subsidiaries taken as a whole being liable, being required to pay,
suffering Adverse Consequences or otherwise being adversely impacted by (i)
$100,000 or more related to any single claim or event or (ii) $500,000 or more
in the aggregate. A Material Adverse Effect as it relates to Parent and Merger
Sub shall mean the same as set forth above, substituting Parent and Merger
Sub
for JJI in all cases.
“Material
Contracts” has the meaning set forth in Section 2.14.1.
83
“Merger”
has the meaning set forth in the Recitals.
“Merger
Consideration” has the meaning set forth in Section 1.7.1.
“Merger
Consideration Rights” has the meaning set forth in Section 1.4.3.
“Merger
Filing Laws” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act and Law
Against Restraints on Competition.
“Merger
Sub” has the meaning set forth in the introduction.
“Multiemployer
Plan” has the meaning set forth in Section 2.13.6.
“Net
Merger Consideration” has the meaning set forth in Section 1.4.4.
“Non-Claiming
Holders” means the holders
of Merger Consideration Rights who have not surrendered their Certificates
in
accordance with Section 1.4.6 hereof.
“Omega
Chemical Site” means the Omega Chemical Corporation Superfund Site listed on the
National Priorities List on January 19, 1999 in 64 Fed. Reg. 2950.
“Omega
Chemical Site Estimated Costs” has the meaning set forth in the definition of
“Agreed Deductions Subject Matter”.
“Options”
means the options or rights issued by JJI pursuant to its 1997 and 2002 Stock
Incentive Plans to purchase shares of JJI Class A Common Stock, the 1987 Stock
Incentive Plan, as amended and restated in 1991, to purchase shares of JJI
Class
A Common Stock and any other right to acquire any ownership of any capital
stock
of JJI or other equity interest in JJI.
“Other
Agreed U.S. Environmental Issues” means only the specific environmental issues
expressly described on Exhibit
G.
“Other
Agreed U.S. Environmental Issues Estimated Costs” has the meaning set forth in
the definition of “Agreed Deductions Subject Matter”.
“Owned
Intellectual Property” means all Intellectual
Property that is purported to be owned by JJI or any Subsidiary of JJI,
including all Intellectual Property referenced on Schedules 2.8.2, 2.83, 2.84
and 2.85.
“Owned
Real Estate” means real estate which is indicated on Schedule 2.11 as being
owned.
“Parent”
has the meaning set forth in the introduction.
84
“Parent
Basket” has the meaning set forth in Section 7.4.1.
“Parent
Claim” or “Parent Claims” has the meaning set forth in Section 7.9.
“Parent
Demand Amount” means the Parent or Parent Indemnified Party’s good faith
estimate of the Estimated Unresolved Claims Amount.
“Parent
Indemnified Party” has the meaning set forth in Section 7.2.
“Parent
Limitation Exception” means each of the following:
(i)
fraud;
(ii)
intentional Breaches;
(iii)
failure of the Merger to become or remain effective unless the cause of such
failure is the sole fault of Parent;
(iv)
failure of the stockholder(s) of the Merger Sub immediately prior to the
Effective Time to become the sole shareholder of JJI at the Effective Time
or
within three (3) days of the Closing unless such failure is the sole fault
of
Parent;
(v)
inaccuracy in any representation in Section 2.1 (other than the specific
representations relative to an entity being qualified to do business in
jurisdictions other than the jurisdiction in which such entity was organized)
or
2.2 at the time of signing of this Agreement or the Effective Time;
(vi)
any
claim by any Person of an interest, Option, Warrant or other right in JJI or
its
equity as of the Effective Time other than the claims pursuant to this Agreement
of the holders of JJI Stock and Class B Common Stock Warrants that are listed
on
the attachment to Schedule 2.1.2;
(vii)
Adverse Consequences relating to (A) Change of Control Obligations exceeding
the
amount reflected in Section 1.7.1.1.5 or Contract Termination Expenses exceeding
the amount reflected in Section 1.7.1.1.9;
|
(viii)
|
the
matter referenced in Section 7.2.9;
and
|
|
(ix)
|
the
matter referenced in Section
7.2.10.
|
Provided,
however, with respect to any of the representations in Article II, Breaches
of
any such specific representations (other than those referenced in part (v)
above) shall not be considered “Parent Limitation Exceptions” under part (ii)
above unless JJI has or is deemed to have
85
Knowledge
that such representations are incorrect or incomplete at either the time of
signing this Agreement or the Effective Time.
“Parent’s
Representatives” has the meaning set forth in Section 4.4.1.
“Patent
License” means rights under any written agreement now owned or hereafter
acquired by JJI granting any right with respect to any invention on which a
Patent is in existence.
“Patents”
means all of the following: (i) all letters patent of the United States or
any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or of any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State or any other country, (ii) all reissues, continuations,
continuations-in-part, divisionals or extensions thereof, and (iii) inventions
and discoveries that may be patentable.
“Pay
Off
Letter” means either (i) a binding written commitment from each obligee of a Pay
Off Liability in form and substance reasonably acceptable to Parent which
accurately reflects the amount which will be required to satisfy such Pay Off
Liability at the Effective Time and for a reasonable period thereafter or (ii)
such other documentation of such amount which is acceptable to Parent in its
sole discretion.
“Pay
Off
Liabilities” has the meaning set forth in Section 1.7.1.1.
“Pay
Off
Liabilities Schedule” has the meaning set forth in Section 2.35.
“PBGC”
means Pension Benefit Guaranty Corporation.
“Pension
Benefit Plan” has the meaning set forth in Section 2.13.2.
“Period”
has the meaning set forth in Section 2.31.
“Permitted
Encumbrances” means the following encumbrances but only to the extent that each
encumbrance is fully and appropriately accrued for or reserved under GAAP and
reflected as a Liability that is deducted from the Merger Consideration in
accordance with Section 1.7:
1.
With
respect to the assets other than the Real Estate,
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(i)
|
inchoate
Liens for taxes, assessments or governmental charges or levies not
yet due
and payable or delinquent, and Liens for taxes, assessments or
governmental charges or levies which are being contested in good
faith by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP, which proceedings (or orders entered in
connection
|
|
(ii)
|
86
with
such
proceedings) have the effect of preventing the forfeiture or sale of the
property subject to any such Lien,
|
(iii)
|
mortgages
or security interests shown on the Balance Sheet included in the
Financial
Statements as securing any specified liabilities or obligations fully
reflected, with respect to which no default (or event that, with
notice or
lapse of time or both, would constitute default) exists,
|
|
(iv)
|
mortgages
or security interests incurred in connection with the purchase of
property
at or assets after December 31, 2005 (such mortgages and security
interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse
of time
or both, would constitute a default) exists,
and
|
|
(v)
|
which
are disclosed on Schedule 8.3-Permitted Encumbrances.
|
2.
With
respect to the Real Estate,
|
(i)
|
inchoate
liens for taxes, assessments or governmental charges or levies not
yet due
and payable or delinquent and Liens for taxes, assessments or governmental
charges or levies which are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings (or orders entered in connection
with such proceedings) have the effect of preventing the forfeiture
or
sale of the property subject to any such
Lien,
|
|
(ii)
|
mortgages
or security interests shown on the Balance Sheet included in the
Financial
Statements as securing specified liabilities or obligations, with
respect
to which no default (or event that, with notice or lapse of time
or both,
would constitute default) exists,
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|
(iii)
|
mortgages
or security interests incurred in connection with the purchase of
property
at or assets after December 31, 2005 (such mortgages and security
interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse
of time
or both, would constitute a default) exists,
and
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|
(iv)
|
which
are disclosed on Schedule 2.11-Permitted
Encumbrances.
|
“Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department
thereof).
87
“Plan”
has the meaning set forth in Section 2.13.1.
“Post-Closing
Statement” has the meaning set forth in Section 1.9.1.
“Price
Reduction Liabilities” has the meaning set forth in Section
1.7.1.3.
“▇▇▇▇▇▇
Valley Site” means the ▇▇▇▇▇▇ Valley Operable Unit of the San ▇▇▇▇▇▇▇ Valley
Superfund Site, Area 4, Los Angeles, CA designated on the National Priorities
List (see 49 Fed. Reg. 19480 (1984)).
“▇▇▇▇▇▇
Valley Site Estimated Costs” has the meaning set forth in the definition of
“Agreed Deductions Subject Matter”.
“Real
Estate” has the meaning set forth in Section 2.11.1.
“Regional
Response Work” shall mean work that the Governmental Authorities require the
Parties, or any of them, to perform, or which they perform at the request or
demand of the Governmental Authorities or any of them, regarding regional
groundwater contamination alleged to be attributed to the Omega Chemical
Site.
“Related
Person”. With respect to a particular individual:
(i)
each
other member of such individual’s Family;
(ii)
any
Person that is directly or indirectly controlled by any one or more members
of
such individual’s Family;
(iii)
any
Person in which members of such individual’s Family hold (individually or in the
aggregate) a Material Interest; and
(iv)
any
Person with respect to which one or more members of such individual’s Family
serves as a director, officer, partner, executor or trustee (or in a similar
capacity).
With
respect to a specified Person other than an individual:
(i)
any
Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person;
(ii)
any
Person that holds a Material Interest in such specified Person;
(iii)
each Person that serves as a director, officer, partner, executor or trustee
of
such specified Person (or in a similar capacity);
(iv)
any
Person in which such specified Person holds a Material Interest;
and
88
(v)
any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity).
For
purposes of this definition, (i) the “Family” of an individual includes (A) the
individual, (B) the individual’s spouse, (C) any other natural person who is
related to the individual or the individual’s spouse within the second degree
and (D) any other natural person who resides with such individual; and (ii)
“Material Interest” means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests representing
at
least ten percent (10%) of the outstanding equity securities or equity interests
in a Person.
“Release”
means any release, spill, emission, leaking, pumping, pouring, emitting,
emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material in the environment, including the
movement of Hazardous Material through or in the air, soil, surface water,
ground water or property.
“Resolution
Period” has the meaning set forth in Section 1.8.2.2.
“Review
Period” has the meaning set forth in Section 1.9.2.2.
“Schedules”
means the Schedules to this Agreement prepared by JJI and identified in
Exhibit
H.
“Senior
Debt” means the obligations owing to the Lenders pursuant to the Credit
Agreement, dated as of December 29, 2004 by and among JJI and the other persons
party thereto that are designated as Credit Parties and General Electric Capital
Corporation as Administrative Agent, Agent, L/C Issuer and a Lender, The
Governor and Company of the Bank of Ireland as Documentation Agent and the
other
financial institutions party thereto and GECC Capital Markets Group, Inc. As
Sole Lead Arranger and Sole Bookrunner.
“Senior
Debt Payments” means all principal, accrued but unpaid interest and other
obligations with respect to the Senior Debt.
“Series
A
Preferred Stock” means the Convertible Voting Preferred Stock, Series A, par
value $.01 per share, of JJI.
“Series
B
Preferred Stock” means the Redeemable Preferred Stock, Series B, par value $.01
per share, of JJI.
“SERP”
means the Supplemental Executive Retirement Plan of JJI and its Subsidiaries
adopted effective as of January 1, 1994, as amended by resolutions of the board
of directors of JJI adopted on October 7, 2002.
89
“SERP
Funding” means all the costs and Adverse Consequences associated with
terminating the SERP.
“Stock
Incentive Plans” means JJI’s 1987, 1997 and 2002 Stock Incentive Plans to
purchase shares of JJI Class A Common Stock.
“Stockholder
Claim” and “Stockholder Claims” has the meaning set forth in Section
7.8.
“Stockholder
Indemnified Party” has the meaning set forth in Section 7.3.
“Stockholder(s)”
means those Persons who own JJI Stock or Class B Common Stock
Warrants.
“Stockholders’
Agent” has the meaning set forth in the introduction.
“Stockholders
Limitation Exception” means each of the following:
(i)
fraud;
(ii)
intentional Breaches;
(iii)
failure of the Merger to become or remain effective unless the cause of such
failure is the sole fault of JJI, any Stockholder or the Stockholders’ Agent;
and
(iv)
inaccuracy in any representation in Section 3.1 (other than the specific
representations relative to an entity being qualified to do business in
jurisdictions other than the jurisdiction in which such entity was organized)
or
3.2 at the time of signing of this Agreement or the Effective Time.
Provided,
however, with respect to any of the representations in Article III, Breaches
of
any such specific representations (other than those referenced in part (iv)
above) shall not be considered “Stockholders Limitation Exceptions” under part
(ii) above unless Parent or Merger Sub has or is deemed to have Knowledge that
such representations are incorrect or incomplete at either the time of signing
this Agreement or the Effective Time.
“Subordinated
Debt” means the Indebtedness of JJI owed to International Mezzanine Capital
B.V., a corporation organized under the laws of the Netherlands pursuant to
the
Subordinated Note Agreement and any other Indebtedness of JJI subordinated
to
the Senior Debt as to right and time of payment and as to any other rights
and
remedies thereunder.
“Subordinated
Debt Payments” means all principal, accrued but unpaid interest and other
obligations with respect to the Subordinated Debt.
90
“Subordinated
Note Agreement” means that certain Amended and Restated Subordinated Note
Agreement, dated as of January 31, 2005 among JJI and International Mezzanine
Capital B.V., as Agent.
“Subsidiary”
means, with respect to any Person, (i) any corporation, association or other
business entity of which more than 50% of the total voting power of shares
of
capital stock entitled (without regard to the occurrence of any contingency)
to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more
of
the other Subsidiaries of that Person (or a combination thereof), (ii) any
partnership (A) the sole general partner or managing general partner of which
is
such Person or a Subsidiary of such Person or (B) the only general partners
of
which are such Person or of one or more Subsidiaries of such Person (or any
combination thereof), and (iii) any corporation, association or other business
entity which is included or consolidated in such Person’s financial
statements.
“Surviving
Claim” has the meaning set forth in Section 1.8.2.2.
“Surviving
Company” has the meaning set forth in Section 1.1.
“Takeover
Statute” has the meaning set forth in Section 2.23.
“Target
Working Capital” means Twenty-Six Million Eight Hundred Eighty-Two Thousand and
No/100 Dollars ($26,882,000).
“Tax”
or
“Taxes” means any United States or foreign, state or local income, gross
receipts, sales, licenses, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, use, transfer, 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
Returns” means all material reports, returns, information returns, claims for
refund, elections, estimated Tax filings or payments, requests for extension,
documents, statements, declarations and certifications and other information
required to be filed with respect to Taxes, including attachments thereto and
amendments thereof.
“Tax
and
German Environmental Issue Survival Period” has the meaning set forth in Section
7.1.
“Terminated
Contract” means any Contractual Obligation in connection with which JJI or any
of Subsidiary of JJI may have any duty to any current or former employee,
officer, director or agent, including the agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇; provided,
however,
Terminated Contracts do not include the Contractual Obligations of ▇▇▇▇▇▇▇▇▇▇▇
to its employees in Germany to the extent disclosed to Parent and identified
on
Schedule 2.9.4.
91
“Third
Party Claim” has the meaning set forth in Section 7.5.1.1.
“Trademark
License” means rights under any written agreement now owned or hereafter
acquired by JJI granting any right to use any Trademark.
“Trademarks”
means all of the following: (i) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, internet domain names,
other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and
all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (ii) all reissues,
extensions or renewals thereof; and (iii) all goodwill associated with or
symbolized by any of the foregoing.
“Trade
Payables” means amounts due (including amounts not yet invoiced for goods sold
or services provided prior to the Effective Time) from JJI and its Subsidiaries
in the ordinary course of their businesses to merchants for the sale of goods
or
services to JJI and its Subsidiaries in the ordinary course of their businesses
prior to the Effective Time; provided,
however,
the
following shall not be considered Trade Payables and shall be included in
Liabilities (i) any liabilities or obligations resulting from, arising out
of,
relating to, in the nature of, or caused by any Breach of contract, Breach
of
warranty, tort, infringement, or violation of law, (ii) any amounts with respect
to any purchase or lease of any capital asset or any real property and (iii)
reasonable accruals for services to be performed in the future relating to
and
at all times prior to the Effective Time.
“Trade
Secrets” means
all
categories of trade secrets as defined in the Uniform Trade Secrets
Act.
“Transaction”
means the Merger and any other transaction contemplated by the Merger or this
Agreement.
“Transaction
Documents” means this Agreement, the Certificate of Merger, the Escrow Agreement
and all other documents and agreements or instruments executed in connection
with the Merger.
“Transaction
Expenses” means the aggregate of all of the following:
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1.
|
All
investment banking fees (other than those incurred or contracted
for by
Parent and those incurred or contracted for by JJI with ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ to the extent included in Working Capital),
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92
|
2.
|
All
legal fees (other than those incurred or contracted for by Parent)
in
connection with this Agreement, the Merger and the Transactions
contemplated hereby,
|
|
3.
|
An
amount sufficient to pay (i) all fees and costs of the accountants
of JJI
and its Subsidiaries in connection with the Financial Statements,
the
Transactions, other work done prior to the Effective Time and other
work
to be performed pursuant to any Contractual Obligation with JJI or
any of
its Subsidiaries reduced by (ii) $150,000 which is to be an accrued
expense included in Working Capital,
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4.
|
One-half
of any HSR filing fee, Law Against Restraints on Competition filing
fee,
any other Government Antitrust Entity fee or any similar fees paid
by
Parent or any Affiliate of Parent or paid by JJI or any Subsidiary
of JJI
and any HSR filing fee, any other Government Antitrust Entity fee
or any
similar fees which will be required to be paid by Parent or any Affiliate
of Parent or by JJI or any of its Subsidiaries in connection with
the
Transaction or otherwise, and
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|
5.
|
One-half
of all fees, expenses and taxes payable to Delaware Governmental
Authorities in connection with the filing of the Certificate of
Merger.
|
“Warrants”
means the Class A Common Stock Warrants of JJI and any other right to acquire
any ownership of any capital stock of JJI or other equity interest in JJI;
provided,
however,“Warrants”
does not include the Class B Common Stock Warrants which are being extinguished
pursuant to this Agreement.
“Working
Capital” has the meaning set forth in Exhibit
D.
“Working
Capital Escrow Amount” means (i) the Initial Working Capital Escrow Amount plus
(ii) the Working Capital Excess, if any.
“Working
Capital Excess” has the meaning set forth in Section 1.9.4.1.
“Working
Capital Liabilities” means all Liabilities which are to be included in Working
Capital.
“Working
Capital Shortfall” has the meaning set forth in Section 1.9.4.2.
“Yort”
means Yort, Inc., a California corporation and wholly-owned Subsidiary
JJI.
93
Unless
otherwise specified, references in the Agreement or any of the Exhibits or
Schedules to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words “herein,” “hereof” and
“hereunder” and other words of similar import refer to the Agreement as a whole,
including all Exhibits and Schedules, as the same may from time to time be
amended, restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Exhibit or
Schedule.
Wherever
from the context it appears appropriate, each term stated in either the singular
or plural shall include the singular and the plural, and pronouns stated in
the
masculine, feminine or neuter gender shall include the masculine, feminine
and
neuter genders. The words “including”, “includes” and “include” shall be deemed
to be followed by the words “without limitation”; the word “or” is not
exclusive; references to Persons include their respective successors and assigns
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Definitions of agreements and instruments in Article VIII
shall
mean and refer to such agreements and instruments as amended, modified,
supplemented, restated, substituted or replaced from time to time in accordance
with their respective terms and the terms of this Agreement and the other
Transaction Documents.
ARTICLE
IX
GENERAL
PROVISIONS
9.1
Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made on the earlier
to
occur of delivery thereof, if by hand; upon receipt, if sent by mail (registered
or certified mail, postage prepaid, return receipt requested); on the second
Business Day following deposit, if sent by a recognized overnight delivery
service; or upon transmission, if sent by telecopy or facsimile transmission
(in
each case with receipt verified) as follows:
If
to
Parent or Merger Sub:
The
Genlyte
Group Incorporated
Attn:
General Counsel
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to: ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ PLLC
▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
R. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
94
If
to
JJI: JJI
Lighting Group, Inc.
▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
Chief Financial Officer
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to:
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇
&
▇▇▇▇▇▇▇, LLP
▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇
Facsimile: ▇▇▇
▇▇▇-▇▇▇▇
If
to the
Stockholders’ Agent:
International
Mezzanine Capital B.V.
c/o
Mezzanine-Management, LLC
Stamford
Harbor Park
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
provided
that each party hereto shall promptly notify the other parties hereto of any
change in its contact information, which revised contact information shall
thereafter be used for the purposes of this Section 9.1 until further
revised.
9.2
Entire
Agreement; Amendment; Waiver.
Other
than the Schedules and the Exhibits, which are hereby incorporated herein and
made a part hereof and the agreement referenced in Section 5.2.4.7,
certificates, financial statements and other documents referenced in or
contemplated by this Agreement, this Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior understandings, agreements
(including any confidentiality agreements), or representations by or between
the
parties, written or oral, that may have related in any way to the subject matter
hereof. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by Parent, Merger Sub, JJI, and
Stockholders’ Agent. The
board
of directors of JJI may agree, on behalf of JJI, to any such amendment at any
time prior to the Certificate of Merger becoming effective in accordance with
Section 103 of the DGCL, provided that an amendment made subsequent to the
adoption of this Agreement by the holders of JJI Stock shall not (1) alter
or change the amount of cash to be received in exchange for or on conversion
of
all or any of the JJI Stock or Class B Warrants, (2) alter or change
any term of the certificate of incorporation of the Surviving Company to be
effected by the Merger or (3) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely affect
the holder of the JJI Stock or Class B Warrants. No
waiver
by any party hereto 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 occurrence of such kind.
95
9.3
Headings,
Terminology. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Unless
the context of this Agreement otherwise requires, the terms “Article” and
“Section” refer, respectively, to the specified Article or Section of this
Agreement.
9.4
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
invalid or unenforceable term or provision in any other situation or in any
other jurisdiction. If a final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
parties hereto agree that the court making the determination of invalidity
or
unenforceability shall have the power to reduce the scope, duration, or area
of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of
the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
9.5
Assignment. This
Agreement shall not be assigned by operation of law or otherwise, except that
Merger Sub may assign all or any of their rights hereunder to any Affiliate,
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
9.6
Parties
in Interest. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and the Stockholders, and, except for the provisions of Article VII,
nothing contained in this Agreement, express or implied, is intended to or
shall
confer upon any other Person any right, benefit, or remedy of any nature
whatsoever under or by reason of this Agreement.
9.7
Governing
Law. Except
to
the extent that the DGCL is mandatorily applicable to the Merger, this Agreement
shall be governed by and construed in accordance with the domestic laws of
the
State of New York,
without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.
9.8
Counterparts. This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall
be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
9.9
Fees
and Expenses. Except
as
expressly provided herein to the contrary, all fees and expenses incurred by
the
parties in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
[signatures
on the next page]
96
IN
WITNESS WHEREOF, Parent, Merger Sub and JJI have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
|
PARENT:
The
Genlyte Group Incorporated
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
|
|
|
MERGER
SUB:
Ignite
Merger Sub Inc.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
|
|
|
JJI:
JJI
Lighting Group, Inc.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
& CEO
|
|
|
STOCKHOLDERS’
AGENT:
International
Mezzanine Capital B.V.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
|
Exhibits
Exhibit
A
- Certificate of Merger
Exhibit
B
- Allocation of Merger Consideration
Exhibit
C
- Letter of Transmittal
Exhibit
D
- Working Capital Definition
Exhibit
D-1 - Exhibit 1 to Exhibit D
Exhibit
D-2 - Exhibit 2 to Exhibit D
Exhibit
E
- ▇▇▇▇▇▇▇▇▇▇▇ Personnel Severance Costs
Exhibit
F
- Escrow Agreement
Exhibit
G
- Other Agreed U.S. Environmental Issues
Exhibit
H
- List of Schedules prepared by JJI
97
Exhibit
D
“Working
Capital” shall mean an amount determined by subtracting the current liabilities
of JJI and its wholly owned Subsidiaries from the current assets of JJI and
its
wholly owned Subsidiaries as of the Effective Time, with such current
liabilities and current assets to be determined in accordance with GAAP and
the
manner in which “WORKING CAPITAL BUYER” was determined in connection with
Exhibits D-1 and D-2 hereto, subject to the following adjustments and overriding
principles:
(a)
GAAP.
No
current assets will in any event be valued at a greater amount than would
be
permitted by GAAP applied on a basis consistent with the Financial Statements
referenced in Section 2.5.1 and 2.5.2 and no current liabilities will be
valued
at a lesser amount than would be permitted by GAAP applied on a basis consistent
with the Financial Statements referenced in Section 2.5.1 and 2.5.2. All
Inventories not written off shall be valued at the lower of cost or market
on a
first in first out basis all in accordance with GAAP.
(b)
Liabilities.
Current
liabilities shall not include the Pay Off Liabilities, Price Reduction
Liabilities or Agreed Deductions to the extent actually taken into account
in
reducing the Merger Consideration in Section 1.7.1. Subject to the immediately
preceding sentence, the reduction to Working Capital for current liabilities
will be not less than the amount of current liabilities determined in accordance
with GAAP.
(c)
Cap.
The
Working Capital shall not in any event exceed $32,000,000.
(d)
Exception.
The
Working Capital will not include any amount for which credit is given in
Section
1.7.1.2.5.
(e)
Accounts
Receivable.
The net
amount of Accounts Receivable and other amounts of anticipated future payments,
if any, included in the Working Capital shall (i) not include any amounts
which
are not due and owing (without any defense or right of set off) at the Effective
Time or (ii) any amounts which should not reasonably be expected to be
collected.
(f)
Exclusion
of Tax Refunds.
Working Capital shall not include any amount for any anticipated refund or
benefit relating to Taxes except that if JJI believes a refund of U.S. federal,
state and local income Taxes will actually be received by JJI after the
Effective Time as a result of U.S. federal, state and local income Taxes
paid by
JJI prior to the Effective Time and losses included on a JJI income Tax return
for a period ending prior to the Effective Time (other than losses relating
to
or resulting from the subject matter of the Defined Benefit Pension Plan
Funding
or any payment or accrual relating thereto) the amount of such refund JJI
reasonably believes (at the time of delivery by Parent of the Post-Closing
Statement) it will receive after the Effective Time will, without duplication
of
any other benefit to the Stockholders and subject to the limitations referenced
below, be included in Working Capital; provided,
however,
any
refund or potential refund will be disregarded to the extent (i) it results
from
or relates to the Defined Benefit Pension Plan Funding, the subject matter
of
the Defined Benefit Pension Plan or any payment or accrual relating to the
Defined Benefit Pension Plan, (ii) the sum of such refund which can be used
to
increase the Working Capital and the amount otherwise included in Working
Capital would exceed the amount stated in part (c) above or (iii) it exceeds
$850,000.
1
(g)
▇▇▇▇▇▇▇▇▇▇▇
Family Plan Expenses.
In the
event the Stockholders’ Agent is able to resolve all of the Liabilities of JJI
and its Subsidiaries in connection with the subject matter of the ▇▇▇▇▇▇▇▇▇▇▇
Family Plan Expenses before the earlier of the end of the General Survival
Period or the date the ▇▇▇▇▇▇▇▇▇▇▇ Family Plan Expenses are paid by JJI or
a
Subsidiary of JJI and the effect of such resolution is that JJI and its
Subsidiaries are able to eliminate all Liabilities relating to the subject
matter of the ▇▇▇▇▇▇▇▇▇▇▇ Family Plan Expenses for an amount less than the
amount included in Pay Off Liabilities pursuant to Section 1.7.1.1.4 then
the
amount of the net savings to JJI as a result of such resolution (as reasonably
determined by the Surviving Company) will, without duplication of any other
benefit to the Stockholders and subject to the limitations referenced below,
(i)
be included in Working Capital to the extent such Liabilities are eliminated
before delivery by Parent of the Post-Closing Statement or (ii) be paid by
JJI
or a Subsidiary of JJI to the Escrow Agent (and such amount shall become
part of
the Indemnity Escrow Amount); provided,
however,
the sum
of (A) such savings which can be used to increase the Working Capital or
the
Indemnity Escrow Amount, (B) the amount otherwise included in Working Capital
and (C) any amount which may be payable under Section 4.18 will not in any
event
exceed the amount stated in part (c) above.
(h)
Insurance.
Working
Capital shall not take into account any value or net value relating to the
life
insurance policy on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or any other insurance
policy.
(i)
High
Mast
Fixture.
Working
Capital shall be reduced by an amount equal to the aggregate amount of the
past,
present and estimated future Adverse Consequences relating to High Mast Issue
at
and after the Effective Time based on information known at the time the Final
Working Capital is determined.
(j)
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇.
Working
Capital shall be reduced by an amount equal to the aggregate amount of the
fees
and expenses that JJI or any of its Subsidiaries have incurred or may be
obligated to pay to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ with respect to service
contracted for or provided prior to the Effective Time, except to the extent,
if
any, such fees or expenses were deducted from the Merger Consideration paid
at
the Effective Time pursuant to Section 1.7.1.1.8.
2
Exhibit D-1
|
JJI
LIGHTING GROUP
|
||||||||||||||||||||||||||||
|
WORKING
CAPITAL
|
||||||||||||||||||||||||||||
|
U.S.
- ▇▇▇▇▇▇▇▇▇▇▇ - CONS
|
||||||||||||||||||||||||||||
|
2006
|
||||||||||||||||||||||||||||
|
|
|
31-Jan
|
|
|
|
|
|
28-Feb
|
|
|
|
|
|
31-Mar
|
|
|
|
|||||||||||
|
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
||||||||||
|
ACCTS
REC
|
11,798
|
2,859
|
14,657
|
11,840
|
2,695
|
14,535
|
13,046
|
2,940
|
15,986
|
|||||||||||||||||||
|
OTHER
REC
|
204
|
10
|
214
|
267
|
0
|
267
|
265
|
0
|
265
|
|||||||||||||||||||
|
INVENTORY
|
20,679
|
8,134
|
28,813
|
21,282
|
8,030
|
29,312
|
20,948
|
8,121
|
29,069
|
|||||||||||||||||||
|
PREPAID
EXP
|
1,057
|
364
|
1,421
|
1,212
|
338
|
1,550
|
1,292
|
415
|
1,707
|
|||||||||||||||||||
|
ACCTS
PAYABLE
|
7,446
|
6,081
|
13,527
|
7,227
|
5,269
|
12,496
|
7,729
|
5,593
|
13,322
|
|||||||||||||||||||
|
ACCRUED
EXP- BUYER
|
3,853
|
1,425
|
5,278
|
3,638
|
1,601
|
5,239
|
3,708
|
1,332
|
5,040
|
|||||||||||||||||||
|
ACCRUED
EXP- SELLER
|
2,127
|
1,852
|
3,979
|
2,551
|
1,654
|
4,205
|
2,708
|
1,498
|
4,206
|
|||||||||||||||||||
|
TOTAL
ACCRUED EXP
|
5,980
|
3,277
|
9,257
|
6,189
|
3,255
|
9,444
|
6,416
|
2,830
|
9,246
|
|||||||||||||||||||
|
TAXES
PAYABLE
|
584
|
0
|
584
|
504
|
0
|
504
|
541
|
0
|
541
|
|||||||||||||||||||
|
NET
W.C.
|
19,728
|
2,009
|
21,737
|
20,681
|
2,539
|
23,220
|
20,865
|
3,053
|
23,918
|
|||||||||||||||||||
|
ACCRUED
EXP - SELLER
|
2,127
|
1,852
|
3,979
|
2,551
|
1,654
|
4,205
|
2,708
|
1,498
|
4,206
|
|||||||||||||||||||
|
WORKING
CAPITAL BUYER
|
21,855
|
3,861
|
25,716
|
23,232
|
4,193
|
27,425
|
23,573
|
4,551
|
28,124
|
|||||||||||||||||||
|
|
|
30-Apr
|
|
|
|
|
|
31-May
|
|
|
|
|
|
30-Jun
|
|
|
|
|||||||||||
|
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
||||||||||
|
ACCTS
REC
|
13,508
|
2,702
|
16,210
|
|||||||||||||||||||||||||
|
OTHER
REC & TAX
|
327
|
0
|
327
|
|||||||||||||||||||||||||
|
INVENTORY
|
21,267
|
8,149
|
29,416
|
|||||||||||||||||||||||||
|
PREPAID
EXP
|
1,256
|
521
|
1,777
|
|||||||||||||||||||||||||
|
ACCTS
PAY
|
8,027
|
5,428
|
13,455
|
|||||||||||||||||||||||||
|
ACCRUED
EXP BUYER
|
3,833
|
1,162
|
4,995
|
|||||||||||||||||||||||||
|
ACCRUED
EXP SELLER
|
2,555
|
1,372
|
3,927
|
|||||||||||||||||||||||||
|
TOTAL
ACCRUED EXP
|
6,388
|
2,534
|
8,922
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
TAXES
PAYABLE
|
410
|
0
|
410
|
|||||||||||||||||||||||||
|
NET
W.C.
|
21,533
|
3,410
|
24,943
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
ACCRUED
EXP SELLER
|
2,555
|
1,372
|
3,927
|
|||||||||||||||||||||||||
|
WORKING
CAPITAL BUYER
|
24,088
|
4,782
|
28,870
|
|||||||||||||||||||||||||
1
|
|
|
31-Jul
|
|
|
|
|
|
31-Aug
|
|
|
|
|
|
30-Sep
|
|
|
|
|||||||||||
|
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
||||||||||
|
ACCTS
REC
|
||||||||||||||||||||||||||||
|
OTHER
REC
|
||||||||||||||||||||||||||||
|
INVENTORY
|
||||||||||||||||||||||||||||
|
PREPAID
EXP
|
||||||||||||||||||||||||||||
|
ACCTS
PAYABLE
|
||||||||||||||||||||||||||||
|
ACCRUED
EXP BUYER
|
||||||||||||||||||||||||||||
|
ACCRUED
EXP SELLER
|
||||||||||||||||||||||||||||
|
TOTAL
ACCRUED EXP
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
TAXES
PAYABLE
|
||||||||||||||||||||||||||||
|
NET
W.C.
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
ACCRUED
EXP SELLER
|
||||||||||||||||||||||||||||
|
WORKING
CAPITAL BUYER
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
|
|
31-Oct
|
|
|
|
|
|
30-Nov
|
|
|
|
|
|
31-Dec
|
|
|
|
|||||||||||
|
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
|
U.S.
|
|
▇▇▇▇
|
|
CONS
|
||||||||||
|
ACCTS
REC
|
||||||||||||||||||||||||||||
|
OTHER
REC
|
||||||||||||||||||||||||||||
|
INVENTORY
|
||||||||||||||||||||||||||||
|
PREPAID
EXP
|
||||||||||||||||||||||||||||
|
ACCTS
PAYABLE
|
||||||||||||||||||||||||||||
|
ACCRUED
EXP BUYER
|
||||||||||||||||||||||||||||
|
ACCRUED
EXP SELLER
|
||||||||||||||||||||||||||||
|
TOTAL
ACCRUED EXP
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
TAXES
PAYABLE
|
||||||||||||||||||||||||||||
|
NET
W.C.
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
ACCRUED
EXP SELLER
|
||||||||||||||||||||||||||||
|
WORKING
CAPITAL BUYER
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||
|
AVERAGE
2005 W.C. BUYER
|
26,882
|
|||||||||||||||||||||||||||
2
Exhibit D-2
|
ACCRUED
EXPENSES
|
|||||||||||||||||||||||||||||||||||||
|
2006
|
|||||||||||||||||||||||||||||||||||||
|
BUYER:
|
Jan
|
|
Feb
|
|
Mar
|
|
Apr
|
|
May
|
|
June
|
|
July
|
|
Aug
|
|
Sept
|
|
Oct
|
|
Nov
|
|
Dec
|
||||||||||||||
|
Vacation,
Sick
|
955
|
999
|
1023
|
1068
|
|||||||||||||||||||||||||||||||||
|
Audit
and Tax Fees
|
304
|
274
|
251
|
227
|
|||||||||||||||||||||||||||||||||
|
Commissions
|
1691
|
1780
|
1909
|
▇▇▇▇
|
|||||||||||||||||||||||||||||||||
|
▇▇▇▇▇▇▇▇
|
30
|
28
|
29
|
26
|
|||||||||||||||||||||||||||||||||
|
Misc
Taxes
|
0
|
18
|
0
|
0
|
|||||||||||||||||||||||||||||||||
|
Other
Fringes
|
342
|
284
|
330
|
223
|
|||||||||||||||||||||||||||||||||
|
Distributor
Rebates
|
127
|
36
|
54
|
36
|
|||||||||||||||||||||||||||||||||
|
Freight
|
141
|
137
|
218
|
242
|
|||||||||||||||||||||||||||||||||
|
Royalty
|
211
|
186
|
121
|
118
|
|||||||||||||||||||||||||||||||||
|
MIC
/ Bonus
|
229
|
229
|
0
|
0
|
|||||||||||||||||||||||||||||||||
|
Insurance
|
211
|
114
|
114
|
140
|
|||||||||||||||||||||||||||||||||
|
A/P
Accrued
|
141
|
107
|
210
|
218
|
|||||||||||||||||||||||||||||||||
|
Accrued
Marketing
|
18
|
32
|
17
|
0
|
|||||||||||||||||||||||||||||||||
|
Miscellaneous
|
202
|
283
|
249
|
263
|
|||||||||||||||||||||||||||||||||
|
Accruals
Sweden
|
320
|
394
|
231
|
191
|
|||||||||||||||||||||||||||||||||
|
SUB
TOTAL
|
4,922
|
4,901
|
4,756
|
4,700
|
|||||||||||||||||||||||||||||||||
|
Accrued
Salaries
|
356
|
338
|
284
|
295
|
|||||||||||||||||||||||||||||||||
|
TOTAL
- BUYER
|
5,278
|
5,239
|
5,040
|
4,995
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
|
SELLER:
|
|||||||||||||||||||||||||||||||||||||
|
Legal
- HL project
|
124
|
128
|
116
|
122
|
|||||||||||||||||||||||||||||||||
|
Interest
- GE
|
208
|
357
|
221
|
446
|
|||||||||||||||||||||||||||||||||
|
Interest
- IMC
|
250
|
500
|
750
|
500
|
|||||||||||||||||||||||||||||||||
|
Customer
deposits/credits
|
398
|
297
|
320
|
296
|
|||||||||||||||||||||||||||||||||
|
Restructuring
|
1823
|
1756
|
1452
|
1326
|
|||||||||||||||||||||||||||||||||
|
▇▇▇▇
EPA - net
|
166
|
166
|
166
|
165
|
|||||||||||||||||||||||||||||||||
|
SERP
|
824
|
821
|
1007
|
1072
|
|||||||||||||||||||||||||||||||||
|
Deferred
Compensation
|
186
|
180
|
174
|
0
|
|||||||||||||||||||||||||||||||||
|
TOTAL
- SELLER
|
3,979
|
4,205
|
4,206
|
3,927
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
|
TOTAL
ACCRUED EXPENSES
|
9,257
|
9,444
|
9,246
|
8,922
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
1
Exhibit
E
Regarding
▇▇▇▇▇▇▇▇▇▇▇ Personnel Severance Costs
Table
|
Month
|
May
2006
|
June
2006
|
|
Total
|
1,105,292
Euros*
|
1,105,292
Euros*
|
*
To be
reduced by payments, if any, made by JJI on the ▇▇▇▇▇▇▇▇▇▇▇ Personnel Severance
Costs after May 12, 2006.
1
FIRST
ADDENDUM TO AGREEMENT AND PLAN OF MERGER
This
First Addendum to Agreement and Plan of Merger (“Addendum”) is entered into as
of the 22nd
day
of
May, 2006, by and among The Genlyte Group Incorporated, a Delaware corporation
(“Parent”), Ignite Merger Sub Inc., a Delaware corporation and an Affiliate of
Parent (“Merger Sub”), International Mezzanine Capital B.V., a limited liability
company incorporated under the laws of the Netherlands (“Stockholders’ Agent”)
and JJI Lighting Group, Inc., a Delaware corporation (“JJI”).
THAT,
WHEREAS, the parties hereto entered into an Agreement and Plan of Merger
dated
as of May 12, 2006 (the “Merger Agreement”);
WHEREAS,
the parties hereto desire to make certain changes in the Merger Agreement
as
stated herein; and
WHEREAS,
except to the extent expressly changed herein, the Merger Agreement shall
continue to be in full force and effect and shall be deemed to have been
entered
into as of May 12, 2006.
W
I T N E
S S E T H:
NOW,
THEREFORE, in consideration of the premises and the promises and covenants
herein contained, the parties hereto agree as follows:
1. Addendum.
Except
as expressly modified by numerical paragraphs 2, 3 and 4 of this Addendum,
the
Merger Agreement is hereby ratified and shall continue in full force and
effect
in accordance with its terms. The Merger Agreement, as modified by this
Addendum, shall be deemed to have been entered into as of May 12, 2006. Each
party represents to the other that (i) it has obtained all necessary approval
and consent to modify the Merger Agreement as set forth herein, including,
without limitation, any approval required by its directors or officers and
(ii)
all representations in the Merger Agreement made by such party apply to this
Addendum as though its terms were a part of the Merger Agreement at the time
of
the execution of the Merger Agreement. The definitions and other provisions
of
Article VIII of the Merger Agreement apply to the interpretation of this
Addendum.
2. Modifications
to Merger Agreement.
(a) Section
1.4.1 Merger
Sub Stock
is
hereby modified by deleting subparagraph (i) in its entirety and replacing
it
with the following:
(i)
each
share of common stock of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become Eleven Thousand (11,000)
shares of Class A common stock of the Surviving Company with the same rights,
powers and privileges as the shares so converted and shall constitute the
only
outstanding shares of capital stock of the Surviving Company and
1
(b) Section
1.5.3 Stock
of
Merger Sub is
hereby
modified by deleting it in its entirety and replacing it with the
following:
Each
share of common stock of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become Eleven Thousand (11,000)
shares of Class A common stock of the Surviving Company as provided in Section
1.4.1.(i).
(c) Section
1.4.6.1 Exchange
Agent
is
hereby modified by deleting the first sentence in its entirety and replacing
it
with the following two sentences:
Prior
to
the Effective Time, Parent shall appoint an agent (the “Exchange Agent”) for the
purpose of exchanging the Merger Consideration for certificates representing
shares of Class A Common Stock, and Parent agrees to act as an exchange agent
for the purpose of exchanging the Merger Consideration for certificates
representing JJI Preferred Stock and for certificates representing Class
B
Common Stock Warrants (collectively, all certificates representing shares
of JJI
Stock and certificates representing Class B Common Stock Warrants are the
“Certificates”). All references in the Merger Agreement to Exchange Agent shall
be deemed to refer to the Exchange Agent when used in connection with
certificates representing shares of Class A Common Stock and shall be deemed
to
refer to Parent when used in connection with certificates representing shares
of
JJI Preferred Stock and certificates representing Class B Common Stock Warrants.
(d) Section
1.4.6.3 Letter
of
Transmittal
is
hereby modified by deleting the second and third sentences in their entirety
and
replacing them with the following:
The
Exchange Agent or Parent shall provide letters of transmittal along with
instructions for use in exchange (together, the “Letter of Transmittal”) as
follows: (a) a letter of transmittal in the form attached hereto as Exhibit
C-1
to
Stockholders’ Agent at or as soon as reasonably practical following the Closing
and (b) a letter of transmittal in the form attached hereto as Exhibit
C-2 to
the
holders of Class A Common Stock (at the address provided by JJI pursuant
to this
Section 1.4.6.3) at or as soon as reasonably practicable following the Closing.
If Parent desires to modify the Letter of Transmittal attached hereto as
Exhibit
C-2, then Parent may send Stockholders’ Agent written notice of Parent’s
proposed modifications and Stockholders’ Agent shall have five (5) Business Days
after such notice has been received by Stockholders’ Agent in which to object to
the notice.
(e) Section
1.4.6.4 Surrender
of Certificates
is
hereby modified by inserting the word “appropriate” before the phrase “Letter of
Transmittal” that appears once in the first sentence and once in the second
sentence of Section 1.4.6.4.
2
(f) Section
1.4.6.10 Lost
Certificates
is
hereby modified by inserting the word “appropriate” before the phrase “Letter of
Transmittal” that appears once in subsection (iii) of Section
1.4.6.10.
(g) Section
1.7.1.1 “Pay Off Liabilities” is hereby modified by adding the following
grammatical paragraph at the end of Section ▇.▇.▇.▇:
To
the
extent the aggregate amount of the amounts included in the Pay Off Liabilities
to pay off the Senior Debt Payments, the ▇▇▇▇▇▇▇▇▇▇▇ Debt Payments and the
Transaction Expenses (i) is greater than the actual aggregate amount required
to
pay off the Senior Debt Payments, the ▇▇▇▇▇▇▇▇▇▇▇ Debt Payments and the
Transaction Expenses, then such excess amount (to the extent not otherwise
taken
into account in establishing Working Capital) shall be added to Working Capital
and thereby increase the Final Working Capital or (ii) is less than the
aggregate amount required to fully pay off the Senior Debt Payments, the
▇▇▇▇▇▇▇▇▇▇▇ Debt Payments and the Transaction Expenses, then such deficiency
(to
the extent not otherwise taken into account in establishing Working Capital)
shall be subtracted from Working Capital and thereby decrease the Final Working
Capital. Provided, further, to the extent there are taxes, employer’s share of
FICA, Medicare or other amounts which are or may become payable to any
Governmental Authority in connection with the Change of Control Obligations,
SERP Funding or Contract Termination Expenses, such amounts (to the extent
not
otherwise taken into account in establishing Working Capital) shall be
subtracted from Working Capital and thereby decrease the Final Working Capital.
The parties acknowledge that the definition of “Working Capital” shall be deemed
to be modified hereby to give full effect to the provisions of this grammatical
paragraph.
(h) The
list
of Exhibits that appears on the Signature Page is hereby modified by deleting
“Exhibit C - Letter of Transmittal” and replacing it with the
following:
Exhibit
C-1 - Letter of Transmittal for the Stockholders’ Agent
Exhibit
C-2 - Letter of Transmittal for the holders of Class A Common Stock
(i) Section
9.8 Counterparts
is
hereby modified by adding the following at the end of Section 9.8:
Each
Transaction Document may be executed in one or more counterparts, each of
which
will be deemed to be an original copy of such Transaction Document and when
taken together, will be deemed to constitute one and the same agreement.
The
exchange of copies of the Merger Agreement, this Addendum and any other
Transaction Documents and of signature pages by facsimile or electronic
transmission shall constitute effective execution and delivery of the Merger
Agreement, this Addendum and any other Transaction Documents as to the parties
and may be used in lieu of the original Merger Agreement, this Addendum and
any
other Transaction Documents for all purposes. Signatures of
3
the
parties transmitted by facsimile or electronic transmission shall be deemed
to
be their original signatures for all purposes.
(j)
The
definition of “Agreement” in Article VIII is hereby modified by changing the
definition to provide as follows:
“Agreement”
has the meaning set forth in the introduction but the term “Agreement” includes
the text of this document as amended by the Addendum, the Schedules, the
Exhibits, any certificates delivered pursuant to the “Agreement” and any other
addendum or modification to the “Agreement”.
(k) The
definition of “Transaction Documents” in Article VIII is hereby modified by
changing the definition to provide as follows:
“Transaction
Documents” means the Agreement as defined in Article VIII, the Certificate of
Merger, the Escrow Agreement and all other documents and agreements,
certificates or instruments executed in connection with the Merger.
(l) The
definition of “Transaction Expenses” in Article VIII is hereby modified by
adding the following additional paragraph after paragraph 5.
6. The
first
year fee of $3,500 owed to the Escrow Agent.
(m) Section
7.6.3 Limits
on
Indemnity Escrow Amount
is
hereby modified by deleting the last sentence at the end of the grammatical
paragraph and replacing it with the following sentence:
However,
neither this limitation nor any other provision of this Article VII is intended
to or will be construed to limit (i) any party's ability to obtain specific
performance with respect to any obligation of the other party or parties
and
each party to this Agreement shall be entitled to specifically enforce the
obligations of each other party in this Agreement to the maximum extent
permitted by Law, or (ii) remedies under any agreement delivered pursuant
to
Article V or any agreement otherwise agreed to by the parties.
(n) The
parties have agreed that for purposes of establishing the amount of any Pay
Off
Liabilities which are expressed in Euros and for purposes of establishing
the
amount of the ▇▇▇▇▇▇▇▇▇▇▇ Personnel Severance Costs the parties will base
the
calculation of the amount to be used in determining Merger Consideration
pursuant to Section 1.7.1 of the Merger Agreement on the assumption that
1.00
Euro is equal to $1.2780.
(o)
Section
7.2.8 is hereby modified by deleting this section in its entirety and
substituting the following therefore:
7.2.8
Any
Terminated Contract or any Warrant issued, incurred or agreed to prior to
the
Effective Time;
4
(p) Subparagraph
(vi) in the definition of “Parent Limitation Exception” in Article VIII is
hereby modified by adding the following parenthetical after the phrase “or other
right in JJI or its equity”:
(including
any claim of any type relating to the Warrants held by the ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
Trust, the Estate of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇)
(q) Sections
1.7.1.4, 4.18 and paragraph (c) of Exhibit D are each hereby modified by
replacing each “$32,000,000” with “$33,000,000” .
3. Modifications
to Exhibits to Merger Agreement.
(a)
The
attachment to the Merger Agreement referred to as “Exhibit A - Certificate of
Merger” is hereby deleted in its entirety and replaced with a Certificate of
Merger substantially in the form attached to this Addendum as Exhibit
A.
(b)
The
attachment to the Merger Agreement referred to as “Exhibit C - Letter of
Transmittal” is hereby deleted in its entirety and replaced with the following:
a letter of transmittal for Stockholders’ Agent in the form attached to this
Addendum as Exhibit
C-1
and a
letter of transmittal for the holders of Class A Common Stock in the form
attached to this Addendum as Exhibit
C-2.
(c)
The
attachment to the Merger Agreement referred to as “Exhibit F - Escrow Agreement”
is hereby deleted in its entirety and replaced with an escrow agreement
substantially in the form attached to this Addendum as Exhibit
F.
(d) The
attachment to the Merger Agreement referred to as “Exhibit H -List of Schedules
prepared by JJI” is hereby deleted in its entirety and replaced with a the list
of schedules substantially in the form attached to this Addendum as Exhibit
H.
(e) Exhibit
D
to the Merger Agreement is hereby modified by adding the following additional
paragraphs (k) and (l):
(k)
Puenta
Valley Site.
Subject
to the limitation in paragraph (c) of Exhibit D, Working Capital shall be
increased by an amount (not to exceed $30,000) equal to the amount JJI receives
from the former owners of ▇▇▇▇ Lighting, Inc. relating to the Puenta Valley
Site
to the extent such amount is received after the Closing and before delivery
of
the Post-Closing Statement by Parent and is not otherwise taken into account
in
determining Working Capital or reducing the ▇▇▇▇▇▇ Valley Site Estimated
Costs.
(l) Late
Receipt of Wires for Certain Pay Off Liabilities.
If any
one or more of the wires intended to pay off any Pay Off Liabilities is not
credited as being received by the applicable recipient early enough to give
credit on the Effective Date and provided that Parent used
commercially
5
reasonable
efforts to cause the correct amount of money to be wired to the intended
recipient in a reasonably timely manner, then Working Capital shall be reduced
by the amount of any expenses or additional interest required to pay off
each
Pay Off Liability arising from the failure of such Pay Off Liabilities receiving
payoff credit on the Effective Date.
(m) ▇▇▇▇▇▇▇▇▇▇▇
Lease Support.
The
calculation pursuant to Section 1.7.1.2.1 would result in a calculation of
▇▇▇▇▇▇▇▇▇▇▇ Lease Support of $1,613,699; however, the parties agree that
since
the intention was to provide for support at the rate of $1,000,000 per year
for
the balance of the ▇▇▇▇▇▇▇▇▇▇▇ lease, and since JJI has paid the rent through
the month of May and hence already paid $25,000 of the support payments prior
to
the Effective Time, that the amount to which Genlyte is entitled pursuant
to
this provision is $1,558,333 (which is 1 year and 7 months at $83,333.33
per
month less the $25,000 prepaid amount) and that this amount of $1,558,333
shall
be used as a deduction for purposes of determining Merger Consideration and
further agree that no amount will be included in Working Capital as prepaid
rent
or for the $25,000 prepaid amount for this matter.
4. Modifications
to Schedules to Merger Agreement.
| (a) |
Schedule 2.14.6 attached to this Addendum is hereby added to the
Schedules.
|
(b) Schedule
2.32.5 to the Merger Agreement is hereby deleted in its entirety and the
Schedule 2.32.5 attached to this Addendum is substituted therefore.
5. Documents
Executed on or after the Date of this Addendum.
Any
other
document, instrument or certificate that is executed on or after the date
of
this Addendum and that refers to the Merger Agreement will be deemed to refer
to
the Merger Agreement as amended by this Addendum, without regard to whether
such
document, instrument or certificate expressly refers to this
Addendum.
LEX
100562/122150/3437698.11
[This
page
intentionally left blank.]
6
IN
WITNESS WHEREOF, Parent, Merger Sub and JJI have caused this Agreement to
be
executed as of the date first written above by their respective officers
thereunto duly authorized.
|
PARENT:
The
Genlyte Group Incorporated
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
and CEO
|
|
|
MERGER
SUB:
Ignite
Merger Sub Inc.
▇▇▇▇▇
▇. ▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
|
|
|
JJI:
JJI
Lighting Group, Inc.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
& CEO
|
|
|
STOCKHOLDERS’
AGENT:
International
Mezzanine Capital B.V.
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
___________________________
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
|
7