EXECUTION VERSION
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SECURITIES PURCHASE AGREEMENT
BY AND AMONG
AMERICAN HOUSEHOLD, INC.,
THE SELLERS IDENTIFIED HEREIN
AND
JARDEN CORPORATION
DATED AS OF SEPTEMBER 19, 2004
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS......................................................1
SECTION 2. ACQUISITION OF SECURITIES.......................................12
2.1. Purchase and Sale of Purchased Securities..............12
2.2. Treatment of Options..................................12
SECTION 3. PURCHASE PRICE AND PAYMENT......................................12
3.1. Purchase Price.........................................13
3.2. Purchase Price Adjustment..............................13
3.3. Reserved Amount........................................15
3.4. Withholding Rights.....................................15
3.5. Stock Options..........................................16
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING SELLERS................16
4.1. Organization and Good Standing.........................17
4.2. Power and Authorization................................17
4.3. No Conflicts...........................................18
4.4. Ownership of the Purchased Securities..................18
4.5. Litigation.............................................19
4.6. Brokers................................................19
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
AND ITS SUBSIDIARIES............................................19
5.1. Organization and Good Standing.........................19
5.2. Power and Authorization................................20
5.3. Capitalization.........................................20
5.4. Investments and Subsidiaries...........................21
5.5. No Conflicts...........................................22
5.6. Financial Matters......................................22
5.7. Absence of Undisclosed Liabilities.....................23
5.8. Real Property..........................................23
5.9. Personal Property......................................25
5.10. Taxes..................................................25
5.11. Litigation.............................................28
5.12. Labor Matters..........................................28
5.13. Intellectual Property Rights...........................29
5.14. Contracts and Commitments..............................30
5.15. Existing Condition.....................................32
5.16. Employee Benefit Plans.................................33
5.17. Compliance with Laws...................................34
5.18. Environmental..........................................35
5.19. Transactions With Affiliates...........................36
5.20. Insurance..............................................36
5.21. Product Recall.........................................37
5.22. Absence of Certain Business Practices..................37
5.23. Indebtedness...........................................37
5.24. Securityholders' Agreement.............................38
5.25. Bankruptcy Matters.....................................38
5.26. Industrial Revenue Bond Matters........................38
5.27. Brokers................................................38
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.....................38
6.1. Incorporation and Good Standing........................39
6.2. Power and Authorization................................39
6.3. Validity of Contemplated Transactions..................39
6.4. Consents...............................................39
6.5. Litigation.............................................40
6.6. Sufficient Funds.......................................40
6.7. Brokers................................................41
SECTION 7. COVENANTS OF THE PARTIES UNTIL CLOSING..........................41
7.1. Conduct of Business Pending Closing....................41
7.2. Negative Covenants.....................................42
7.3. Access.................................................45
7.4. Consents; Cooperation; Notice..........................45
7.5. HSR Act................................................46
7.6. No Solicitation........................................47
7.7. Interest in Purchased Securities.......................48
7.8. Estimated Closing Adjustment Amount....................48
7.9. Indebtedness...........................................48
7.10. Monthly Financials.....................................49
7.11. Exercise of Rights Under Securityholders' Agreement....49
7.12. Inventory..............................................49
7.13. Indemnity..............................................49
7.14. Retention of Accountant................................50
7.15. Financing..............................................51
7.16. Public Statements......................................51
7.17. Interest in Subsidiaries...............................52
7.18. Adjusted EBITDA Certificate............................52
SECTION 8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.....................52
8.1. Representations and Warranties.........................52
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8.2. Performance of Covenants...............................53
8.3. Approvals..............................................53
8.4. Legal Matters..........................................53
8.5. No Material Adverse Effect.............................53
8.6. Minimum Share Amount...................................53
8.7. Adjusted EBITDA Amount.................................54
SECTION 9. CONDITIONS PRECEDENT TO THE SELLERS' AND
THE COMPANY'S OBLIGATIONS.......................................54
9.1. Representations and Warranties.........................54
9.2. Performance of Covenants...............................54
9.3. Approvals..............................................54
9.4. Legal Matters..........................................54
SECTION 10. CLOSING.........................................................55
10.1. Time and Place of Closing..............................55
10.2. Deliveries at the Closing by the Sellers...............55
10.3. Deliveries at the Closing by the Company...............55
10.4. Deliveries at the Closing by the Buyer.................56
10.5. Indebtedness Payoff....................................56
SECTION 11. TERMINATION AND ABANDONMENT.....................................57
11.1. Termination............................................57
11.2. Procedure for Termination..............................57
SECTION 12. SURVIVAL AND INDEMNIFICATION....................................58
12.1. Survival of Representations, Warranties and
Covenants and Certain Claims...........................58
12.2. Indemnity..............................................58
SECTION 13. CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS.....................59
13.1. Tax Matters............................................59
13.2. Employee Benefits Matters..............................60
13.3. Merger Following the Closing...........................62
13.4. Joinder................................................63
13.5. Holdback Amount........................................63
SECTION 14. MISCELLANEOUS...................................................68
14.1. Construction...........................................68
14.2. Further Assurances.....................................68
14.3. Costs and Expenses.....................................69
14.4. Notices................................................69
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14.5. Assignment and Benefit.................................71
14.6. Amendment, Modification and Waiver.....................72
14.7. Governing Law; Consent to Jurisdiction.................72
14.8. Section Headings and Defined Terms.....................72
14.9. Severability...........................................72
14.10. Effectiveness; Counterparts............................72
14.11. Entire Agreement.......................................73
EXHIBITS:
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Exhibit A Adjusted EBITDA Amount
Exhibit B Environmental Sites
Exhibit C Form of Joinder Agreement
Exhibit D Knowledge of the Company
Exhibit E Material Divisions
Exhibit F Specified Proceedings
Exhibit G Holdback Amount
Exhibit H Form of Restricted Stock Agreement
Exhibit I Form of Drag-Along Notice
Exhibit J Form of Press Release
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DEFINED TERMS
Page
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Acquisition Cost...............................................................2
Acquisition Transaction.......................................................48
Adjusted EBITDA Amount.........................................................2
Adjusted EBITDA Certificate...................................................53
Adjusted EBITDA Target Amount..................................................2
Affiliate......................................................................2
Aggregate Option Consideration.................................................2
Agreement......................................................................1
Antitrust Division............................................................47
Audited Financial Statements..................................................23
Balance Sheet.................................................................23
Bank Consents..................................................................2
Bankruptcy Court...............................................................4
Bankruptcy Plans...............................................................2
Board..........................................................................2
Bonds..........................................................................2
Bonus Amount..................................................................63
Breach Damages.................................................................3
Business.......................................................................3
Business Day...................................................................3
Buyer..........................................................................1
Buyer Closing Documents.......................................................40
Buyer Common Stock.............................................................3
Buyer Parties..................................................................3
Cash...........................................................................3
Cause..........................................................................3
Challenge.....................................................................47
City...........................................................................3
Closing.......................................................................56
Closing Adjustment Dispute....................................................14
Closing Date..................................................................56
Closing Date Adjustment Amount.................................................3
Code...........................................................................3
Coleman........................................................................3
Coleman Common Stock...........................................................3
Coleman Stock Option Plan......................................................3
Company........................................................................1
Company Closing Documents.....................................................21
Company Common Stock...........................................................1
Company Liabilities............................................................3
Company Stock Option Plan......................................................4
Confidentiality Agreement......................................................4
Confirmation Orders............................................................4
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Contract.......................................................................4
Control Transaction Offer......................................................1
Convertible Securities.........................................................4
D&O Premium...................................................................51
Debtor Subsidiary..............................................................2
Defaulted Shares..............................................................16
Defaulting Securityholder.....................................................16
Disclosure Schedule...........................................................20
Domain Names...................................................................8
Emergence Date.................................................................4
Employee Beneficiaries........................................................61
Employment Taxes...............................................................4
Encumbrance....................................................................4
Environmental Claim............................................................5
Environmental Damages..........................................................5
Environmental Laws.............................................................5
Environmental Permits.........................................................36
Environmental Reserved Amount..................................................5
Environmental Sites............................................................5
Equity Escrow Agent............................................................5
Equity Escrow Agreement........................................................6
Equity Investment.............................................................41
Equity Investment Agreements...................................................6
Equity Purchase Agreement......................................................6
ERISA..........................................................................6
ERISA Affiliate...............................................................33
ERISA Affiliate Plans.........................................................34
Estimated Closing Adjustment Amount...........................................49
Excess Environmental Reserves.................................................66
Excess Litigation Reserves....................................................66
Exchange Act...................................................................6
Fair Market Value..............................................................6
Final Closing Adjustment Amount...............................................15
Financial Statements..........................................................23
Financing Commitment Letter...................................................41
Financing Commitments.........................................................41
First Alert/Powermate..........................................................6
First Alert/Powermate Common Stock.............................................6
First Alert/Powermate Equity Plan..............................................6
First Alert/Powermate Option...................................................6
Foreign Benefit Plan..........................................................35
Foreign Subsidiaries..........................................................28
FTC...........................................................................47
GAAP...........................................................................6
GECC..........................................................................50
Governmental Entity............................................................6
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Hazardous Materials............................................................6
Holdback Amount...............................................................14
Holdback Reserve Amount.......................................................68
HSR Act.......................................................................19
Income Taxes...................................................................7
Indebtedness...................................................................7
Individual Loss...............................................................59
Insurance Proceedings.........................................................69
Intellectual Property..........................................................7
Interim Balance Sheet.........................................................23
Interim Financial Statements..................................................23
IRB Lease......................................................................8
Joinder Agreement..............................................................8
Joining Securityholder........................................................64
July Forecast..................................................................8
Knowledge of the Company.......................................................8
Law............................................................................8
Lease..........................................................................8
Leased Properties..............................................................8
Listed Individuals............................................................62
Litigation Damages.............................................................9
Litigation Reserved Amount.....................................................9
Loss...........................................................................9
Losses.........................................................................9
LTIP Specified Employees......................................................62
Majority Sellers...............................................................9
Management Options............................................................17
Material Adverse Effect........................................................9
Material Division..............................................................9
Merger........................................................................63
Monthly Statements............................................................50
Option.........................................................................9
Owned Properties...............................................................9
Patents........................................................................8
Pay-Off Amount................................................................57
PBGC..........................................................................34
Per Share Holdback Amount.....................................................10
Per Share Purchase Price......................................................10
Permit........................................................................10
Permitted Encumbrances........................................................24
Person........................................................................10
Plans.........................................................................33
Post-Closing Adjustment.......................................................15
Powermate Business............................................................10
Pre-Closing Company Expenses..................................................10
Principal Sellers.............................................................10
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Pro Rata Share................................................................11
Proceeding....................................................................10
Properties....................................................................10
Proportionate Interest........................................................10
Proposed Final Closing Adjustment Amount......................................14
Purchase Price................................................................13
Purchased Securities...........................................................1
Recoveries....................................................................69
Registration Rights Agreement.................................................11
Remediation...................................................................11
Remediation Standard..........................................................11
Requisite Stockholders.........................................................1
Reserved Amount...............................................................16
Resolving Accountant..........................................................15
Restricted Stock Agreement....................................................17
Retention Payments............................................................63
Schedule of Option Payments...................................................17
Section 5.16(g)(iii) Damages..................................................68
Securityholders' Agreement....................................................11
Seller........................................................................11
Seller Closing Documents......................................................18
Seller Disclosure Schedule....................................................17
Several Loss..................................................................59
Software......................................................................11
Specified Employees...........................................................62
Specified Proceedings.........................................................11
Stock.........................................................................16
Subsidiary....................................................................11
Sunbeam.......................................................................11
Sunbeam Common Stock..........................................................11
Sunbeam Stock Option Plan.....................................................11
Surviving Indebtedness........................................................49
Tax...........................................................................12
Tax Return....................................................................12
Taxes.........................................................................12
Third-Party Claim.............................................................65
Trademarks.....................................................................8
Transfer Taxes................................................................60
Treasury Regulation...........................................................12
Trust Indenture...............................................................12
Trustee.......................................................................45
Unallocated Option Payment....................................................63
Wholly-Owned Subsidiary.......................................................13
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of September 19, 2004 (this
"Agreement"), by and among American Household, Inc., a Delaware corporation (the
"Company"), the Sellers (as defined below) and Jarden Corporation, a Delaware
corporation (the "Buyer").
RECITALS:
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WHEREAS, Sellers, in the aggregate, own of record more than fifty
percent (50%) of the outstanding shares of common stock, par value $0.01 per
share (the "Company Common Stock"), of the Company;
WHEREAS, pursuant to Section 3.7 of the Securityholders' Agreement, if
Selling Stockholders (as defined in the Securityholders' Agreement) owning 50%
or more of the outstanding shares of Company Common Stock on a fully diluted
basis (the "Requisite Stockholders") receive an offer (a "Control Transaction
Offer") from a Third Party (as defined in the Securityholders' Agreement)
proposing a Control Transaction (as defined in the Securityholders' Agreement)
with respect to the Company, and such Control Transaction Offer is accepted by
such Selling Stockholders, then each Securityholder shall, if requested to do so
by such Requisite Stockholders, Transfer (as defined in the Securityholders'
Agreement) all of its shares of Company Common Stock to such Third Party on the
terms of the Control Transaction Offer so accepted by the Requisite
Stockholders, including making the same representations, warranties, covenants,
indemnities and agreements that the Requisite Stockholders agree to make
(subject to certain limited exceptions);
WHEREAS, the Buyer desires to acquire 100% of the outstanding equity
interests of the Company;
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer
desires to purchase from the Sellers, shares of Company Common Stock owned by
the Sellers, as set forth opposite the Sellers' respective names on Schedule I
attached hereto (the "Purchased Securities"), on the terms and conditions set
forth in this Agreement; and
WHEREAS, the Sellers have agreed to deliver a notice under Section 3.7
of the Securityholders' Agreement and to otherwise facilitate as contemplated by
Section 3.7 of the Securityholders' Agreement Buyer's acquisition of 100% of the
outstanding equity interests of the Company as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto, each intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS
In addition to the terms defined elsewhere in this Agreement as used
in herein, the following terms and phrases shall have the following respective
meanings:
"Acquisition Costs" means, with respect to any shares of Company
Common Stock, including any Defaulted Shares (as defined below), any amount paid
to the holder thereof, pursuant to an appraisal proceeding under Section 262 of
the General Corporation Law of the State of Delaware, in excess of the Per Share
Purchase Price (as defined below) therefor or in any settlement of such
appraisal proceeding consented to by the Buyer and the Majority Sellers (such
consent not to be unreasonably withheld or delayed), together with all
third-party expenses incurred by (or on behalf of) the Buyer in connection with
such appraisal proceeding.
"Adjusted EBITDA Amount"means an amount calculated as set forth on
Exhibit A.
"Adjusted EBITDA Target Amount" means the amount identified as such on
Exhibit A.
"Affiliate" means, with respect to any Person, each Person that
controls, is controlled by or is under common control with such Person. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Aggregate Option Consideration" means the aggregate amount set forth
on the Schedule of Option Payments to be delivered by the Principal Sellers
pursuant to Section 3.5, which amount shall be equal to the sum of (a) the
aggregate amount of consideration payable (whether in cash or restricted Buyer
Common Stock) to the holders of all outstanding Options pursuant to Section 3.5
and (b) the Unallocated Option Payment (as defined below).
"Bank Consents"shall have the meaning set forth in the Equity Purchase
Agreement.
"Bankruptcy Plans"means the Third Amended Plan of Reorganization of
the Company, together with the Third Amended Plan of Reorganization of certain
Subsidiaries (each, a "Debtor Subsidiary"), each as confirmed by Bankruptcy
Court pursuant to the Confirmation Orders.
"Board" means the Board of Directors of the Company.
"Bonds" means, collectively, those certain Taxable Industrial Revenue
Bonds, Series VII, 1993 (The ▇▇▇▇▇▇▇ Company, Inc.), Series XVI, 1994 (The
▇▇▇▇▇▇▇ Company, Inc.), Series XII, 1995 (The ▇▇▇▇▇▇▇ Company, Inc.), Series
VIII, 1996 (The ▇▇▇▇▇▇▇ Company, Inc.), Series XVIII, 1997 (The ▇▇▇▇▇▇▇ Company,
Inc.), Series XIII, 1998 (The ▇▇▇▇▇▇▇ Company, Inc.), Series XVI, 1999 (The
▇▇▇▇▇▇▇ Company, Inc.), Series VII, 2000 (The ▇▇▇▇▇▇▇ Company, Inc.), Series
XVI, 2001 (The ▇▇▇▇▇▇▇ Company, Inc.) and Series IX, 2002 (The ▇▇▇▇▇▇▇ Company,
Inc.) issued by the City to the Company or a Subsidiary, in each case issued
under the Trust Indentures, together with any and all obligations of the Company
or any Subsidiary under any of the foregoing.
"Breach Damages" means all Losses imposed on or incurred by any of the
Buyer Parties as a result of or arising from or in connection with any breach
existing as of the Closing
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Date of (a) any representation or warranty made by the Company in Section 5 or
(b) any covenant or agreement of the Company set forth in Section 7.4(a).
"Business" means the businesses of the Company and its Subsidiaries,
taken as a whole, as currently conducted, including designing, manufacturing,
marketing and distributing branded durable household and leisure outdoor
products; it being understood and agreed that the Business does not include the
Powermate Business.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in the City of New York are authorized or obligated by Law or
executive order to close.
"Buyer Common Stock" means the common stock, par value $0.01 per
share, of the Buyer.
"Buyer Parties" means, collectively, the Buyer and its officers,
directors, employees, stockholders, subsidiaries, Affiliates (including, without
limitation, the Company and the Subsidiaries from and after the Closing),
successors and permitted assigns.
"Cash" means the cash and cash equivalents of the Company and any
Subsidiary as of the Closing, determined in accordance with GAAP.
"Cause" shall have the meaning set forth in the Restricted Stock
Agreement.
"City" means the City of Wichita, Kansas.
"Closing Date Adjustment Amount" means the amount of Pre-Closing
Company Expenses (if any).
"Code" means the Internal Revenue Code of 1986, as amended.
"Coleman" means The ▇▇▇▇▇▇▇ Company, Inc., a Wholly Owned Subsidiary
of the Company.
"Coleman Common Stock" means shares of common stock, par value $0.01
per share, of Coleman.
"Coleman Stock Option Plan" means The ▇▇▇▇▇▇▇ Company, Inc. Management
Equity Plan, effective as of December 18, 2002.
"Company Liabilities" means all Losses imposed on or incurred by any
of the Buyer Parties as a result of or arising from or in connection with: (a)
any liability of the Company under or in connection with any employee
change-in-control payments arising from or in connection with the transactions
contemplated hereby (except in the case of an involuntary termination by the
Company of any relevant employee's employment with the Company) after the
Closing required to be made under the Contracts, but only to the extent in
excess of the respective amounts set forth in Section 1.1 of the Disclosure
Schedule (as defined below); (b) an amount equal to any upward Post-Closing
Adjustment; (c) an amount equal to fifty percent
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(50%) of the Acquisition Costs; (d) any Environmental Damages; (e) any
Litigation Damages; and (f) any Breach Damages.
"Company Stock Option Plan" means the American Household, Inc. Stock
Option Plan, effective as of December 18, 2002.
"Confidentiality Agreement" means that certain confidentiality
agreement, dated as of May 10, 2004, between the Company and the Buyer.
"Confirmation Orders" means the written orders, each dated November
27, 2002, pursuant to which the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") confirmed the Bankruptcy Plans of
the Company and certain of its Subsidiaries.
"Contract" means any contract, undertaking, agreement, arrangement,
commitment, indemnity, indenture, instrument or lease, including any and all
amendments, supplements, and modifications thereto, to or under which the
Company or any Subsidiary or any of their respective assets is legally bound.
"Convertible Securities" means outstanding options, warrants and other
rights to purchase, and any other outstanding securities exercisable for or
convertible into, (a) shares of Company Common Stock, (b) shares of Sunbeam
Common Stock, (c) shares of Coleman Common Stock and (d) shares of First
Alert/Powermate Common Stock.
"Emergence Date" means December 18, 2002, the date upon which the
Company and certain of its Subsidiaries substantially consummated the
transactions contemplated by their respective Bankruptcy Plans.
"Employment Taxes" means the employer's portion of the employment
Taxes (excluding foreign employment, social and similar Taxes) required to be
paid on or before March 31, 2005 by the Buyer, the Company or any Subsidiary to
any Governmental Entity as a result of the payment of (a) the Bonus Amount, and
(b) fifty percent (50%) of (i) the aggregate amount of consideration payable
(whether in cash or restricted Buyer Common Stock) to the holders of outstanding
Options pursuant to Section 3.5, and (ii) the Retention Payments.
"Encumbrance" means any mortgage, pledge, security interest,
encumbrance, lien, assessment, encroachment, defect in title or charge of any
kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction and including any lien or charge arising by statute or other
laws, which secures the payment of a debt (including, without limitation, any
Tax) or the performance of an obligation.
"Environmental Claim" means any Proceeding seeking damages or an
order, injunction or similar relief against the Company or any of its
Subsidiaries by any Person alleging personal injury, property damage or other
potential liability, including, without limitation, any cleanup liability,
arising out of, based on, or resulting from any actual or threatened (a) release
or disposal, or the presence in the environment, of any Hazardous Materials by
or attributable to the
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Company or any Subsidiary, or any of their respective predecessors, at any
location, (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Laws by or attributable to the Company or any
Subsidiary or (c) exposure to any Hazardous Materials attributable to the
Company, any Subsidiary or any of their respective predecessors.
"Environmental Damages" means (a) cleanup costs (or other reasonably
associated expenses) incurred by the Buyer Parties in connection with the
environmental conditions for which the Company or any of its Subsidiaries is
responsible at an Environmental Site that existed at the Closing Date and (b)
damages, costs, fines, charges, penalties or other regulatory assessments for
any non-compliance at an Environmental Site prior to the Closing Date with any
Environmental Laws imposed on or incurred by the Buyer Parties as a result of or
in connection with any Environmental Claim (including, in the case of clauses
(a) and (b) above, settlement costs, court costs and any reasonable legal,
expert and consultant fees and expenses incurred in connection with defending
any actions, but excluding indirect, punitive, special or exemplary damages and
unforeseen or other consequential damages).
"Environmental Laws" means all federal, state, local or foreign laws,
statutes, regulations, orders, ordinances, judgments or decrees or common law
(a) related to releases or threatened releases of any Hazardous Materials in
soil, surface water, groundwater or air, (b) governing the use, treatment,
storage, disposal, transport, or handling of Hazardous Materials or (c) related
to the protection of the environment, human health or natural resources. Such
Environmental Laws shall include, but are not limited to, the Resource
Conservation and Recovery Act, and the Comprehensive Environmental Response,
Compensation and Liability Act, the Toxic Substances Control Act, the Clean
Water Act, the Clean Air Act, the Safe Drinking Water Act, and the Emergency
Planning and Community Right-to-Know Act, and their respective state, local or
foreign analogs.
"Environmental Reserved Amount" means the aggregate amount reserved on
the Interim Balance Sheet (as defined below) with respect to Environmental
Damages.
"Environmental Sites" means such Properties of the Company or its
Subsidiaries, as are set forth on Exhibit B hereto, and such other properties
set forth on Exhibit B.
"Equity Escrow Agent" means the escrow agent under the Equity Escrow
Agreement.
"Equity Escrow Agreement" means that certain Escrow Agreement to be
entered into by and among the Buyer, Warburg Pincus and the Equity Escrow Agent,
in the form of Exhibit 4 to the Equity Purchase Agreement, with such changes
thereto as shall be permitted by this Agreement and the Equity Purchase
Agreement.
"Equity Investment Agreements" means, collectively, the Equity
Purchase Agreement and the Equity Escrow Agreement.
"Equity Purchase Agreement" means that certain Purchase Agreement,
dated as of the date hereof, between the Buyer and Warburg Pincus.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or a successor law, and the regulations and rules issued pursuant to
that act or to any successor law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value " shall mean, with respect to the Buyer Common
Stock, the average of the closing prices of Buyer Common Stock on the New York
Stock Exchange (as reported on the NYSE Composite Tape) during the ten trading
days preceding the second trading day prior to the Closing Date.
"First Alert/Powermate Common Stock" means shares of common stock, par
value $0.01 per share, of First Alert/Powermate, Inc., a Wholly Owned Subsidiary
of the Company ("First Alert/Powermate, Inc.").
"First Alert/Powermate Equity Plan" means the First Alert/Powermate,
Inc. Management Equity Plan, effective as of December 18, 2002.
"First Alert/Powermate Option" means an option to purchase shares of
First Alert/Powermate Common Stock under the First Alert/Powermate Equity Plan.
"GAAP" means, as of any date, generally accepted accounting principles
in the United States as in effect on such date.
"Governmental Entity" means any domestic, international, foreign,
national, multinational, territorial, regional, state or local governmental
authority, instrumentality, court, commission or tribunal or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the Natural Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. (ss). 300.5, or defined as such
by, or regulated as such under, any Environmental Law, and shall include silica,
asbestos, polychlorinated biphenyls, and urea formaldehyde.
"Income Tax" or "Income Taxes" means (a) any federal, state, local or
foreign Tax based upon, measured by, or calculated with respect to income or
profits (including any capital gains Tax or franchise Tax), minimum Tax,
alternative minimum Tax, or any Tax on items of Tax preference, but, for the
avoidance of doubt, not including any sales, use, real or personal property,
gross receipts or transfer Taxes, (b) any interest or penalties, additions to
tax or additional amounts imposed by any Governmental Entity in connection with
(i) any item described in the foregoing clause (a), or (ii) the failure to
comply with any requirement imposed with respect to any Income Tax Return, and
(c) any obligation with respect to Taxes described in the foregoing clause (a)
and/or (b) payable by reason of being a successor or indemnitor or by reason of
contract, assumption, transferee liability, operation of Law, Treasury
Regulation (ss).1.1502-6 (or any predecessor or successor thereof or any
analogous or similar provision under Law) or otherwise. For the avoidance of
doubt, if a Tax is imposed on one of multiple bases,
-6-
including Taxes described in the preceding clause (a), and the Tax is in fact
imposed on the bases described in clause (a), such Tax shall be considered as
Income Tax.
"Income Tax Return" means any Tax Return filed with or submitted to,
or required to be filed with or submitted to, any Governmental Entity in
connection with the determination, assessment, collection or payment of any
Income Tax.
"Indebtedness" means, with respect to the Company and any Subsidiary,
net of Cash, as of the time immediately prior to the Closing, without
duplication: (a) any liability for borrowed money, or evidenced by an instrument
for the payment of money, or incurred as purchase money indebtedness, or
relating to a capitalized lease obligation, other than accounts payable or any
other indebtedness to trade creditors created or assumed by the Company or any
Subsidiary in the ordinary course of business in connection with the obtaining
of materials or services; (b) obligations under exchange rate contracts or
interest rate protection agreements; (c) any obligations to reimburse the issuer
of any letter of credit, surety bond, performance bond or other guarantee of
contractual performance (including, without limitation, any guarantee of payment
of accounts receivables in connection with any factoring arrangement), in each
case, only to the extent drawn or otherwise not contingent; (d) any payments,
fines, fees, penalties or other amounts applicable to or otherwise incurred in
connection with or as a result of any prepayment or early satisfaction of any
obligation described in clauses (a) through (c) above to the extent actually
paid at or prior to the Closing in connection with the repayment of Indebtedness
at the Closing pursuant to Section 10.5 hereof; and (e) all outstanding checks;
provided, however, that, notwithstanding any provision of this Agreement,
Indebtedness shall not include (i) any intercompany indebtedness, obligations or
guarantees between the Company and any of its Wholly Owned Subsidiaries or
between any Wholly Owned Subsidiaries; or (ii) any indebtedness obligations or
guarantees incurred at the request of the Buyer to finance the transactions
contemplated by this Agreement.
"Intellectual Property" means all of the following used by the Company
and its Subsidiaries in the operations of the Business: (a) United States and
foreign trademarks, service marks, and trademark and service ▇▇▇▇ registrations
and applications, trade names, logos, trade dress and slogans, and all goodwill
related to the foregoing (collectively, "Trademarks"); (b) patent applications,
patents, inventions, improvements, know-how, formula methodology, research and
development, business methods, processes, technology and Software in any
jurisdiction, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions (collectively, the "Patents"); (c)
trade secrets; (d) copyrights in writings, designs, Software, mask works or
other works, applications or registrations in any jurisdiction for the
foregoing, other original works of authorship and all moral rights related
thereto; (e) database rights; and (f) Internet web sites, web pages, domain
names and applications and registrations pertaining thereto (the "Domain Names")
and all intellectual property used in connection with or contained in the
Company's or any Subsidiary's web sites (for the avoidance of doubt, the
foregoing does not include (i) third-party websites linked to or from the
websites of the Company and its Subsidiaries or (ii) any off-the-shelf or
"shrink-wrap" licensed software).
"IRB Leases" means, collectively, (a) the Lease, dated as of December
1, 1993, (b) the First Supplemental Lease, dated as of December 1, 1994, (c) the
Second Supplemental Lease, dated as of December 1, 1995, (d) the Third
Supplemental Lease, dated as of December 1,
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1996, (e) the Fourth Supplemental Lease, dated as of December 1, 1997, (f) the
Fifth Supplemental Lease, dated as of December 1, 1998, (g) the Sixth
Supplemental Lease, dated as of December 1, 1999, (h) the Seventh Supplemental
Lease, dated as of December 1, 2000, (i) the Eighth Supplemental Lease, dated as
of December 1, 2001, and (j) the Ninth Supplemental Lease, dated as of December
1, 2002, in each case by and between the City and Coleman and as supplemented,
amended and in effect from time to time.
"Joinder Agreement" means a counterpart to this Agreement joining the
Person or Persons executing and delivering such counterpart as a Seller
hereunder, substantially in the form of Exhibit C.
"July Forecast" means, in the form previously provided by the Company
to the Buyer, the Company's forecast of its financial results for the fiscal
year ending December 31, 2004, based on, among other things, the actual
financial results of the Company for the six month period ended on June 30,
2004.
"Knowledge of the Company" means the actual knowledge, without any
duty of inquiry, of any of the individuals set forth on Exhibit D.
"Law" means any law, statute, ordinance, regulation, judgment, order,
award or other decision or requirement of any arbitrator, court, government or
governmental agency or instrumentality (domestic or foreign).
"Lease" means any lease, sublease or occupancy agreement, in each case
together with any amendments or supplements thereto, through which the Company
or any Subsidiary has rights in or to any Leased Property.
"Leased Properties" means any real property that is leased by the
Company or any Subsidiary.
"Litigation Damages" means all Losses imposed on or incurred by the
Buyer Parties as a result of or in connection with any Specified Proceeding in
excess of the Litigation Reserved Amount with respect to such Specified
Proceeding.
"Litigation Reserved Amount" means the aggregate amount reserved on
the Interim Balance Sheet with respect to Litigation Damages.
"Loss" or "Losses" means all damages, losses, liabilities,
obligations, fines, penalties, costs and expenses (including settlement costs,
court costs and any reasonable legal, expert and consultant fees and expenses
incurred in connection with defending any actions but excluding indirect,
punitive, special or exemplary damages and unforeseen or other consequential
damages), net of any Tax benefits of the Buyer, the Company or its Subsidiaries
actually realized by the Buyer Parties (after first taking into account the
utilization of the Tax benefits, if any, of the Company or its Subsidiaries
existing on the Closing Date) in respect of any taxable period that ends on or
prior to the fourth anniversary of the Closing Date.
"Majority Sellers" means, in any case, the Principal Sellers holding a
majority of the outstanding Purchased Securities acquired by the Buyer as of the
Closing Date.
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"Material Adverse Effect" means a material adverse effect on the
Business, operations, properties or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole; provided, however, that none of
the following shall be deemed, individually or in the aggregate, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Material Adverse Effect: (a) this Agreement, the
transactions contemplated by this Agreement or the announcement thereof, (b) the
Buyer's announcement or other disclosure of its plans or intentions with respect
to the conduct of the Business (or any portion thereof), (c) changes or
conditions (including changes in economic, financial market, regulatory or
political conditions, whether resulting from acts of war or terrorism, an
escalation of hostilities or otherwise) affecting the U.S. economy or foreign
economies in any locations where the Company or any of its Subsidiaries has
material operations or sales, or (d) any event, circumstance, change or effect
to the extent predominantly arising from any action taken by the Buyer or any of
its directors or officers.
"Material Divisions" means such divisions of the Company set forth on
Exhibit E.
"Option" means an option to purchase shares of Company Common Stock
under the Company Stock Option Plan, shares of Sunbeam Common Stock under the
Sunbeam Stock Option Plan or shares of Coleman Common Stock under the Coleman
Stock Option Plan, in each case, issued and outstanding immediately prior to the
Closing.
"Owned Properties" means any real property that is owned by the
Company or any Subsidiary.
"Permit" means any material license, permit, registration or
government approval which are required in order for the Company or any
Subsidiary (as applicable) to conduct the Business as presently conducted.
"Per Share Holdback Amount" means the Holdback Amount (as defined
below), divided by the number of issued and outstanding shares of Company Common
Stock immediately prior to the Closing.
"Per Share Purchase Price" means (a) the Purchase Price, less the
Aggregate Option Consideration (as defined below), less the Bonus Amount (as
defined below), divided by (b) the number of issued and outstanding shares of
Company Common Stock immediately prior to the Closing.
"Person" means an individual, a partnership (general or limited), a
corporation, a limited liability company, an association, a joint stock company,
Governmental Entity, a business or other trust, a joint venture, any other
business entity or an unincorporated organization.
"Powermate Business" means the Business of Powermate (each, as defined
in the Purchase Agreement, dated as of July 22, 2004, by and between the Company
and Powermate Holding Corp., a Delaware corporation).
"Pre-Closing Company Expenses" means the aggregate amount of (a) all
expenses incurred by the Company or any of its Subsidiaries in connection with
the transactions
-9-
contemplated hereby but only to the extent paid, incurred or otherwise payable
by the Company or any of its Subsidiaries as of the Closing, other than (i) the
aggregate Acquisition Costs and (ii) any out-of-pocket expenses incurred by the
Company and its Subsidiaries directly relating to the Buyer obtaining the
financing to consummate the transactions contemplated hereby, (b) the D & O
Premium (as defined below), (c) all expenses incurred by the Buyer to enforce
Sellers' obligations contained in Section 7.6 and (d) an amount equal to the
Employment Taxes.
"Principal Sellers" means, collectively, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior
Funding, Inc., Wachovia Bank National Association, Banc of America Strategic
Solutions, Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Proceeding" means any action, suit, proceeding, arbitration, claim,
complaint, decree or lawsuit before or involving any Governmental Entity.
"Properties" means the Leased Properties and the Owned Properties,
collectively.
"Proportionate Interest" means with respect to any Seller, the number
of Purchased Securities held by such Seller and sold to the Buyer pursuant to
this Agreement, as set forth opposite such Seller's name on Schedule I hereto,
divided by the total number of shares of Company Common Stock issued and
outstanding immediately prior to the Closing.
"Pro Rata Share" means, with respect to any Seller, an amount equal to
the Per Share Purchase Price less the Per Share Holdback Amount, multiplied by
the number of shares of Company Common Stock held by such Seller and sold to the
Buyer pursuant to this Agreement, as set forth on Schedule I hereto.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 18, 2002, as amended from time to time, by and
among the Company and the holders of Registrable Common Stock (as defined
therein) who are parties thereto or bound thereby.
"Remediation" means any investigative, response, removal, remedial,
treatment, cleanup, disposal, monitoring and other corrective actions.
"Remediation Standard" means a numerical standard that defines the
concentrations of Hazardous Materials that may be permitted to remain in any
environmental media after an investigation, remediation or containment of a
release of Hazardous Materials.
"Securityholders' Agreement" means that certain Securityholders'
Agreement, dated as of the Emergence Date, among the Company, the Principal
Sellers and the other Securityholders named therein or bound thereby.
"Seller" means any Person set forth on Schedule I attached hereto,
including any such Person added thereto pursuant to Section 13.3 or 13.4.
"Software"means any and all (a) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code form material to the operations of the Business, (b)
material databases, whether
-10-
machine readable or otherwise, and (c) all documentation, including technical,
end-user, training and troubleshooting manuals and materials, relating to any of
the foregoing.
"Specified Proceedings" mean such Proceedings of the Company or its
Subsidiaries as are set forth on Exhibit F.
"Subsidiary" means any Person (other than an individual) with respect
to which the Company (directly or indirectly, through any Subsidiary) has the
power to vote or direct the voting of sufficient securities or other interests
to elect a majority of the directors (or Persons in similar positions) thereof.
"Sunbeam" means Sunbeam Products, Inc., a Wholly Owned Subsidiary of
the Company.
"Sunbeam Common Stock" means shares of common stock, par value $0.01
per share, of Sunbeam.
"Sunbeam Stock Option Plan" means Sunbeam's Management Equity Plan,
effective as of December 18, 2002.
"Tax" or "Taxes" means (a) any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind whatsoever imposed by any
Governmental Entity (including, without limitation, taxes or other charges on or
with respect to income, minimum, alternative minimum tax, franchises, windfall
or other profits, gross receipts, excess distributions, impositions, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; withholding, ad valorem,
stamp, transfer, mortgage recording, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and similar
charges), (b) any interest or penalties, additions to tax or additional amounts
imposed by any Governmental Entity in connection with (i) any item described in
the foregoing clause (a), or (ii) the failure to comply with any requirement
imposed with respect to any Tax Return, and (c) any obligation with respect to
Taxes described in the foregoing clause (a) and/or (b) payable by reason of
being a successor or indemnitor or by reason of contract, assumption, transferee
liability, operation of Law, Treasury Regulation (ss). 1.1502-6 (or any
predecessor or successor thereof or any analogous or similar provision under
Law) or otherwise.
"Tax Return" means any return, report, declaration, statement,
extension, form or other documents or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Entity in connection
with the determination, assessment, collection or payment of any Tax.
"Treasury Regulation" means the regulations promulgated under the Code
by the United States Department of Treasury.
"Trust Indentures" means, collectively, (a) the Trust Indenture, dated
as of December 1, 1993, between the City, as issuer, and Boatmen's National Bank
(f/k/a Bank IV, N. A. and Bank IV Kansas, National Association), as trustee, (b)
the First Supplemental Trust Indenture, dated as of December 1, 1994, between
the City, as issuer, and Boatmen's National
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Bank (f/k/a Bank IV, N. A. and Bank IV Kansas, National Association), as
trustee, (c) the Second Supplemental Trust Indenture, dated as of December 1,
1995, between the City, as issuer, and Boatmen's National Bank (f/k/a Bank IV,
N. A. and Bank IV Kansas, National Association), as trustee, (d) the Third
Supplemental Trust Indenture, dated as of December 1, 1996, between the City, as
issuer, and Boatmen's National Bank (f/k/a Bank IV, N. A. and Bank IV Kansas,
National Association), as trustee, (e) the Fourth Supplemental Trust Indenture,
dated as of December 1, 1997, between the City, as issuer, and The Bank of New
York, as trustee, (f) the Fifth Supplemental Trust Indenture, dated as of
December 1, 1998, between the City, as issuer, and BNY Trust Company of
Missouri, as trustee, (g) the Sixth Supplemental Trust Indenture, dated as of
December 1, 1999, between the City, as issuer, and BNY Trust Company of
Missouri, as trustee, (h) the Seventh Supplemental Trust Indenture, dated as of
December 1, 2000, between the City, as issuer, and BNY Trust Company of
Missouri, as trustee, (i) the Eighth Supplemental Trust Indenture, dated as of
December 1, 2001, between the City, as issuer, and BNY Trust Company of
Missouri, as trustee, and (j) the Ninth Supplemental Trust Indenture, dated as
of December 1, 2002, between the City, as issuer, and BNY Trust Company of
Missouri, as trustee, in each case as supplemented, amended and in effect from
time to time.
"Warburg Pincus" means Warburg Pincus Private Equity VIII, L.P.
"Wholly Owned Subsidiary" means any Subsidiary, all of the outstanding
capital stock or other equity interests of which (other than any directors'
qualifying shares, shares held by nominee holders and similar requirements of
applicable Law) is owned by the Company and/or one or more Wholly Owned
Subsidiaries.
SECTION 2. ACQUISITION OF SECURITIES
2.1. Purchase and Sale of Purchased Securities.
Upon the terms and subject to the conditions of, and on the basis of
and in reliance upon the covenants, agreements and representations and
warranties set forth in, this Agreement, at the Closing, each Seller, with
respect to itself and not any other Seller, individually and not jointly, shall
sell, transfer, convey, assign, and deliver to the Buyer, and the Buyer shall
purchase and acquire from each Seller, free and clear of all Encumbrances, all
of the Purchased Securities set forth opposite such Seller's name on Schedule I
attached hereto for an aggregate amount in cash equal to the product of the Per
Share Purchase Price, multiplied by the number of Purchased Securities set forth
opposite such Seller's name on Schedule I attached hereto.
2.2. Treatment of Options.
At the Closing, the Company shall cause each then outstanding Option,
whether or not then vested or exercisable, to be cancelled and, in consideration
thereof, each holder of an Option shall be entitled to receive consideration in
accordance with Section 3.5.
SECTION 3. PURCHASE PRICE AND PAYMENT
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3.1. Purchase Price.
(a) The aggregate purchase price (the "Purchase Price") to be paid by
the Buyer for the Purchased Securities shall be an amount equal to Seven Hundred
Forty Five Million Six Hundred Thousand Dollars ($745,600,000), as adjusted by
the Closing Date Adjustment Amount, which Purchase Price shall be paid in cash
or reserved by the Buyer at the Closing in accordance with Section 3.1(b).
(b) Without limiting the provisions of Section 3.2, at the Closing,
the Purchase Price shall be paid, and shall be subject to adjustment, as
follows:
(i) the Buyer shall pay to the Sellers an aggregate amount equal
to $745,600,000, less the sum of (i) the Estimated Closing Date Adjustment
Amount, (ii) the Holdback Amount, (iii) the Reserved Amount (as defined
below), (iv) the Aggregate Option Consideration and (v) the Bonus Amount,
which shall be paid by the Company at the Closing to such employees of the
Company and its Subsidiaries, in such amounts, as is set forth in Section
13.2(g), by wire transfer of immediately available funds at the Closing to
accounts respectively designated in writing by the Sellers (or by check, to
any Seller who fails to specify wire transfer instructions to its account),
with each Seller receiving an amount at Closing equal to the Per Share
Purchase Price, less the Per Share Holdback Amount, multiplied by the
number of shares of Company Common Stock set forth opposite such Seller's
name on Schedule I attached hereto;
(ii) an amount (the "Holdback Amount") equal to the amount set
forth on Exhibit G shall be retained by the Buyer from the Purchase Price
to satisfy any claims by the Buyer Parties pursuant to Section 13.5, and
shall be administered and distributed, as set forth in and subject to the
conditions of Section 13.5;
(iii) an amount equal to the Aggregate Option Consideration shall
be paid to Option holders pursuant to Section 3.5 and to employees of the
Company and its Subsidiaries pursuant to Section 13.2(g); and
(iv) an amount equal to the Bonus Amount shall be paid to
employees of the Company and its Subsidiaries pursuant to Section 13.2(g).
3.2. Purchase Price Adjustment.
(a) Not more than sixty (60) days after the Closing Date (as defined
below), the Buyer may (but shall not be obligated to) prepare from the books and
records of the Company and deliver to the Principal Sellers a written statement
setting forth in reasonable detail the Buyer's calculation of the actual Closing
Date Adjustment Amount (the "Proposed Final Closing Adjustment Amount"). If the
Buyer fails to timely deliver such statement to the Principal Sellers for any
reason, the Estimated Closing Adjustment Amount shall be deemed to be the Final
Closing Adjustment Amount (as defined below) for all purposes under this
Agreement, and shall be conclusive, final and binding upon the Buyer and the
Sellers and shall not be subject to any challenge or appeal by any such parties.
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(b) The Majority Sellers shall notify the Buyer in writing of the
Majority Sellers' disagreement (if any) with the amount of the Proposed Final
Closing Adjustment Amount within forty five (45) days after the Principal
Sellers' receipt of the statement described in Section 3.2(a). During such
period, the Majority Sellers and their accountants and other representatives
shall have reasonable access (upon reasonable prior notice) to the books,
records, appropriate personnel, schedules, work papers and other documents of
the Company reasonably necessary to review the statement described in Section
3.2(a) and the calculation of the Proposed Final Closing Adjustment Amount and
the Buyer shall, and shall cause the Company and its Subsidiaries (and their
respective appropriate employees), to reasonably cooperate with the Majority
Sellers and their representatives in connection with such review. If the
Majority Sellers fail to timely deliver such notice to the Buyer for any reason,
the Proposed Final Closing Adjustment Amount, as reflected in such statement,
shall be deemed to be the Final Closing Adjustment Amount for all purposes under
this Agreement, and shall be conclusive, final and binding upon the Buyer and
the Sellers and shall not be subject to any challenge or appeal by any such
parties. If the Majority Sellers timely give the Buyer notice of their
disagreement (a "Closing Adjustment Dispute") with the amount of the Proposed
Final Closing Adjustment Amount reflected in such statement, the Buyer and such
Majority Sellers shall negotiate in good faith to resolve such Closing
Adjustment Dispute. In the event that the Buyer and such Majority Sellers
resolve such Closing Adjustment Dispute and agree upon the amount of the Final
Closing Adjustment Amount, such agreed Final Closing Adjustment Amount shall be
deemed to be the Final Closing Adjustment Amount for all purposes under this
Agreement, and shall be conclusive, final and binding upon the Buyer and the
Sellers and shall not be subject to any challenge or appeal by any such parties.
In the event that such Closing Adjustment Dispute is not resolved within twenty
(20) Business Days after the Buyer's receipt of such Majority Sellers notice of
such Closing Adjustment Dispute, then such Majority Sellers and the Buyer shall
promptly submit such Closing Adjustment Dispute for resolution to the New York
office of an independent registered public accounting firm of recognized
national standing, mutually acceptable to such Majority Sellers and the Buyer
(the "Resolving Accountant"), for review and resolution of any and all
unresolved matters that are the subject of such Closing Adjustment Dispute.
(c) Unless otherwise expressly agreed by the Buyer and such Majority
Sellers, the Resolving Accountant shall render its decision as to the Closing
Adjustment Dispute within thirty (30) days after it is referred to the Resolving
Accountant. The Resolving Accountant's function shall be to resolve only such
unresolved matters that are the subject of the Closing Adjustment Dispute in
accordance with the terms and provisions of this Agreement. The decision of the
Resolving Accountant shall be conclusive, final and binding upon the Buyer and
the Sellers and shall not be subject to any challenge or appeal by any such
parties; provided, however, that in no event shall any decision of the Resolving
Accountant require (i) the Buyer to be responsible for the payment to the
Sellers of any amount in excess of the amount of the Final Closing Adjustment
proposed by the Majority Sellers and submitted to the Resolving Accountant
pursuant to such Closing Adjustment Dispute or (ii) the Sellers to be
responsible for the payment to the Buyer of any amount in excess of the amount
of the Final Closing Adjustment proposed by the Buyer and submitted to the
Resolving Accountant pursuant to such Closing Adjustment Dispute. The fees of
the Resolving Accountant shall be shared equally among the Buyer, on one hand,
and such Majority Sellers, on the other hand (it being understood that if any
such fees are
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not timely so paid by such Majority Sellers, the Buyer may pay any such fees and
collect the amount of such payment from the Holdback Amount).
(d) If the actual amount of the Closing Date Adjustment Amount, as
finally determined in accordance with this Section 3.2 (the "Final Closing
Adjustment Amount"), (i) is less than the Estimated Closing Adjustment Amount by
an amount in excess of One Hundred Thousand Dollars ($100,000), the Purchase
Price shall be adjusted upward by an amount equal to the entire amount of such
deficiency, or (ii) is greater than the Estimated Closing Adjustment Amount by
an amount in excess of One Hundred Thousand Dollars ($100,000), the Purchase
Price shall be adjusted downward by an amount equal to the entire amount of such
excess. For the purposes of this Agreement, "Post-Closing Adjustment" shall mean
any upward adjustment to the Purchase Price in respect of any decrease of the
Final Closing Adjustment Amount, or any downward adjustment to the Purchase
Price in respect of any increase of the Final Closing Adjustment Amount, in
either case pursuant to the provisions of this Section 3.2.
(e) Subject to any applicable limitations set forth in Section 12, in
the event of: (i) a downward Post-Closing Adjustment, within five (5) Business
Days after the final determination thereof in accordance with this Section 3.2,
the Buyer shall pay to the Sellers (in accordance with their respective
Percentage Interests on the date of such payment) by wire transfer of
immediately available funds to accounts respectively designated in writing by
the Sellers (or by check, to any Seller who fails to specify wire transfer
instructions to its account), an amount equal to such downward Post-Closing
Adjustment, or (ii) an upward Post-Closing Adjustment, at any time after the
final determination thereof in accordance with this Section 3.2, the Buyer may
collect an amount equal to such upward Post-Closing Adjustment from the Holdback
Amount.
3.3. Reserved Amount.
In the event that any Securityholder (each, a "Defaulting
Securityholder") fails for any reason to deliver its shares (the "Defaulted
Shares") of Company Common Stock at the Closing, the Buyer shall have the right
to retain from the Purchase Price an amount (the "Reserved Amount") equal to the
amount of the Per Share Purchase Price, multiplied by the number of such
Defaulted Shares. The Reserved Amount shall be retained by, and available to,
the Buyer for the purpose of acquiring such Defaulted Shares from and after the
Closing Date pursuant to Section 13.3 or Section 13.4. Promptly after the
consummation of the purchase by the Buyer of any outstanding Defaulted Shares,
the Reserved Amount with respect to such Defaulted Shares shall be paid by the
Buyer to such Defaulting Securityholder by wire transfer of immediately
available funds to accounts respectively designated in writing by the Defaulting
Securityholders (or by check, to any Defaulting Securityholder who fails to
specify wire transfer instructions to its account). For the avoidance of doubt,
no interest shall be paid or payable to the Sellers or any other Person in
respect of the Reserved Amount.
3.4. Withholding Rights.
The Buyer, the Company and its Subsidiaries shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement such Taxes as it is required to deduct and withhold with respect to
the making of such payment under all applicable
-15-
Law, provided that (i) the Buyer and the Company shall deliver to the Principal
Sellers, no later than two (2) Business Days prior to the Closing Date, a
schedule of all amounts so required to be withheld and (ii) the Buyer, the
Company and its Subsidiaries shall pay all such Taxes withheld to the
appropriate Governmental Entity promptly after such amount being withheld (but
in no event later than when such payment is due). To the extent that Taxes are
so withheld by the Buyer, the Company or any Subsidiary such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Person who would have received such payment in accordance with the terms hereof
if no amount had been withheld.
3.5. Stock Options.
(a) At the Closing, each Option (other than the Management Options,
which shall be treated in accordance with Section 3.5(b)) representing the right
to acquire shares of Company Common Stock, ▇▇▇▇▇▇▇ Common Stock or Sunbeam
Common Stock (collectively, "Stock") which is outstanding immediately prior to
the Closing under the Company Stock Option Plan, the ▇▇▇▇▇▇▇ Stock Option Plan
or the Sunbeam Stock Option Plan (whether or not then vested or exercisable)
shall be cancelled at the Closing in exchange for a payment at the Closing in
cash to the holder of such Option in such amount as is set forth opposite such
holder's name (in a column designating the amount of such cash payment) on a
schedule, to be delivered by the Principal Sellers to the Buyer two (2) Business
Days prior to the Closing Date (the "Schedule of Option Payments") which amount
shall be calculated in accordance with Section 3.5(a) of the Disclosure
Schedule.
(b) At the Closing, fifty percent (50%) of the Options held by each
individual listed in Section 3.5(b) of the Disclosure Schedule (such fifty
percent (50%) of such Options, the "Management Options") shall be converted into
such number of restricted shares of Buyer Common Stock as is equal to the
quotient obtained by dividing (i) the aggregate value of such Management Options
held by such individual as set forth opposite such individual's name (in a
column designating the amount of such value to be paid in restricted Buyer
Common Stock) on the Schedule of Option Payments, by (ii) the Fair Market Value
of the Buyer Common Stock; provided, that such shares of restricted Buyer Common
Stock shall be subject to the terms of the Buyer's 2003 Stock Incentive Plan and
a Restricted Stock Agreement substantially in the form attached hereto as
Exhibit H (the "Restricted Stock Agreement").
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
Simultaneously with the execution of this Agreement by any particular
Seller, such Seller shall (as applicable) deliver to the Buyer a disclosure
schedule (each, a "Seller Disclosure Schedule") with numbered sections
corresponding to the relevant sections in this Agreement. Each exception set
forth in a Seller Disclosure Schedule and each other response to this Agreement
set forth in such Seller Disclosure Schedule shall be identified by reference
to, or shall be grouped under a heading referring to, a specific individual
section of this Agreement. Any disclosure made in a Seller Disclosure Schedule
that is identified by reference to, or grouped under a heading referring to, a
specific section of this Agreement shall be deemed disclosed in such Seller
Disclosure Schedule and applicable to any other section of such Seller
Disclosure Schedule only to the extent that such disclosure is reasonably
apparent from its face to be applicable to such other section of such Seller
Disclosure Schedule. The inclusion of any
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information in any Seller Disclosure Schedule shall not be deemed an admission
or acknowledgement, in and of itself or solely by virtue of the inclusion of
such information in such Seller Disclosure Schedule, that such information is
required to be set forth therein or that such information is material to the
Company or its Subsidiaries, the Sellers or the Business. Capitalized terms used
and not otherwise defined in any Seller Disclosure Schedule shall have the
respective meanings ascribed to them in this Agreement. As a material inducement
to the Buyer to enter into and perform its obligations under this Agreement each
Seller, except as specifically set forth in its Seller Disclosure Schedule, with
respect to itself and not any other Seller, individually and not jointly, hereby
represents and warrants to the Buyer (solely to the extent that any of the
following representations and warranties are applicable to such Seller) as
follows:
4.1. Organization and Good Standing.
Such Seller, if not an individual, is a Person duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization (as applicable).
4.2. Power and Authorization.
(a) Such Seller, if not an individual, has all requisite corporate or
organizational (as applicable) and other power and authority to enter into and
perform its obligations under this Agreement and under the other agreements and
documents (collectively, the "Seller Closing Documents") required to be
delivered by it at the Closing that are set forth in Section 10.2. The
execution, delivery and performance by such Seller of this Agreement and the
Seller Closing Documents have been duly authorized by all necessary corporate or
other action on the part of such Seller. This Agreement has been duly executed
and delivered by such Seller and constitutes the valid and binding obligation of
such Seller, enforceable against it in accordance with its terms, and, when
executed and delivered as contemplated herein, each of the Seller Closing
Documents shall constitute the valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, in each case
subject to applicable bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and matters of public
policy.
(b) Such Seller, if an individual, is at least of legal majority and
capacity, and has all requisite power and authority, to enter into and perform
such Seller's obligations under this Agreement and under the Seller Closing
Documents required to be delivered by such Seller at the Closing that are set
forth in Section 10.2. This Agreement has been duly and validly executed and
delivered by such Seller and constitutes the valid and binding obligation of
such Seller, enforceable against such Seller in accordance with its terms and,
when executed and delivered as contemplated herein, each of the Seller Closing
Documents shall constitute the valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, in each case
subject to applicable bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and matters of public
policy.
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4.3. No Conflicts.
(a) The execution, delivery and performance of this Agreement and the
Seller Closing Documents to which such Seller is a party do not and will not
(with or without the passage of time or the giving of notice): (i) violate or
conflict with (as applicable) the articles or certificate of incorporation,
bylaws, articles or certificate of formation or organization, limited liability
company or operating agreement, partnership agreement or other organizational
document of such Seller if such Seller is not an individual, in each case, as
currently in effect; (ii) violate or conflict with any Law binding upon such
Seller or violate or result in a breach of, or constitute a default under, any
material agreement to which such Seller is a party or by which the Seller or any
of its assets are otherwise bound, except, in each case, for such violations,
conflicts, breaches or defaults as would not reasonably be expected to result in
a material adverse effect upon the ability of such Seller to enter into or
perform its obligations under this Agreement or any Seller Closing Document to
which such Seller is a party; or (iii) result in, or require the creation or
imposition of any Encumbrance upon or with respect to any of the Purchased
Securities held by such Seller. Except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") and applicable requirements
of antitrust or other competition laws of other jurisdictions, no consent,
authorization, waiver by or filing with any Governmental Entity, administrative
body or other third party is required in connection with the execution, delivery
or performance of this Agreement by such Seller or the consummation by the
Seller of the transactions contemplated hereby, except for such consents,
authorizations, waivers or filings as to which the failure to obtain would not
reasonably be expected to result in a material adverse effect upon the ability
of such Seller to enter into or perform its obligations under this Agreement or
any Seller Closing Document to which such Seller is a party.
(b) There are no Proceedings pending against such Seller or, to the
knowledge of such Seller, pending against the Company or threatened against such
Seller or the Company that challenge the validity of this Agreement or the
transactions contemplated hereby or which, if adversely determined, would
reasonably be expected to result in a material adverse effect upon the ability
of the Seller to enter into or perform its obligations under this Agreement or
any Seller Closing Documents to which such Seller is a party.
4.4. Ownership of the Purchased Securities.
Subject to the terms of the Securityholders' Agreement, such Seller
owns all right, title and interest, and has good and valid title, in and to all
of the Purchased Securities set forth opposite its name on Schedule I attached
hereto, beneficially and of record, free and clear of any Encumbrance (except
for restrictions imposed generally by applicable securities laws). Except for
the Securityholders' Agreement and the Registration Rights Agreement, there are
no shareholder or other agreements affecting the right of such Seller to convey
such Purchased Securities (or rights therein) to the Buyer as contemplated
hereby, and such Seller has the right, authority, power and capacity to sell,
transfer, convey, assign and deliver the Purchased Securities to the Buyer as
contemplated hereby, free and clear of any Encumbrance (except for restrictions
imposed generally by applicable securities laws). Upon delivery to the Buyer of
the certificate or other instruments representing all of the Purchased
Securities set forth opposite such Seller's name on Schedule I attached hereto
and the payment by Buyer of the consideration therefor as provided in this
Agreement, the Buyer will acquire good and valid title in and to such
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Purchased Securities, free and clear of any Encumbrance (except for applicable
securities laws restrictions).
4.5. Litigation.
There are no Proceedings that have been commenced or, to the knowledge
of such Seller, threatened in writing against such Seller that challenge the
validity of this Agreement or the transactions contemplated hereby or that may
have the effect of preventing, delaying or impairing, or making illegal the
transactions contemplated, or materially affecting such Seller's ability to
perform its obligations, hereunder or under the Seller Closing Documents to
which such Seller is a party or to consummate the transactions contemplated
hereby or thereby.
4.6. Brokers.
No Person acting on behalf of such Seller or any of its Affiliates or
under the authority of such Seller or Affiliate is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee with respect to
which the Buyer, the Company or any Subsidiary will be liable in connection with
any of the transactions contemplated by this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND ITS
SUBSIDIARIES
Simultaneously with the execution of this Agreement, the Company shall
deliver to the Buyer a Disclosure Schedule with numbered sections corresponding
to the relevant sections in this Agreement (the "Disclosure Schedule"). Each
exception set forth in the Disclosure Schedule and each other response to this
Agreement set forth in the Disclosure Schedule shall be identified by reference
to, or shall be grouped under a heading referring to, a specific section of this
Agreement. Any disclosure made in the Disclosure Schedule that is identified by
reference to, or grouped under a heading referring to, a specific individual
section of this Agreement shall be deemed disclosed in such Disclosure Schedule
and applicable to any other section of the Disclosure Schedule only to the
extent that such disclosure is reasonably apparent from its face to be
applicable to such other section of the Disclosure Schedule. The inclusion of
any information in any Disclosure Schedule shall not be deemed an admission or
acknowledgement, in and of itself or solely by virtue of the inclusion of such
information in the Disclosure Schedule, that such information is required to be
set forth therein or that such information is material to the Company, its
Subsidiaries, the Sellers or the Business or constitutes a Material Adverse
Effect. Capitalized terms used and not otherwise defined in any Disclosure
Schedule shall have the respective meanings ascribed to them in this Agreement.
As a material inducement to the Buyer to enter into and perform its obligations
under this Agreement, except as specifically set forth in the Disclosure
Schedule, the Company hereby represents and warrants to the Buyer as follows:
5.1. Organization and Good Standing.
The Company and each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate or other power and authority, as
applicable, to conduct its business as presently conducted and to own and lease
the material properties and assets presently used in
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connection therewith and to perform all of its material obligations under each
material agreement and instrument by which it is bound. The Company and each
Subsidiary is qualified to do business and is in good standing in each
jurisdiction where the nature or character of the property owned, leased or
operated by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure to be so qualified or be in
good standing would not reasonably be expected to result in a Material Adverse
Effect.
5.2. Power and Authorization.
The Company has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement and under the other
agreements and documents required to be delivered by it at the Closing that are
set forth in Section 10.3 (collectively, the "Company Closing Documents"). The
execution, delivery and performance by the Company of this Agreement have been
duly authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and matters of public
policy. At the Closing, the Company Closing Documents will be duly executed and
delivered by the Company and, when executed and delivered at the Closing as
contemplated herein, each of the Company Closing Documents will constitute the
valid and binding obligations of the Company, enforceable against the Company in
accordance with its terms, in each case, subject to applicable bankruptcy,
insolvency and similar laws affecting the enforceability of creditors' rights
generally, general equitable principles, the discretion of courts in granting
equitable remedies and matters of public policy.
5.3. Capitalization.
(a) As of the date hereof, the total outstanding shares of the
Company's capital stock consist of 31,724,796 shares of Company Common Stock,
all of which shares are owned of record by the Persons, and in the respective
amounts, set forth in Section 5.3(a) of the Disclosure Schedule. Immediately
after the Closing, the shares of Company Common Stock (other than those that are
Purchased Securities acquired by the Buyer at the Closing) will be owned of
record by the Persons, and in the respective amounts, set forth in Section
5.3(a) of the Disclosure Schedule (as the same may be amended immediately prior
to the Closing to reflect transfers of Company Common Stock, to the extent
permitted hereunder, and issuances of Company Common Stock upon exercise of
Convertible Securities). Under the Company Stock Option Plan, there are
authorized Options to purchase 2,296,433 shares of Company Common Stock, of
which, as of the date hereof, there are issued and outstanding Options to
purchase 2,043,899 shares of Company Common Stock. Other than the
Securityholders' Agreement and the foregoing Options, there are no outstanding
offers, options, warrants, rights, agreements or commitments of any kind
(contingent or otherwise), including employee benefit arrangements, relating to
the issuance, conversion, registration, voting, sale, repurchase or transfer of
any equity interests or other securities of the Company or obligating the
Company or any other Person to purchase or redeem any such equity interests or
other securities. All outstanding shares and rights to acquire shares of capital
stock of the Company were issued on and after the Emergence Date. All of the
issued and outstanding shares of capital stock of the Company have been duly
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authorized, are validly issued and outstanding, are fully paid and nonassessable
and have been issued in compliance in all material respects with applicable
securities Laws. No securities issued by the Company from the Emergence Date to
the date hereof were, and as of the Closing Date will have been, issued in
violation of any statutory or common law preemptive rights. There are no
dividends which have accrued or been declared but are unpaid on any capital
stock of the Company.
(b) All issued and outstanding shares of capital stock and equity
interests (as applicable) of each Subsidiary are owned (beneficially and of
record) by the Company or another Subsidiary, free and clear of any Encumbrance,
other than directors' qualifying shares, shares held by nominee holders and
similar requirements of applicable Laws. Under the Sunbeam Stock Option Plan and
the ▇▇▇▇▇▇▇ Stock Option Plan, there are authorized Options to purchase 577,438
shares of Sunbeam Common Stock and 866,849 shares of ▇▇▇▇▇▇▇ Common Stock,
respectively, of which, as of the date hereof, there are issued and outstanding
Options to purchase 542,950 shares of Sunbeam Common Stock and 670,950 shares of
▇▇▇▇▇▇▇ Common Stock. Under the First Alert/Powermate Equity Plan, there are
authorized First Alert/Powermate Options to purchase 215,387 shares of First
Alert/Powermate Common Stock, of which, as of the date hereof, there are issued
and outstanding First Alert/Powermate Options to purchase no shares of First
Alert/Powermate Common Stock. From and after December 31, 2004, no First
Alert/Powermate Options will be issued and outstanding. Except for such Options
and First Alert/Powermate Options, there are no outstanding offers, options,
warrants, rights, agreements or commitments of any kind (contingent or
otherwise), including employee benefit arrangements, relating to the issuance,
conversion, registration, voting, sale, repurchase or transfer of any equity
interests or other securities of any Subsidiary or obligating any Subsidiary or
any other Person to purchase or redeem any such equity interests or other
securities. All of the issued and outstanding equity interests of each
Subsidiary have been issued in compliance in all material respects with
applicable securities Laws. No securities issued by any Subsidiary and held by
the Company or another Subsidiary have been issued in violation of any statutory
or common law preemptive rights. As of the date hereof, there are no dividends
which have accrued or been declared but are unpaid on the outstanding equity
interests of any Subsidiary.
(c) At the Closing, after giving effect to the transactions
contemplated by Section 3.5 (which transactions the Company has or will have at
or prior to the Closing the right or authority to consummate or cause to be
consummated), no options, warrants or other rights to acquire shares of Company
Common Stock, ▇▇▇▇▇▇▇ Common Stock or Sunbeam Common Stock, or to acquire any
other equity securities of the Company or any Subsidiary, will be outstanding.
(d) At the Closing, the Registration Rights Agreement will terminate
in accordance with its terms and will be of no further force or effect.
5.4. Investments and Subsidiaries.
The Business is conducted solely by and through the Company and the
Subsidiaries, and neither the Company nor any Subsidiary, directly or
indirectly, owns, controls or has any investment or other ownership interest in
any Person other than the Company's ownership of its interest in the
Subsidiaries.
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5.5. No Conflicts.
The execution, delivery and performance of this Agreement and the
Company Closing Documents do not and will not (with or without the passage of
time or the giving of notice): (i) violate or conflict with the articles or
certificate of incorporation, bylaws, articles or certificate of formation or
organization, limited liability company or operating agreement, partnership
agreement or other organizational document of the Company or any Subsidiary;
(ii) violate or conflict with any Law binding upon the Company or any
Subsidiary, except for such violations or conflicts as would not reasonably be
expected to result in a Material Adverse Effect; (iii) violate or conflict with,
result in a breach of, constitute a default under any material agreement or
other material obligation to which the Company or any Subsidiary is a party
(including without limitation the Contracts set forth in Section 5.14 of the
Disclosure Schedule), or by which either of them or any of their assets are
otherwise bound, except, in each case, for such violations, conflicts, breaches
or defaults as would not reasonably be expected to result in a Material Adverse
Effect; (iv) result in the creation of an Encumbrance pursuant to, or give rise
to any penalty, acceleration of remedies, right of termination or otherwise
cause any alteration of any rights or obligations of any party under any
material Contract to which either the Company or any Subsidiary is a party or by
which either of them or any of their assets are otherwise bound, except for
Permitted Encumbrances and such penalties, remedies, terminations, rights,
obligations or Encumbrances as would not reasonably be expected to result in a
Material Adverse Effect; or (v) require any consent, notice, authorization,
waiver by or filing with any Governmental Entity or other third party, except
(A) as would not reasonably be expected to result in a Material Adverse Effect
or (B) for filings (1) under the HSR Act and (2) applicable requirements of
antitrust or other competition laws of other jurisdictions which, if not
obtained, would not reasonably be expected to result in a Material Adverse
Effect.
5.6. Financial Matters.
(a) The Company has delivered to the Buyer true and complete copies of
the Company's (a) audited consolidated balance sheets of the Company at December
31, 2002 and 2003 (such balance sheet at December 31, 2003, the "Balance Sheet")
and the related audited consolidated statements of operations, shareholder's
equity and cash flows at and for the fiscal years ended December 31, 2002 and
2003, including the notes thereto (together with the Balance Sheet, the "Audited
Financial Statements"), and (b) unaudited consolidated balance sheet at June 30,
2003 and 2004 (such balance sheet at June 30, 2004, the "Interim Balance Sheet")
and the related unaudited consolidated statements of operations and cash flows
for the six months ended June 30, 2004 (the "Interim Financial Statements" and,
together with the Audited Financial Statements, the "Financial Statements"). The
Financial Statements (i) have been prepared based on the books and records of
the Company and each Subsidiary, (ii) have been prepared in accordance with
GAAP, consistently applied, in all material respects, except, in the case of the
Interim Financial Statements, for normal year-end adjustments, the omission of
footnote disclosures required by GAAP and the omission of a statement of
shareholder's equity, and (iii) fairly present in all material respects the
financial position of the Company and the Subsidiaries on a consolidated basis
as of the respective dates thereof and the results of operations, changes in
shareholders' equity (in the case of the Audited Financial Statements), and cash
flows for the periods covered thereby.
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(b) The Company has retained KPMG LLP to assist the Company with
achieving compliance with reporting disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and internal
controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) requirements inherent in Section 404 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended.
5.7. Absence of Undisclosed Liabilities.
To the Knowledge of the Company, there are no material liabilities or
obligations of the Company or any Subsidiary, either accrued, contingent,
absolute or otherwise, other than those that: (a) are disclosed or reserved
against on the Balance Sheet, the Interim Balance Sheet or the notes thereto; or
(b) have arisen in the ordinary course of business since the date of the Interim
Balance Sheet.
5.8. Real Property.
(a) Section 5.8(a) of the Disclosure Schedule sets forth a true,
accurate and complete list of the addresses of all Properties (identifying those
that are Leased Properties and those that are Owned Properties) that are
material to the operations of the Company or any Material Division.
(b) The Company and each Subsidiary (as applicable) has valid title in
fee simple to all of the Owned Properties and valid leasehold interests in all
Leased Properties, in each case, free and clear of any Encumbrance, except for:
(i) liens for taxes not yet delinquent and as to which no penalty has been
imposed, assessments and governmental charges and levies which are not in
default or which are being contested in good faith by appropriate proceedings
and adequate reserves with respect thereto are maintained on the books and
records of the Company or such Subsidiary in accordance with GAAP; (ii) any
zoning or other governmentally established restrictions or encumbrances; (iii)
such utility and municipal easements and restrictions, if any, as do not detract
in any material respect from the value of the Property subject thereto and do
not materially interfere with any Property used in the ordinary conduct of the
Business as presently conducted; (iv) Encumbrances that, individually or in the
aggregate, do not have a material adverse effect upon the Property or Properties
affected thereby; and (v) such matters as an accurate survey may show, provided
that, individually or in the aggregate, such matters would not reasonably be
expected to result in a material adverse effect on the value of the Property or
Properties affected thereby (collectively, the "Permitted Encumbrances"). The
Company shall make available copies of all existing surveys, title insurance
policies and their respective exception documents for each of the Properties, to
the extent in the possession of the Company or any Subsidiary, to Buyer or its
representatives. To the Knowledge of the Company, neither the Company nor any
Subsidiary has received written notice with respect to any Owned Property or to
any Leased Property that is material to the operations of the Company or any
Material Division that (i) any building or structure, to the extent of the
premises owned or leased by the Company or any Subsidiary, or (ii) any
appurtenance thereto or equipment therein, or (iii) the operation or maintenance
thereof, violates in any material respect any restrictive covenant or any rule
adopted by any national, state or local association. To the Knowledge of the
Company, neither the Company nor any Subsidiary has received written notice of
any pending or threatened condemnation proceeding, special assessment, tax
certiorari or similar
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proceeding with respect to any Owned Property or to any Leased Property that is
material to the operations of the Company or any Material Division.
(c) To the Knowledge of the Company, neither the Company nor any
Subsidiary has received any written notice since the Emergence Date (i) of any
pending rezoning proceeding affecting any Owned Property or any Leased Property
that is material to the operations of the Company or any Material Division, or
(ii) from any utility company or municipality of any existing fact or condition
that would reasonably be expected to result in the discontinuation of presently
available sewer, water, electric, gas or telephone for any Property (or any
portion thereof) that is material to the conduct of the Business.
(d) The Leased Properties that are material to the operations of the
Company or any Material Division and the Owned Properties have sufficient access
to conduct the Business at such Properties, as presently conducted.
(e) Neither the Company nor any Subsidiary is party to any lease or
license granting to any Person any right to the use, occupancy or enjoyment with
respect to any Owned Property or any portion thereof.
(f) No Owned Property (or any portion thereof) that is set forth in
Section 5.8(a) of the Disclosure Schedule, including, without limitation, any
material building or improvement thereon, is subject to any purchase option,
right of first refusal or first offer or other similar right.
(g) The Company has made available to the Buyer true and complete
copies of all Leases that are material to the operations of the Business and all
material ancillary documents pertaining thereto.
(h) Each Lease for any Leased Property that is material to the
operations of the Company or any Material Division is in full force and effect.
Neither the Company nor any Subsidiary (as applicable) nor, to the Knowledge of
the Company, any other party to any such Lease has given to the other party to
such Lease written notice of any material breach or default that remains uncured
as of the date hereof. Neither the Company nor any Subsidiary (as applicable) is
in material default under any such Lease and, to the Knowledge of the Company
and any Subsidiary, no other party to any such Lease is in material default. To
the Knowledge of the Company, there are no events which with the passage of time
or the giving of notice or both would constitute a material default by the
Company or any Subsidiary or by any other party to any such Lease.
(i) Neither the Company nor any Subsidiary is party to any sublease,
license or other agreement granting to any Person any right to the use,
occupancy or enjoyment of any Leased Property (or any portion thereof) that is
set forth in Section 5.8(a) of the Disclosure Schedule.
(j) There are no guaranties from any of the Sellers, the Company or
any Subsidiary in favor of the lessors with respect to any Leased Property that
is material to the operations of the Company or any Material Division.
-24-
5.9. Personal Property.
The Company and each Subsidiary has good and valid title in and to all
material personal property owned by it, free and clear of all Encumbrances,
except for any Permitted Encumbrances. All leased personal property used in the
Business is used pursuant to valid, subsisting and enforceable leases,
subleases, licenses and other agreements binding upon the Company and any
Subsidiary (as applicable) and, to the Knowledge of the Company, the other
parties thereto, in accordance with their terms, except as would not reasonably
be expected to result in a Material Adverse Effect. The material properties and
assets owned or leased by the Company or any Subsidiary are in the possession or
under the control of the Company or such Subsidiary, other than properties and
assets in transit or on consignment.
5.10. Taxes.
(a) The Company, each Subsidiary and each affiliated group (within the
meaning of Section 1504 of the Code) of which the Company or any Subsidiary is a
member has (i) timely and duly filed with the appropriate Governmental Entities
all Income Tax Returns and other material Tax Returns required to be filed by
them (after giving effect to validly obtained extensions of time in which to
make such filings) and each such Tax Return is accurate and complete in all
material respects and (ii) timely paid all Taxes shown as due thereon. The
unpaid Taxes for all taxable years beginning after the Emergence Date for which
the Company and the Subsidiaries are responsible do not exceed in any material
respect the amounts of the reserves for actual unpaid Taxes for such taxable
years which are set forth on the Interim Balance Sheet and are specifically
stated in the books and records of the Company and/or the Subsidiaries (as
opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income). For the avoidance of doubt, nothing in
this Agreement shall be construed as representing the existence or availability
of any net operating losses or tax credits in any taxable period, or portions of
taxable period.
(b) The Company has delivered or made available to the Buyer, upon its
written request, (i) true, correct, and complete copies of all Income Tax
Returns of the Company and each Subsidiary for taxable periods ending after
December 31, 1999 that had been filed at the time of such request and (ii) an
accurate and complete summary of all material audit reports issued by a
Governmental Entity on or after December 31, 1998, relating to any material
Taxes due from or with respect to the Company or any Subsidiary.
(c) Neither the Company nor any Debtor Subsidiary has made an election
described in Section 108(b)(5) of the Code with respect to the transactions
consummated in any Bankruptcy Plan. The Company (i) has consistently treated it
and each Debtor Subsidiary as duly qualified for treatment under Section
382(l)(5) with respect to the transactions consummated in connection with the
Bankruptcy Plans and (ii) has not made an election described in Section
382(l)(5)(H) of the Code in respect of such transactions. Since January 1, 1998,
neither the Company nor any Subsidiary has undergone an ownership change within
the meaning of Section 382 of the Code, except as a result of the transactions
consummated in connection with the Bankruptcy Plans or pursuant to this
Agreement.
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(d) All deficiencies for Taxes asserted against the Company or any
Subsidiary (i) have been paid or (ii) are reserved, in accordance with GAAP, on
the Balance Sheet or on the books and records of the Company and being contested
in good faith by proper proceedings. Since January 1, 2001, neither the Company
nor any Subsidiary has been the subject of any audit, suit, proceeding, claim,
examination, or assessment by any Governmental Entity regarding Taxes, and no
such audit, suit, action, proceeding, claim, examination, or assessment is
currently pending or, to the Knowledge of the Company, threatened. There are no
Encumbrances for Taxes except for Encumbrances for Taxes not yet due or
delinquent upon the assets of the Company or any Subsidiary or upon any of the
capital stock of the Company or any Subsidiary.
(e) Section 5.10(e) of the Disclosure Schedule lists (i) all types of
Taxes currently payable, and all types of Tax Returns currently required to be
filed, by or on behalf of the Company and each Subsidiary, (ii) all of the
jurisdictions that currently impose upon the Company or any Subsidiary a duty to
pay Tax or file a Tax Return and (iii) the taxable years of the Company and the
Subsidiaries for which the statute of limitations remains open with respect to
any material Tax. No claim in writing has been made by any Governmental Entity
in a jurisdiction in which the Company or Subsidiary does not file Tax Returns
that the Company or any Subsidiary is or may be subject to taxation by that
jurisdiction.
(f) There is no material taxable income of the Company or any
Subsidiary that will be reportable in a taxable period beginning after the
Closing Date that (i) economically accrued in a period beginning prior to the
Closing Date, by reason of the installment method of accounting, the completed
contract method of accounting, the percentage of completion method of accounting
or (ii) was reported for financial accounting purposes in a period beginning
prior to the Closing Date.
(g) Neither the Company nor any Subsidiary has engaged in any
"intercompany transaction" in respect of which income or gain that is material
in the aggregate (disregarding any losses arising from any such intercompany
transaction) continues to be deferred pursuant to Treasury Regulation (ss).
1.1502-13 or any predecessor or successor thereof or analogous or similar
provision under state, local or foreign Law.
(h) Neither the Company nor any Subsidiary (i) has any liability for
the Taxes of any Person, other than the Company or the Subsidiaries, under
Treasury Regulation (ss). 1.1502-6 (or any predecessor or successor thereof or
analogous or similar provision of state, local or foreign Law) or as a
transferee or successor or (ii) has entered into or is subject, directly or
indirectly, to any Tax allocation, indemnity, sharing or similar agreement or
arrangement (whether or not written), other than those that are solely among the
Company and/or Wholly-Owned Subsidiaries.
(i) None of the Company, any Subsidiary or any other Person on its or
their behalf has (i) agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code or any similar provision of state, local or foreign
Law (and, to the Knowledge if the Company, no Governmental Entity has proposed
any such adjustment), or has any application pending with any Governmental
Entity requesting permission for any change in accounting method that relates to
the Company or any Subsidiary, (ii) entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local or foreign Law
with
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respect to the Company or any Subsidiary, (iii) requested any extension of time
within which to file any Tax Return, which Tax Return has since not been filed,
(iv) granted any extension of the statute of limitations for the assessment or
collection of Taxes, or otherwise entered into or filed any agreement,
arrangement, waiver or objection extending the statutory period or providing for
an extension of time with respect to the assessment or reassessment of Taxes or
the filing of any Tax Return, or any payment of Taxes, (v) granted to any Person
any power of attorney that is currently in force with respect to any Tax matter,
or (vi) since January 1, 2002, requested or received a ruling from any
Governmental Entity in respect of Taxes or requested or entered into an
agreement in respect of Taxes with any Governmental Entity.
(j) Neither the Company nor any Subsidiary is or 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)(i)(A)(ii)
of the Code.
(k) No outstanding Indebtedness is a "disqualified debt instrument"
within the meaning of Section 163(l) of the Code.
(l) With respect to the Company or any Subsidiary that used or uses
the LIFO method of accounting with respect to its inventory in taxable periods
that end on or before the Closing Date, the Company and each Subsidiary (i)
properly make use of the LIFO method of accounting with respect its inventory,
(ii) have a valid LIFO election in effect, (iii) have not committed any act that
would cause a termination of such LIFO election, and (iv) have not entered into
any transaction that would require the collapse of its historic base year
layers.
(m) Neither the Company nor any Subsidiary was either a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code (i) within the two (2) year period
ending on the date hereof or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
(n) The Company and the Subsidiaries have maintained, in all material
respects, intercompany agreements with respect to transfer pricing, concurrent
and supporting documentation in respect of such transfer pricing as required
under guidelines issued by the IRS and the Organization for Economic Cooperation
and Development.
(o) To the Knowledge of the Company, none of the Subsidiaries
organized under the Laws of a country other than the United States (the "Foreign
Subsidiaries") (i) is engaged in a United States trade or business for U.S.
federal income tax purposes, (ii) has any investment in United States property
within the meaning of Section 956 of the Code, (iii) is (or has ever been) a
"foreign investment company" within the meaning of Section 1246(b) of the Code,
(iv) is a "passive foreign investment company" within the meaning of Section
1297 of the Code, or (v) has made an election described in Section 897(i) of the
Code.
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(p) Since January 1, 1998, neither the Company nor any Subsidiary has
participated in or cooperated with any international boycott or has been
requested to do so in connection with any transaction or proposed transaction.
(q) Since January 1, 1998, neither the Company nor any Subsidiary has
(i) at any time, engaged in or entered into a "listed transaction" within the
meaning of Treasury Regulation (ss).(ss). 1.6011-4(b)(2), 301.6111-2(b)(2) or
301.6112-1(b)(2), or (ii) filed IRS Form 8275 or 8275-R or any predecessor or
successor thereof or analogous or similar Tax Return under state, local or
foreign Law.
(r) The Company and the Subsidiaries have complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes, have duly and timely withheld and paid over to the appropriate
Governmental Entity all amounts so withheld under applicable Laws, and have duly
and timely filed all required Tax Returns with respect to such withheld Taxes.
5.11. Litigation.
There are no Proceedings pending or, to the Knowledge of the Company,
threatened in writing, against the Company or any Subsidiary, or, to the
Knowledge of the Company, pending or threatened in writing against their
respective directors (or Persons in similar positions) or officers, in their
capacities as such, other than, in each case, (a) Proceedings in the ordinary
course of Business, (b) Proceedings that, if adversely determined, would not
reasonably be expected to result in a Material Adverse Effect and (c)
Environmental Claims, which are addressed in Section 5.18. Neither the Company
nor any Subsidiary is bound by any judgment, award, determination, order, writ,
injunction or decree of any Governmental Entity, except for such judgments,
awards, orders, writs, injunctions or decrees as would not reasonably be
expected to result in a Material Adverse Effect.
5.12. Labor Matters.
With respect to labor matters: (a) neither the Company nor any
Subsidiary is a party to any labor or collective bargaining agreement, and, to
the Knowledge of the Company, there are no other labor or collective bargaining
agreements which pertain to, or cover, employees of the Company or any
Subsidiary; (b) no employees of the Company or any Subsidiary are (or, since the
Emergence Date, have been) represented by any labor organization, since the
Emergence Date, no labor organization or group of employees has made a demand,
and therefore no pending demands, for recognition or certification, and there
are no (and since the Emergence Date, there have not been any) representation or
certification proceedings presently pending or, to the Knowledge of the Company,
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority; (c) there are no (and since the
Emergence Date, there have not been any) strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances or other labor disputes pending or, to the
Knowledge of the Company, threatened against or involving the Company or any
Subsidiary, in each case, that would be reasonably expected to have a material
impact on the operations of the Company or any Material Division, and there are
no (and since the Emergence Date, there have not been any) unfair labor practice
charges, grievances or complaints pending or threatened in writing by or on
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behalf of any employee or group of employees, in each case, that would be
reasonably expected to have a material impact on the operations of the Company
or any Material Division; (d) there are no complaints, charges or claims against
the Company or any Subsidiary pending or, to the Knowledge of the Company,
threatened to be brought or filed with any Governmental Entity or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment of, or termination of employment by, the Company or any Subsidiary of
any individual, except for such charges, grievances or complaints as would not
reasonably be expected to result in a Material Adverse Effect; and (e) the
Company and each Subsidiary (i) have complied with all applicable federal,
state, and local legal requirements relating to its employees, arising from
statutes relating to wages, hours, collective bargaining, unemployment
insurance, worker's compensation, equal employment opportunity, age and
disability discrimination, and (ii) have complied with all applicable federal,
state and local legal requirements relating to its employees arising from
statutes relating to immigration and I-9 compliance, except, in each case, for
such non-compliance as would not reasonably be expected to result in a Material
Adverse Effect.
5.13. Intellectual Property Rights.
(a) The Company and/or the Subsidiaries own all right, title and
interest in and to, or have valid licenses to use, all Intellectual Property
that is material to the operations of the Company or any Material Division. To
the Knowledge of the Company, (i) none of the trade secrets owned by the Company
or any Subsidiary that are material to the operations of the Company or any
Material Division has been misappropriated by any other Person; and (ii) no
employee, independent contractor or agent of the Company or any Subsidiary has
misappropriated any trade secrets of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of the Company or any Subsidiary.
(b) Neither the Intellectual Property that is material to the
operations of the Company or any Material Division nor the Company's or any
Subsidiary's use thereof violates or infringes any intellectual property or
other proprietary rights of any other Person. During the five (5) year period
ended on the date hereof, no third party has notified the Company or any
Subsidiary in writing of a challenge to the Company's or such Subsidiary's
ownership or use of, or the validity or enforceability of, any material
Intellectual Property owned or licensed by the Company or any Subsidiary and, to
the Knowledge of the Company, there is no existing fact or circumstance that
would be reasonably expected to give rise to any such challenge that would
reasonably be expected to result in a Material Adverse Effect. To the Knowledge
of the Company, no third party is infringing upon any of the Intellectual
Property owned by the Company or any Subsidiary or any Intellectual Property
that is material to the operations of the Company or any Material Division and
is licensed by the Company or any Subsidiary.
(c) Section 5.13(c) of the Disclosure Schedule sets forth a true,
accurate, complete and current list (including the registration numbers, if any,
and respective owners) of all patents, patents pending, trademark/service ▇▇▇▇
applications and registrations, copyright applications and registrations, and
domain name registrations that are owned by the Company or any Subsidiary. All
renewal fees, maintenance fees, and other fees in respect of the material
Intellectual Property owned by the Company or any Subsidiary that have fallen
due on or prior to the date of this Agreement (and the Closing Date) have been
(and as of the Closing Date will
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have been) paid in full except to the extent that Company or the Subsidiaries
have intentionally abandoned or otherwise failed to maintain such Intellectual
Property.
(d) Section 5.13(d) of the Disclosure Schedule sets forth the material
licenses pursuant to which the Company or any Subsidiary grants to any other
Person the right to use Intellectual Property owned by the Company or any
Subsidiary, and pursuant to which any other Person grants to the Company or any
Subsidiary the right to use Intellectual Property owned by any other Person.
Neither the Company nor any Subsidiary is in material breach or default with
respect to any of such material licenses and, to the Knowledge of the Company,
no other party thereto is in material breach or default with respect to such
licenses, and, to the Knowledge of the Company, no event has occurred which,
with due notice or lapse of time or both, would constitute such a default.
(e) Section 5.13(e) of the Disclosure Schedule sets forth a true,
accurate, complete and current list of all Software used by the Company or any
Subsidiary in the operation of the Business. The Company and its Subsidiaries
have not installed any unlicensed copies of any mass market software that is
available in consumer retail stores or otherwise commercially available and
subject to "shrink-wrap" or "click-through" license agreements on any of the
Company's or any Subsidiary's computers or computer systems, and the Company and
its Subsidiaries have policies in place prohibiting such installation, which
policies are adequate and appropriate in light of the respective size and nature
of the operations of the Company and its Subsidiaries.
5.14. Contracts and Commitments.
Section 5.14 of the Disclosure Schedule sets forth a complete and
accurate list of:
(a) For the twelve month period ended on December 31, 2003 and for the
six month period ended on June 30, 2004, a complete and correct list of, (i) the
top ten (10) customers of each of ▇▇▇▇▇▇▇ and Sunbeam, and the aggregate sales
to such customers and (ii) the top ten (10) suppliers of each of ▇▇▇▇▇▇▇ and
Sunbeam, by the aggregate dollar volume of purchases by the Business from such
suppliers for such period;
(b) Each Contract (other than open sales or purchase orders and
obligations based on forecasts for purchases and Contracts described in Section
5.14(e)) that involves the performance of services for or the delivery of goods
or materials to the Company and/or any Subsidiary during the Company's most
recently completed fiscal year in an amount or value in excess of $1,500,000 or
pursuant to which the Company or any Subsidiary is obligated to purchase future
services, goods or materials in an amount in excess of $1,000,000, in each case,
that may not be terminated (by its terms or otherwise) by the Company or such
Subsidiary within one hundred and twenty (120) days without payment of a
termination penalty of less than $250,000 under such Contract on the part of the
Company or any Subsidiary;
(c) Each Contract that was not entered into in the ordinary course of
business or that is not contemplated by the July Forecast that involves future
expenditures or receipts in excess of $250,000 to which the Company and/or any
Subsidiary is a party or is otherwise bound;
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(d) Each material Contract with respect to environmental
investigation, removal, remediation or monitoring at any facility or property
(including, without limitation, any Property);
(e) Each representative, distribution, marketing or sales agency
Contract to which the Company and/or any Subsidiary is a party or is otherwise
bound and that (i) requires payments to be made thereunder by the Company or any
Subsidiary without regard to any minimum sales and (ii) may not be terminated
(by its terms or otherwise) by the Company or such Subsidiary within one hundred
and twenty (120) days without payment of a termination penalty of less than
$250,000 under such Contract on the part of the Company or any Subsidiary;
(f) Each Contract containing covenants materially limiting the freedom
of the Company and/or any Subsidiary to engage in any line of business or to
compete with any Person or covenants of another Person not to compete with the
Company or any Subsidiary in any material respect;
(g) Each sole source supply Contract for the purchase of any material,
raw material, component or product that is otherwise not generally available and
that is used in the manufacture of any product that is material to the Business;
(h) All agreements entered into during the five (5) year period ended
on the date hereof with respect to the acquisition of any other entity,
business, line of business or assets that are material to the Business to which
the Company and/or any Subsidiary is a party or is otherwise bound;
(i) All employment, severance, separation or change of control
agreements presently in effect with past or present employees of the Company or
any Subsidiary and all consulting agreements to which the Company or any
Subsidiary is a party (other than offer letters or employment arrangements
terminable at will without payment of contractual severance or other amounts in
excess of $200,000); and
(j) Each Contract to which the Company or any Subsidiary is a party or
is otherwise bound with respect to the sharing, contingent or otherwise, of
material profits, revenues, losses, costs or liabilities of any Person.
Neither the Company nor any Subsidiary is in material breach or default with
respect to any of the above Contracts or any Contracts with the Persons
described in Section 5.14(a) (except for such breaches or defaults that would
not reasonably be expected to be material to the operations of the Business)
and, to the Knowledge of the Company, no other party to any such Contracts is in
material breach or default with respect to any such Contracts (except for such
breaches or defaults that would not reasonably be expected to be material to the
operations of the Business), and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default. Neither the Company nor
any Subsidiary has received any written notice since December 31, 2003 of any
material breach or default with respect to any such Contracts which remains
uncured (except for such breaches or defaults that would not reasonably be
expected to be material to the operations of the Business).
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5.15. Existing Condition.
(a) Since the date of the Interim Balance Sheet and through the date
hereof, there has not occurred any:
(i) Material Adverse Effect or any event, change or effect which
would reasonably be expected to result in a Material Adverse Effect;
(ii) damage to, destruction or loss of any material asset of the
Company or any Subsidiary not covered by insurance and in excess of
$1,500,000;
(iii) forbearance of any material Indebtedness, except in each
case in the ordinary course of business;
(iv) adoption of or material change in any Plan (as defined
below) or, except in the ordinary course of business, labor policy, other
than as required by applicable Law;
(v) termination or receipt of notice of termination of, business
relationship with any Person required to be disclosed in the Disclosure
Schedule pursuant to Section 5.14(a);
(vi) sale (other than sales of inventory in the ordinary course
of business), assignment, conveyance, transfer, lease, or other disposition
of any asset or property of the Company or any Subsidiary that is material
to the Business or mortgage, pledge, or imposition of any lien or other
encumbrance on any asset or property of the Company or any Subsidiary that
is material to the Business, except, in each case, pursuant to existing
Indebtedness or as specifically permitted hereunder; or
(vii) capital expenditure, other than as contemplated by the July
Forecast, in excess of $250,000.
(b) From and after the date of the Interim Balance Sheet until the
date hereof, there has not occurred: (i) any change by the Company or any
Subsidiary in its accounting principles or policies except as required by GAAP
or applicable Law; (ii) any revaluation by the Company or any Subsidiary of any
of its assets, including, without limitation, any write off or write down of
notes, accounts receivable or inventory, other than in the ordinary course of
business and consistent with past practice or as required by GAAP or applicable
Law; or (iii) any binding agreement to do or otherwise suffer or incur any of
the foregoing by the Company or any Subsidiary.
(c) From and after the date of the Interim Balance Sheet until the
date hereof, there has not occurred any increase in compensation payable to, or
entry into (or amendment of) any employment or severance agreement with, any (i)
U.S. stockholder, director (or Person in a similar position), officer or
employee, in any such case who earns compensation (in their capacities as such)
in excess of $75,000 per annum, of the Company or its Subsidiaries, or (ii) any
non-U.S. stockholder, director (or Person in a similar position), officer or
employee in of
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the Company or its Subsidiaries other than in the ordinary course of business
and consistent with past practice.
5.16. Employee Benefit Plans.
(a) Section 5.16(a) of the Disclosure Schedule contains a true,
accurate and complete list of (i) all material employee benefit plans, policies
and arrangements, including, but not limited to, all "employee benefit plans"
(as defined in Section 3(3) of ERISA), sponsored, maintained or contributed to,
or required to be contributed to, by the Company or any Subsidiary in the United
States (collectively, the "Plans") and (ii) all "employee benefit pension plans"
(as defined in Section 3(2) of ERISA) sponsored, maintained or contributed to,
or required to be contributed to, by any Person required to be aggregated with
the Company under Section 414(b), (c), (m), or (o) of the Code (each, an "ERISA
Affiliate") in the United States whether or not for the benefit of employees or
former employees of the Company or any Subsidiary (such employee benefit pension
plans are collectively the "ERISA Affiliate Plans").
(b) With respect to each Plan, the Company has made available to the
Buyer a true and correct copy of, as applicable, (i) the Plan and all amendments
thereto, (ii) the most recent annual report of each Plan on Form 5500, (iii)
such trust agreement and group annuity contract, if any, relating to such Plan,
(iv) the most recent actuarial report or valuation relating to any such Plan
subject to Title IV of ERISA, (v) the most recent IRS determination or opinion
letter with respect to any such Plan which is intended to be "qualified" within
the meaning of Section 401(a) of the Code or where an application for such
letter is pending, all applications to the IRS, and (vi) the most recent summary
plan description for such Plan.
(c) With respect to each Plan: (i) if intended to qualify under
Section 401(a) of the Code, such Plan has received a determination letter from
the Internal Revenue Service stating that it so qualifies and that its trust is
exempt from taxation under Section 501(a) of the Code or an application for such
letter is pending, and, to the Knowledge of the Company, nothing has occurred
since the date of such determination or application that would reasonably be
expected to result in the loss of such qualification or exempt status; (ii) such
Plan has been administered and operated in all material respects in accordance
with its terms and applicable Law (including ERISA and the Code, and all rules
and regulations promulgated thereunder); (iii) neither the Company nor any
Subsidiary has incurred any material liability for breach of fiduciary duty or
any other failure to act or comply in connection with the administration or
investment of the assets of any such Plan; (iv) no disputes are pending, or, to
the Knowledge of the Company, threatened by any Governmental Entity or by any
participant or beneficiary against any Plan, the assets of any trust under any
Plan or the Plan sponsor or the Plan administrator, or against any fiduciary of
any Plan with respect to the design or operation of such Plan, other than
routine claims for benefits thereunder; (v) to the Knowledge of the Company, no
non-exempt prohibited transaction (within the meaning of Section 406 of ERISA)
has occurred that gives rise to or would reasonably be expected to give rise to
material liability on the part of the Company or any of its Subsidiaries; and
(vi) all contributions due and payable by or under any Plan (or trust or fund
established thereunder or in connection therewith) (taking into account any
extensions of time for the making of such contributions) have been made in full
or appropriately accrued for in the Company's Financial Statements.
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(d) No Plan or ERISA Affiliate Plan has incurred an accumulated
funding deficiency, as defined in Section 302 of ERISA or Section 412 of the
Code, whether or not waived. Except for liabilities for premiums due to the
Pension Benefit Guaranty Corporation ("PBGC"), no liability has been or would
reasonably be expected to be incurred by the Company, any Subsidiary or any
ERISA Affiliate under or pursuant to Title IV of ERISA, and no event has
occurred or condition exists that has resulted in or would reasonably be
expected to result in any such liability to the Company, any Subsidiary or any
ERISA Affiliate.
(e) No Plan or ERISA Affiliate Plan is a "multiemployer plan" as
defined in Section 3(37) of ERISA, and none of the Company, any Subsidiary or
any ERISA Affiliate has withdrawn at any time within the preceding six years
from any multiemployer plan, or incurred any withdrawal liability which remains
unsatisfied, and no event has occurred and no circumstance exists that would
result in any such liability to the Company, any Subsidiary or any ERISA
Affiliate.
(f) None of the Plans provide retiree health or life insurance
benefits except as may be required by Section 4980B of the Code and Section 601
of ERISA, any other applicable Law or at the expense of the participant or the
participant's beneficiary. There has been no violation of the "continuation
coverage requirement" of "group health plans" as set forth in Section 4980B of
the Code and Part 6 of Subtitle B of Title I of ERISA with respect to any Plan
to which such continuation coverage requirements apply that would reasonably be
expected to result in any material liability to the Company or any Subsidiary.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, either by itself or
in conjunction with a subsequent event: (i) result in any payment becoming due
to any current employee or former employee of the Company or any Subsidiary,
(ii) increase any benefits otherwise payable under any of the Plans, (iii)
result in any payment or any amount payable that will not be deductible under
Section 280G of the Code or give rise to any Tax under Section 4999 of the Code,
or (iv) result in the acceleration of the time of payment or vesting of any
benefits provided under any of the Plans.
(h) Section 5.16(h) of the Disclosure Schedule contains a true,
accurate and complete list of each employee benefit plan sponsored, maintained
or contributed to, or required to be contributed to, by the Company or any
Subsidiary that is not located in the United States, other than government
sponsored employee benefit plans (each, a "Foreign Benefit Plan"). With respect
to each Foreign Benefit Plan: (i) all employer and employee contributions to
such Foreign Benefit Plan required by Law or by the terms of such Foreign
Benefit Plan have been made, or, if applicable, accrued in accordance with
normal accounting practices, and (ii) such Foreign Benefit Plan is operated in
material compliance with applicable Laws.
5.17. Compliance with Laws.
The Company and each Subsidiary is in compliance with, and from and
after the Emergence Date, has not received any written notice of any violation
with respect to, any Laws applicable to the Business, except, in each case, for
such non-compliance or violations as would not reasonably be expected to result
in a Material Adverse Effect. The Company and each
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Subsidiary (as applicable) possesses all Permits. Each Permit is valid and in
full force and effect, and is not subject to any pending or, to the Knowledge of
the Company, threatened administrative or judicial proceeding to revoke, cancel
or declare such Permit invalid in any respect.
5.18. Environmental.
(a) The Company and each Subsidiary is and, in the five-year period
preceding the date hereof, has been in material compliance with all applicable
Environmental Laws and has not received written notice of any unresolved
potential liability, violation or delinquency with respect to any Environmental
Law that would be material to the conduct of the Business, including, without
limitation, pursuant to any agreement with any Person, or any Permit or order
from, any Governmental Entity. The Company and each Subsidiary has obtained all
Permits required under Environmental Laws and material to the conduct of the
Business ("Environmental Permits"), such Environmental Permits are set forth in
Section 5.18(a) of the Disclosure Schedule, each Environmental Permit of the
Company and each Subsidiary remains in full force and effect, is not subject to
appeal or any pending or threatened administrative or judicial proceedings,
other than administrative review processes in the ordinary course of pending
renewals, and complete applications for all material new, modified or renewed
Environmental Permits that are presently due or pending have been submitted on a
timely basis except where the failure to obtain any such Environmental Permit,
take any such action or where such appeal or Proceeding would, if adversely
determined, not be material to the conduct of the Business. Except as would not
be material to the conduct of the Business, neither the Company nor any
Subsidiary has received notice that any such Environmental Permit will not be
issued or renewed with terms and conditions that are consistent with the present
or presently proposed operation of the relevant facility.
(b) There is no material Environmental Claim pending or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary or
otherwise relating to any of the Properties. To the Knowledge of the Company,
except as would not reasonably be expected to result in a Material Adverse
Effect, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the production,
use, sale, storage, transportation, handling, release, threatened release,
emission, discharge, presence or disposal of any Hazardous Materials, that would
reasonably be expected to form the basis of any Environmental Claim or prevent
continued compliance with Environmental Laws relating to the Business or any of
the Properties or against the Company or any Subsidiary.
(c) To the Knowledge of the Company, neither the Company nor any
Subsidiary is or will be required to incur material capital cost or expense to
cause its operations or properties to achieve or maintain compliance with
applicable Environmental Laws under current operational conditions.
(d) To the Knowledge of the Company, neither the Company nor any
Subsidiary has manufactured, distributed or sold any asbestos-containing
material in the five-year period ended on the date hereof. Except as would not
reasonably be expected to result in a Material Adverse Effect, there are no
pending or, to the Knowledge of the Company, threatened Proceedings against the
Company or any of its Subsidiaries arising out of any lead-containing,
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silica-containing or asbestos-containing material or the exposure to or release
thereof. In the five-year period ended on the date hereof, there have been no
Proceedings against the Company or any of its Subsidiaries arising out of any
asbestos-containing material or the exposure to or release thereof.
(e) Neither the Company nor any Subsidiary has, or, in the five-year
period preceding the date hereof, has had any material obligation under any
agreement with any Person or pursuant to an order of a Governmental Entity for
conducting any site investigation or cleanup. To the Knowledge of the Company,
neither the Company nor any Subsidiary has, either expressly or by operation of
law, assumed or undertaken any material liability or material corrective,
investigatory or remedial obligation of any other Person or for any business or
property previously owned or operated by the Company or any Subsidiary relating
to any Environmental Law.
(f) The Company has made available to the Buyer true and complete
copies of all (i) material Environmental Permits, (ii) material notices,
demands, claims or actions relating to any of the Business or the Properties
pursuant to Environmental Law which are unresolved, and (iii) material reports
related to all investigations or assessments of environmental conditions at any
of the Properties or compliance of the Business with Environmental Law.
5.19. Transactions With Affiliates.
Section 5.19 of the Disclosure Schedule sets forth for each (a)
Seller, (b) director or officer of the Company or any Subsidiary and (c)
Affiliate of any stockholder of the Company who is an individual and who owns of
record more than 1% of the outstanding shares of Company Common Stock every
agreement, undertaking or compensation arrangement that is in effect as of the
date hereof between such Person and the Company and/or any Subsidiary (other
than under the Plans and employment arrangements in the ordinary course of
business) and any interest of such Person in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the Business. To the
Knowledge of the Company, since the Emergence Date, no Seller or director or
officer of the Company or any Subsidiary has been a director (or Person in a
similar position) or executive officer of, or has had any ownership interest in
(excluding the ownership of no more than 5% of the outstanding securities in any
publicly traded company), any firm, corporation, association or business
enterprise which during such period was a material customer of the Company or
any Subsidiary.
5.20. Insurance.
Section 5.20 of the Disclosure Schedule sets forth a true, correct and
complete list of all insurance policies of the Company and any Subsidiary for
the five (5) year period ended on the date hereof, which policies have been made
available to the Buyer. The Company and each Subsidiary has complied in all
material respects with all terms and conditions of such policies, including
premium payments, and such policies are in full force and effect. Since the
Emergence Date, neither the Company nor any Subsidiary has received: (a) any
written notice of cancellation of any policy or binder of insurance required to
be identified in Section 5.20 of the Disclosure Schedule other than statutory
notices protecting insurers' rights to renew an existing policy or to change
terms, conditions and pricing upon renewal; (b) any written notice that any
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issuer of such policy or binder has filed for protection under applicable
bankruptcy or insolvency laws; or (c) any other written notice that any such
policy or binder is no longer in full force or effect or that the issuer of any
such policy or binder is unwilling or unable to perform its obligations
thereunder. Since the Emergence Date, the Company and its Subsidiaries have
maintained, without interruption, self-insurance or policies or binders of
insurance covering such risks and events as to provide, in the reasonable
judgment of the Company, adequate and sufficient insurance coverage for all the
assets and operations of the Business, subject to deductibles and policy limits
reasonable and appropriate for the Company and the Subsidiaries. There are no
pending or, to the Knowledge of the Company, threatened disputes to coverage
under any of the policies listed on Section 5.20 of the Disclosure Schedule
that, if adversely determined, would reasonably be expected to result in a
Material Adverse Effect.
5.21. Product Recall.
From and after the Emergence Date and until the date hereof, there has
not been any recall or, to the Knowledge of the Company, investigation or
written inquiry from a Governmental Entity which would reasonably be expected to
result in a recall of any product, substance or material produced, distributed
or sold by or on behalf of the Business.
5.22. Absence of Certain Business Practices.
To the Knowledge of the Company, neither the Company or any Subsidiary
nor any of its respective directors (or Persons in similar positions) or
executive officers, acting alone or together, has: (a) received, directly or
indirectly, any payments, commissions or any other economic benefits, regardless
of their nature or type, from any customer, supplier, trading company, shipping
company, governmental employee or other Person with whom the Company or any
Subsidiary has done business; or (b) directly or indirectly, given or agreed to
give any gift or similar benefit to any customer, supplier, trading company,
shipping company, governmental employee or other Person with whom the Company or
any Subsidiary has done business, except where such actions have not subjected,
or would not reasonably be expected to subject the Company or any Subsidiary or
any of its respective executive officers or directors (or Persons in similar
positions) to any fine or penalty in any criminal or governmental litigation or
proceeding.
5.23. Indebtedness.
Section 5.23 of the Disclosure Schedule sets forth a list (including
each related Contract, the principal amount, the maturity date and the
administrative agent or Person serving in a similar capacity thereunder) of all
Indebtedness of the Company and each Subsidiary outstanding as of the date
hereof. Neither the Company nor any Subsidiary is in material breach or default
with respect to any of the Contracts listed in Section 5.23 of the Disclosure
Schedule (except for such breaches or defaults that would not reasonably be
expected to be material to the operations of the Business) and, to the Knowledge
of the Company, no other party thereto is in material breach or default with
respect to any such Contract (except for such breaches or defaults that would
not reasonably be expected to be material to the operations of the Business),
and no event has occurred which, with due notice or lapse of time or both, would
constitute such a default. Neither the Company nor any Subsidiary has received
any written notice since December 31, 2003 of any material breach or default
with respect to any such Contract which
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remains uncured (except for such breaches or defaults that would not reasonably
be expected to be material to the operations of the Business).
5.24. Securityholders' Agreement.
The Securityholders' Agreement has been duly executed and delivered by
the Company and the Principal Sellers, and the Securityholders' Agreement
constitutes the valid and binding obligation of the Company and the Principal
Sellers, enforceable against each such Person in accordance with its terms, in
each case subject to applicable bankruptcy, insolvency and similar laws
affecting the enforceability of creditors' rights generally, general equitable
principles, the discretion of courts in granting equitable remedies and matters
of public policy.
5.25. Bankruptcy Matters.
The Company and each Subsidiary has complied with, and performed all
of its obligations (including, without limitation, the effectuation of all
distributions) under, the Bankruptcy Plans and the Confirmation Orders in all
material respects. There are no material outstanding obligations (contingent or
otherwise) under any Bankruptcy Plan or Confirmation Order. There are no pending
or, to the Knowledge of the Company, threatened material disputes arising under,
in connection with, with respect to or relating to any Bankruptcy Plan or
Confirmation Order or the performance by the Company or any Subsidiary of its
obligations thereunder.
5.26. Industrial Revenue Bond Matters.
The Company has made available to the Buyer true, accurate and
complete copies of the Trust Indentures, the Bonds and the IRB Leases. The
aggregate amount of all amounts payable under the IRB Leases by the Company or
any Subsidiary to the City is less than or equal to the aggregate amount of all
amounts payable under the Bonds by the City to the Company or any Subsidiary.
Neither the Company nor any Subsidiary is in material breach or default of any
its obligations under the IRB Leases, the Bonds or the Trust Indentures and, to
the Knowledge of the Company, no other party to any of the IRB Leases, the Bonds
or the Trust Indentures is in material breach or default thereunder, and no
event has occurred which, with due notice or lapse of time or both, would
constitute such a default. Neither the Company nor any Subsidiary has received
any written notice since December 31, 2003 of any material breach or default
under any of the IRB Leases, the Bonds or the Trust Indentures which remains
uncured.
5.27. Brokers.
No Person acting on behalf of the Company or any Subsidiary or under
the authority of any of the foregoing is or will be entitled to any brokers' or
finders' fee or any other commission or similar fee with respect to which the
Buyer, the Company or any Subsidiary will be liable in connection with any of
the transactions contemplated by this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER
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As a material inducement to each Seller and the Company to enter into
and perform its respective obligations under this Agreement, the Buyer hereby
represents and warrants to each Seller and the Company as follows:
6.1. Incorporation and Good Standing.
The Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to conduct its business as presently conducted and
to own and lease the properties and assets presently used in connection
therewith.
6.2. Power and Authorization.
The Buyer has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement and under any other
agreement, instrument or other document required to be delivered by the Buyer at
the Closing that is set forth in Section 10.4 (the "Buyer Closing Documents").
The execution, delivery and performance by the Buyer of this Agreement and the
Buyer Closing Documents have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by the Buyer and
constitutes the valid and binding obligation of the Buyer, enforceable against
the Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting the enforceability of creditors' rights
generally, general equitable principles, the discretion of courts in granting
equitable remedies and matters of public policy. At the Closing, the Buyer
Closing Documents will be duly executed and delivered by the Buyer and, when
executed and delivered at the Closing as contemplated herein, each of the Buyer
Closing Documents will constitute the valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with its terms, in each case,
subject to applicable bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and matters of public
policy.
6.3. Validity of Contemplated Transactions.
The execution, delivery and performance of this Agreement and the
Buyer Closing Documents do not and will not (with or without the passage of time
or the giving of notice): (i) violate or conflict with the certificate of
incorporation or bylaws of the Buyer; or (ii) violate or conflict with any Law
binding upon Buyer or violate or conflict with, result in a breach of, or
constitute a default under any material agreement or other material obligation
to which the Buyer is a party or by which the Buyer or its subsidiaries or any
of their assets are otherwise bound or any Law, applicable to the Buyer, except,
in each case, for such violations, conflicts, breaches or defaults as would not
reasonably be expected to materially affect or delay the ability of the Buyer to
perform its obligations under this Agreement or any Buyer Closing Document or
consummate the transactions contemplated hereby or thereby.
6.4. Consents.
Except for filings under the HSR Act and applicable requirements of
antitrust or other competition laws of other jurisdictions, no consent,
authorization, waiver by or filing with any Governmental Entity, administrative
body or other third party is required in connection with
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the execution or performance of this Agreement, the Buyer Closing Documents or
the Equity Investment Agreements by the Buyer or the consummation by the Buyer
of the transactions contemplated hereby or thereby, except for such consents,
authorizations, waivers or filings, as to which the failure to obtain would not
reasonably be expected to materially affect or delay the Buyer's ability to
perform its obligations under this Agreement, the Buyer Closing Documents or the
Equity Investment Agreements or to consummate the transactions contemplated
hereby or thereby, in each case in any material respect.
6.5. Litigation.
There are no Proceedings that have been commenced or, to the knowledge
of the Buyer, threatened against the Buyer that challenge the validity of this
Agreement or the transactions contemplated hereby or that may have the effect of
preventing, delaying or impairing, or making illegal the transactions
contemplated, or materially affecting the Buyer's ability to perform its
obligations, hereunder or under the Buyer Closing Documents or to consummate the
transactions contemplated hereby or thereby.
6.6. Sufficient Funds.
(a) As of the Closing Date, the Buyer will have sufficient funds to
effect the Closing as contemplated hereby.
(b) As of the date hereof, the Buyer has (i) agreed to issue to
Warburg Pincus, and Warburg Pincus has agreed to subscribe for and purchase,
Three Hundred and Fifty Million Dollars ($350,000,000) of common stock and
preferred stock of the Buyer (the "Equity Investment"), which amount, subject to
the receipt by the Buyer of the Bank Consents, will be funded into escrow by
Warburg Pincus not more than fifteen (15) Business Days after the date hereof
pursuant to the terms of the Equity Investment Agreements, and (ii) received a
letter (the "Financing Commitment Letter") from Citicorp USA, Inc., Citigroup
Global Markets Inc. and Canadian Imperial Bank of Commerce confirming their
commitments, on the terms and subject to the conditions thereof, to provide and
arrange for the syndication of a senior secured credit facility in an aggregate
principal amount of not less than One Billion and Fifty Million Dollars
($1,050,000,000) (the "Financing Commitments") in connection with the
transactions contemplated hereby. As contemplated by the Equity Investment
Agreements and the Financing Commitment Letter, the proceeds from the Equity
Investment and the credit facilities described in the Financing Commitment
Agreement will be used by the Buyer for the purposes of, among other things,
consummating the transactions contemplated hereby, including the payment of the
Purchase Price payable pursuant to Section 3.1. A true and complete copy of the
Equity Investment Agreements and the Financing Commitment Letter have been
delivered to the Company. Each of the Equity Purchase Agreement and the
Financing Commitment Letter is in full force and effect and, upon the funding of
the Equity Investment into escrow pursuant to the terms of the Equity Investment
Agreements, the Equity Escrow Agreement will be in full force and effect. Except
for amendments and modifications agreed to in writing by the Majority Sellers in
accordance with Section 7.15, none of the Equity Investment Agreements or the
Financing Commitment Letter has been amended or modified in any respect.
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(c) As of the date hereof, the Buyer knows of no circumstance or
condition that may reasonably be expected to prevent the availability at the
Closing of the requisite financing to consummate the transactions contemplated
by this Agreement on the terms set forth herein, as provided in the Equity
Investment Agreements or the Financing Commitment Letter.
6.7. Brokers.
No Person acting on behalf of the Buyer or any of its subsidiaries or
under the authority of any of the foregoing is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee with respect to
which the Company or any Seller will be liable in connection with any of the
transactions contemplated by this Agreement.
SECTION 7. COVENANTS OF THE PARTIES UNTIL CLOSING
7.1. Conduct of Business Pending Closing.
Except as set forth in Section 7.1 of the Disclosure Schedule or as
otherwise expressly provided in this Agreement, between the date hereof and the
Closing, without the prior written consent of the Buyer, which consent shall not
be unreasonably withheld or delayed, the Company shall, and shall cause each
Subsidiary to, operate its respective business in the ordinary course consistent
with past practices and shall, and shall cause each Subsidiary to, use
commercially reasonable efforts to preserve intact its business organization and
goodwill in all material respects, including, without limitation, the goodwill
and relationships of the Company's and each Subsidiary's customers, suppliers,
employees and vendors, and shall, and shall cause each Subsidiary to:
(a) maintain its respective existence, and discharge debts,
liabilities and obligations as they become due, and operate in the ordinary
course in a manner consistent with past practice and in compliance in all
material respects with all applicable Laws and Contracts that are set forth on
Section 5.14 of the Disclosure Schedule or, if entered into after the date
hereof, would be required to be identified in Section 5.14 of the Disclosure
Schedule if they were in effect on the date hereof, (including, in each case,
any such Contracts with the Persons set forth in the Disclosure Schedule
pursuant to Section 5.14(a));
(b) maintain its respective facilities and assets in substantially the
same state of repair, order and condition as they were on the date hereof,
reasonable wear and tear and damage by acts of God excepted;
(c) maintain its respective books and records in accordance with past
practice and applicable Law (other than such changes as may be required by
changes in applicable Law or GAAP) and use commercially reasonable efforts to
maintain in full force and effect all authorizations and all insurance policies
and binders; and
(d) file, when due or required, all material Tax Returns required to
be filed (taking into account any extensions) and pay prior to delinquency all
material Taxes, assessments, fees and other charges lawfully levied or assessed
against them, unless the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted.
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7.2. Negative Covenants.
Except as set forth in Section 7.2 of the Disclosure Schedule, as
otherwise expressly provided in this Agreement or as required by applicable Law,
between the date hereof and the Closing, without the prior written consent of
the Buyer, which consent shall not be unreasonably withheld or delayed, the
Company shall not, and shall cause each Subsidiary not to:
(a) other than (i) issuances and transfers of capital stock or other
equity securities and dividends or distributions by any Wholly Owned Subsidiary
to the Company or to any other Wholly Owned Subsidiary of the Company, (ii)
issuances of shares of Company Common Stock, Sunbeam Common Stock or ▇▇▇▇▇▇▇
Common Stock upon the exercise or conversion of the Convertible Securities,
(iii) grants of Options to employees of the Company or its Subsidiaries, and
(iv) transfers or issuances of directors' qualifying shares or nominee holders'
shares, make any change in the Company's or such Subsidiary's authorized or
issued capital stock or other equity securities, grant any option, warrant or
other right to purchase or otherwise acquire any equity securities of the
Company or any Subsidiary, issue or make any security convertible into capital
stock, grant any registration rights, or purchase, redeem, retire or make any
other acquisition of any shares of capital stock or other equity securities,
declare or pay any dividend or other distribution upon any shares of capital
stock or on any equity securities;
(b) amend (as applicable) the articles or certificate of
incorporation, bylaws, articles or certificate of formation or organization,
limited liability company or operating agreement, partnership agreement or other
organizational document of the Company or any Subsidiary, except, in the case of
any Subsidiary that is incorporated or organized (as applicable) under the laws
of a country other than the United States, in connection with internal
restructurings and Tax planning;
(c) fail to pay or discharge when due any material liability or
obligation of the Company or any Subsidiary, except any such liability or
obligation that shall be contested in good faith;
(d) make, enter into, amend in any material respect, renew, extend or
terminate any Contract required to be set forth in Section 5.14 of the
Disclosure Schedule, other than (i) in the ordinary course of business, (ii)
renewals of current insurance policies of the Company or its Subsidiaries
consistent with past practice, or (iii) compensation, perquisites and other
employee benefits currently in effect or otherwise permitted by Section 7.2(j)
or Section 13.2 or set forth in Section 7.2(j) or Section 13.2 of the Disclosure
Schedule;
(e) enter into any Contract with any Seller or any Affiliate of any
stockholder of the Company who is an individual and who owns of record more than
1% of the outstanding shares of Company Common Stock, other than in connection
with the transactions contemplated hereby and compensation, perquisites and
other employee benefits in effect as of the date of the Interim Balance Sheet or
otherwise permitted by Section 7.2(j);
(f) make any material change in the conduct of the Business;
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(g) make any sale, assignment, transfer, abandonment or other
conveyance of assets of the Company or any Subsidiary or any part thereof
(including the factoring of accounts receivable) that are material to the
operations of the Company or any Material Division, except (i) transactions
pursuant to existing Contracts set forth in Section 5.14 of the Disclosure
Schedule, (ii) dispositions of inventory or worn-out or obsolete equipment and
machinery, in each case in the ordinary course of business and consistent with
past practice, (iii) facilities and equipment and machinery located thereat not
used or usable in the Business and (iv) transfers of assets among the Company
and/or its Subsidiaries;
(h) subject any of the assets of the Company or any Subsidiary, or any
part thereof, to any Encumbrance, other than (i) Permitted Encumbrances, (ii)
such Encumbrances as may arise under Contract governing the Indebtedness in
effect on the date hereof, or (iii) as may arise in the ordinary course of
business consistent with past practice, or by operation of Law;
(i) acquire any assets, raw materials or properties other than (i) in
the ordinary course of business and consistent with past practice, or (ii) in an
amount not to exceed $1,500,000 for any one transaction or series of related
transactions;
(j) (i) enter into any new (or materially amend any existing) Plan,
(ii) enter into any employment, severance or consulting agreement with, or grant
any increase in the compensation payable or to become payable to, any
stockholder, director (or Person in a similar position), officer or employee, in
any such case who earns compensation (in its capacity as such) in excess of
$75,000 per annum (including any such increase pursuant to any Plan), in each
case, except (A) in accordance with pre-existing contractual provisions, (B)
retention or severance payments, not in excess of $250,000 in the aggregate,
made in connection with the transactions contemplated hereby (other than to
those individuals receiving a portion of the Retention Payments, as set forth in
Section 13.2(g) of the Disclosure Schedule) and (C) grants of Options to
employees of the Company or its Subsidiaries, or (iii) terminate the employment
of the Chief Executive Officer of any of the Company, ▇▇▇▇▇▇▇ or Sunbeam or any
of his or her direct reports or (iv) establish any performance period commencing
on or after the date hereof, or grant any awards with respect to any performance
period commencing on or after the date hereof, in each case pursuant to the
Company's Key Executive Long Term Incentive Plan or the Company Management
Incentive Plan;
(k) except (i) revaluations of assets as required by and in accordance
with GAAP or (ii) in the ordinary course of business and consistent with past
practice, make any material revaluation of any of the assets, including, without
limitation, writing off or writing down the value of notes, accounts receivable
or inventory;
(l) make, change or revoke, or permit to be made, changed or revoked,
any material election or method of accounting with respect to material Taxes of
the Company or any Subsidiary, except as required by law (in which case, the
Buyer's consent is not required but the Company shall notify the Buyer thereof
not less than two (2) Business Days prior to making, changing or revoking any
such election);
(m) enter into, or permit to be entered into, any closing or other
agreement or settlement of any audit, suit, action, proceeding, claim or
assessment with respect to material
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Taxes affecting or relating to the Company or any Subsidiary or file any
material amended Tax Return for or on behalf of the Company or any Subsidiary,
except as required by law (in which case, the Buyer's consent is not required
but the Company shall notify the Buyer thereof not less than two (2) Business
Days prior to any such entry into any such closing or other agreement or
settlement);
(n) settle, release or forgive any claim or litigation in an amount
greater than $250,000, provided that if after the submission (in writing) of any
such settlement, release or forgiveness by the Company to the Buyer for its
consideration pursuant to this Section 7.2(n), the Buyer refuses to grant its
consent to any such settlement, release or forgiveness and the Company or any
Subsidiary is finally adjudicated by a court of competent jurisdiction to pay
any amounts in respect of such matters so submitted to the Buyer for its consent
in excess of the amounts therefor rejected by the Buyer, the Buyer shall pay to
the Sellers an amount equal to such excess, which amount, if determined prior to
the Closing, shall be added to the Purchase Price or, if determined after the
Closing, shall be credited by the Buyer to the Holdback Amount (it being
understood that, if at such time, the Holdback Amount has been released to the
Sellers as contemplated hereby, such amount shall be paid directly to the
Sellers in accordance with their respective Proportionate Interests);
(o) other than any Lease for an outlet discount retail store located
in the United States, amend or terminate any Lease, or enter into any Lease,
sublease or occupancy agreement or assign or sublet any existing Lease, sublease
or occupancy agreement, in any such case that (i) has a term of more than nine
(9) months or (ii) provides for payments thereunder by the Company or any
Subsidiary of more than $1,000,000 in the aggregate;
(p) make any distributions or payments to any Seller, except (i) in
the ordinary course of business and consistent with past practice or in
accordance with existing contractual arrangements set forth in Section 5.19 of
the Seller Disclosure Schedule, (ii) compensation, perquisites and other
employee benefits currently in effect or otherwise permitted by Section 7.2(j)
or Section 13.2; or (iii) as required by the Indenture, dated as of December 18,
2002, between the Company, the guarantors party thereto and The Bank of New
York, as trustee (the "Trustee"), as amended by the First Supplemental
Indenture, dated as of April 24, 2003, between the Company, the guarantors party
thereto and the Trustee, and the Second Supplemental Indenture, dated as of June
30, 2003, between the Company, the guarantors party thereto and the Trustee;
(q) make any change in the accounting principles or policies of the
Company or any Subsidiary (including with respect to inventory, receivables or
Cash collections), except as required by applicable Law or GAAP;
(r) except as contemplated by the capital expenditure plan contained
in the July Forecast, make (in a single transaction or a series of transactions)
any capital expenditures in excess of (i) with respect to any such capital
expenditures relating to the information systems (including, without limitation,
computer hardware and software) used by the Company or any Subsidiary, $250,000
and (ii) with respect to such capital expenditures not contemplated by the
immediately preceding clause (i), $750,000, including any additions to property,
plant and equipment used in the operations of the Business, other than (A) in
the ordinary course of
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business and consistent with past practice, (B) to the extent required to comply
with applicable Laws and (C) repairs and/or replacements of machinery and
equipment used in the Business in the event of unexpected failure or breakdown
thereof;
(s) approve an annual budget with respect to the operations of the
Company or any Subsidiary;
(t) take any action to terminate the business relationship or cease
conducting business with any of the customers and suppliers set forth in Section
5.14(a) of the Disclosure Schedule, other than in the ordinary course of
business;
(u) other than in the ordinary course of business, repay to the
Company or any Subsidiary any indebtedness owed thereto by any other Subsidiary
that is not organized under the laws of any jurisdiction of the United States;
or
(v) agree or commit to do any of the foregoing.
7.3. Access.
The Buyer and its respective officers, directors, attorneys,
accountants and representatives, and the Buyer's financing sources and their
respective officers, directors, partners, members, attorneys, accountants and
representatives, shall be permitted to examine the property, books and records
of the Company and each Subsidiary, and such officers, directors, attorneys,
accountants and representatives shall be afforded reasonable access during
normal business hours to such property, books and records (and to the Properties
for the purposes of, among other things, testing or other assessments, at the
Buyer's sole option, of soil, groundwater, structural and mechanical components,
tanks or other conditions), upon reasonable prior notice and the Company shall
promptly make available to the Buyer all other information concerning the
Business, its properties and its personnel as the Buyer may reasonably request;
provided, however, that any such access shall be conducted at the Buyer's
expense, under the reasonable supervision of the Company's personnel and in such
a manner as to maintain the confidentiality of such information and not to
unreasonably interfere with the normal operation of the business of the Company
or its Subsidiaries. Notwithstanding anything to the contrary contained in this
Agreement, none of the Company, any Subsidiary or any Seller shall have any
obligation to disclose any information to the Buyer if such disclosure would (a)
result in a material breach of any agreement to which the Company, such
Subsidiary or such Seller is a party or is otherwise bound, (b) reasonably be
expected to jeopardize any attorney-client or other legal privilege of the
Company, such Subsidiary or such Seller, or (c) result in a violation of any
Laws or fiduciary duties applicable to the Company, such Subsidiary or such
Seller. The information contained in the Disclosure Schedule or delivered to the
Buyer or its authorized representatives pursuant hereto shall be subject to the
Confidentiality Agreement, and, for that purpose and to that extent, the terms
of the Confidentiality Agreement are incorporated herein by reference.
7.4. Consents; Cooperation; Notice.
(a) Prior to the Closing, the Company and the Buyer shall use
commercially reasonable efforts to obtain all consents, permits, approvals of,
and exemptions by, any Governmental Entity and all consents of any third party,
in each case, necessary for the
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consummation of the transactions contemplated by this Agreement. Each of the
parties hereto shall diligently assist and cooperate in preparing and filing all
documents required to be submitted to any Governmental Entity in connection with
such transactions and in obtaining any consents, waivers, authorizations or
approvals which may be required to be obtained in connection with such
transactions.
(b) If the Company, any Principal Seller or the Buyer becomes aware of
any Proceeding, including any proceeding by a Governmental Entity or private
party, that is instituted (or threatened to be instituted) challenging this
Agreement or any transaction contemplated by this Agreement, as violative of any
Law or otherwise (a "Challenge"), each such party shall notify the other of such
parties thereof promptly after becoming so aware of such Challenge. Each of the
parties hereto shall cooperate in all reasonable respects with each other and
use its respective commercially reasonable efforts in order to contest and
resist any Challenge and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(c) The Company shall notify the Buyer in writing promptly (but in no
event more than five (5) Business Days) after the Company has Knowledge of any
actual or asserted violation of or noncompliance with applicable Law by the
Company or any Subsidiary that is (i) material to the operations of the Company
or any Material Division and (ii) not set forth in the Disclosure Schedule.
(d) The Company shall, and shall cause each Subsidiary to, assist and
cooperate with the Buyer as reasonably requested by the Buyer in connection with
(i) the Buyer consummating the transactions contemplated by the Equity
Investment Agreements and the Financing Commitment Letter or otherwise for the
Buyer to satisfy its obligations under Section 7.15, including, without
limitation, in connection with the preparation and delivery of any disclosure
schedules and other information, documents, instruments, securities and
materials relating to the Company and/or any Subsidiary (each in such form and
substance) that shall be necessary for the effectuation of such transactions,
and (ii) the preparation and filing by the Buyer of any filings (including any
proxy statement) required to be made by the Buyer with the Securities and
Exchange Commission or pursuant to applicable Law or securities exchange rules
with respect to the transactions contemplated by this Agreement.
(e) Prior to Closing, the Company shall consult with, and consider the
views of, the Buyer prior to making any increase in the respective aggregate
amounts reserved with respect to Environmental Damages and Litigation Damages
from the amounts reflected on the Interim Balance Sheet.
7.5. HSR Act.
The Company and the Buyer each undertakes and agrees to promptly file
a Notification and Report Form under the HSR Act with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice,
Antitrust Division (the "Antitrust Division"), and to make any other applicable
competition filing or notifications required by any other Governmental Entity
(including under foreign competition Laws) as
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promptly as practicable. The Company and the Buyer each shall (as applicable):
(a) respond in a commercially reasonable manner and as promptly as practicable
to any formal or informal inquiries received from the FTC or the Antitrust
Division for additional information or documentary materials, and to all
inquiries and requests received from any State Attorney General or other
Governmental Entity in connection with antitrust or competition matters; (b)
take all commercially reasonable steps to seek early termination of any
applicable waiting period under the HSR Act or any similar Laws and to obtain
all required approvals; and (c) refrain from entering into any agreement with
the FTC or the Antitrust Division or any Governmental Entity not to consummate
or delay consummation of or to give notice of consummation, other than as
required by Law, of the transactions contemplated by this Agreement, except with
the prior written consent of the Buyer, on the one hand, and the Company and the
Majority Sellers, on the other hand (which consent shall not be unreasonably
withheld or delayed). Each party hereto shall promptly notify each other party
hereto of any written or oral communication to that party from the FTC, the
Antitrust Division, any State Attorney General or any other Governmental Entity
and shall permit the Buyer, on the one hand, and the Company and the Majority
Sellers, on the other hand, or their respective counsel to review in advance any
proposed written communication or response to any of the foregoing; provided,
however, that no party hereto shall be required to disclose to any other party
hereto or its counsel any information that such disclosing party deems to be
competitively or commercially sensitive thereto. In connection with the receipt
of any necessary approvals under the HSR Act and any foreign competition Laws,
the Buyer shall propose, negotiate and cooperate with the Company and the
Majority Sellers to effect prior to the Closing Date, by consent decree, hold
separate order or otherwise, the sale, divestiture or disposition of such assets
or businesses of the Buyer and its subsidiaries or the Company and the
Subsidiaries (in either case in an amount not to exceed, in the aggregate, the
value of 5% of the aggregate assets of the Business), or otherwise take any
action that reasonably limits the freedom of action with respect to any of the
businesses, product lines, or assets of any of the Buyer, the Buyer's
subsidiaries, the Company or the Subsidiaries, as may be required in order to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order, or other order in any Proceedings, which would otherwise have
the effect of preventing or materially delaying the consummation of the
transactions contemplated hereby.
7.6. No Solicitation.
(a) Neither any Seller, the Company nor any Subsidiary shall, and each
of the foregoing shall not allow any Person acting on its behalf to, directly or
indirectly, continue, initiate or participate in discussions or negotiations
with, or provide any nonpublic information to, any Person (other than the Buyer
and its representatives in connection with the transactions contemplated by this
Agreement) concerning any sale of a material portion of the assets used in the
operations of the Business (other than in the ordinary course of its business
and consistent with past practice or in accordance with Section 7.2) or any
securities of the Company (including, without limitation, the Purchased
Securities) or any Subsidiary (other than issuances of shares of Common Stock,
Sunbeam Common Stock, ▇▇▇▇▇▇▇ Common Stock, First Alert/Powermate Common Stock
upon exercise of Options or First Alert/Powermate Options in accordance with
their respective terms) or any merger, consolidation, recapitalization,
liquidation or similar transaction involving the Company or any Subsidiary and
any other third party (collectively, an "Acquisition Transaction").
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(b) Each Seller and the Company shall, and the Company shall cause
each Subsidiary to, promptly communicate to the Buyer the terms of any proposal
that it may receive after the date of this Agreement in respect of an
Acquisition Transaction. Any notification under this Section 7.6 shall include
the identity of each Person making such proposal, the terms of such proposal and
any other information with respect thereto as the Buyer may request.
(c) The Company and each Seller hereby agree that a monetary remedy
for a breach of the agreements set forth in this Section 7.6 will be inadequate
and impracticable, and that any such breach would cause the Buyer and its
Affiliates irreparable harm. In the event of a breach of this Section 7.6, in
addition to any other remedies available to the Buyer, prior to the Closing, the
Buyer shall be entitled to seek equitable remedies in a court of competent
jurisdiction, including, without limitation, the equitable remedy of specific
performance with respect to the transactions set forth in this Agreement, and
shall be entitled to such injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, as a court of
competent jurisdiction shall determine. If the Closing shall occur, the Buyer
shall not be entitled to any remedy for any breaches of this Section 7.6 that
may have occurred; provided, however, that all expenses incurred by the Buyer to
enforce the Sellers' obligations contained in this Section 7.6 shall be deemed
Pre-Closing Company Expenses, and shall be subject to the provisions of this
Agreement applicable to the Pre-Closing Company Expenses.
7.7. Interest in Purchased Securities.
From and after the date hereof until the termination of this
Agreement, without the prior written consent of the Buyer, which consent shall
not unreasonably be withheld or delayed, no Seller shall in any manner sell,
assign, convey, transfer, lease, pledge, mortgage or dispose of, or otherwise
take any action that may result in the incurrence or suffering of any
Encumbrance on or relating to, any Purchased Securities or Convertible
Securities (including any shares of Company Common Stock issuable upon the
exercise or conversion thereof), other than transfers to the Company in
connection with the exercise, conversion or cancellation of Convertible
Securities.
7.8. Estimated Closing Adjustment Amount.
Not less than two (2) Business Days prior to the Closing Date, the
Company shall deliver to the Buyer a good faith estimate of the Closing Date
Adjustment Amount (the "Estimated Closing Adjustment Amount"). The Buyer may
seek to adjust the Estimated Closing Adjustment Amount pursuant to the
procedures set forth in Section 3.2, and any such adjustment and corresponding
adjustment, if any, to the Purchase Price will be governed by such procedures
set forth in such Section 3.2.
7.9. Indebtedness.
(a) Not less than ten (10) Business Days prior to the Closing Date,
the Buyer shall notify the Company in writing of the outstanding Indebtedness
(the "Surviving Indebtedness") that shall remain outstanding as of the Closing;
provided, however, that in no event shall the 7.5% Payment-in-Kind Second
Priority Secured Notes due 2009 of the Company be "Surviving Indebtedness" or
remain outstanding from and after the Closing.
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(b) The Company shall obtain and deliver to the Buyer not less than
two (2) Business Days prior to the Closing Date, to the reasonable satisfaction
of the Buyer's lenders, payoff letters and other written documentation
evidencing the complete and irrevocable release, as of the Closing Date and
after giving effect to the payments contemplated by such payoff letters, of the
Company and each Subsidiary from any and all obligations and Encumbrances under
or in connection with any Indebtedness (other than the Surviving Indebtedness),
including, without limitation, the release of all liens or security interests
upon or in any of the respective properties and assets of the Company or any
Subsidiary, and any guaranties by the Company or any Subsidiary, arising under
or in connection with such Indebtedness.
7.10. Monthly Financials.
The Company shall deliver to the Buyer on a monthly basis, and as soon
as they are available (but not later than the last day of each successive
calendar month), prior to the Closing Date such internally generated monthly
financial statements and related information (the "Monthly Statements") as are
prepared and delivered to General Electric Capital Corporation, a Delaware
corporation ("GECC"), pursuant to the Credit Agreement among GECC, the Company
and certain of its Subsidiaries, dated December 18, 2002, as amended,
substantially at the same time provided to GECC.
7.11. Exercise of Rights Under Securityholders' Agreement.
Promptly (but not more than thirty (30) days) after the date hereof,
the Sellers shall, pursuant to and in accordance with Section 3.7 of the
Securityholders' Agreement, (a) deliver a notice in respect of the transactions
contemplated hereby to all Securityholders (other than the Sellers) in the form
of Exhibit I and (b) exercise their respective rights thereunder with respect to
the transactions contemplated hereby. Thereafter, the Sellers shall (i) deliver
all other notices in respect of the transactions contemplated hereby that shall
be required (if any) to be given under Section 3.7 of the Securityholders'
Agreement, and (ii) continue to exercise their respective rights under Section
3.7 of the Securityholders' Agreement with respect to the transactions
contemplated hereby.
7.12. Inventory.
The Company shall perform such physical count of the majority of
inventory of the Business during December 2004, or in some cases in November
2004 or October 2004, consistent with past practice and as required for purposes
of the 2004 financial audit. The Buyer may, at its discretion, observe such
physical inventory being taken. The Company shall promptly notify the Buyer in
writing of the results of such physical count.
7.13. Indemnity.
(a) Effective as of the Closing, the Buyer shall, or shall cause the
Company to, purchase, and shall cause the Company to, continue to maintain in
effect, without any lapses in coverage, policies of directors' and officers'
liability insurance (or a "tail" policy) covering a period of six years from the
Closing Date for the benefit of those Persons who are covered by the Company's
or its Subsidiaries' directors' and officers' liability insurance policies as of
the date hereof or at the Closing, providing coverage with respect to matters
occurring prior to the
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Closing that is at least equal to the coverage provided under the Company's or
its Subsidiaries' current directors' and officers' liability insurance policies.
The full premium for such six-year period for such insurance (the "D&O Premium")
shall be paid in full by the Company at or prior to the Closing and shall be
treated as a Pre-Closing Company Expense in accordance with the terms hereof.
The limits of such tail policy shall be independent of any other limits of
insurance purchased by the Buyer, the Company or their Subsidiaries.
(b) Effective as of the Closing and until the sixth anniversary of the
Closing Date, the Buyer shall, and shall cause the Company and its Subsidiaries
to: (i) continue to indemnify and hold harmless each of the Company's and its
Subsidiaries' present and former directors and officers, in their capacities as
such, from and against all damages, costs and expenses incurred or suffered in
connection with any threatened or pending Proceeding at law or in equity by any
Person or any arbitration or administrative or other proceeding relating to the
Business, the Company or its Subsidiaries or the status of such individual as a
director or officer of the Company or any Subsidiary at or prior to the Closing,
to the fullest extent permitted by any applicable Law; and (ii) retain or
include in the certificate of incorporation and by-laws of the Company and the
comparable organizational documents of the Subsidiaries any indemnification
provision or provisions, including provisions with respect to the advancement of
expenses, in each case to the extent in effect immediately prior to the Closing,
for the benefit of (as applicable) the Company's and its Subsidiaries'
directors, officers, employees and agents, and shall not thereafter amend the
same (except to the extent that such amendment preserves, increases or broadens
the indemnification or other rights theretofore available to such directors,
officers, employees and agents). If the Buyer and/or Company merges into,
consolidates with or transfers all or substantially all of its assets to another
Person, then and in each such case, the Buyer shall, and/or shall cause the
Company to, make proper provision so that the surviving or resulting corporation
or the transferee in such transaction shall assume the obligations under this
Section 7.13. The obligations set forth in this Section 7.13 shall continue for
a period of six (6) years following the Closing and shall continue in effect
thereafter with respect to any action, suit or proceeding commenced prior to the
sixth anniversary of the Closing Date, and is intended to benefit (as
applicable) each director, officer, employee or agent of the Company or any
Subsidiary who has held such capacity on or prior to the Closing Date and is
either a party to an indemnification agreement with the Company or any of its
Subsidiaries or now or hereafter is entitled to indemnification or advancement
of expenses pursuant to any provisions contained in the certificate of
incorporation or by-laws of the Company or the comparable organizational
documents of any of the Subsidiaries as of the date hereof.
7.14. Retention of Accountant.
If not formally retained as of the date hereof, not later than October
10, 2004, the Company shall retain Deloitte & Touche LLP as registered public
accountants to the Company to audit the Company's consolidated balance sheet at
December 31, 2004 and the related consolidated statements of operations,
shareholders' equity and cash flows at and for the fiscal year ending December
31, 2004, including in each case notes thereto, of the type that would be
required to be included with such statements to satisfy the requirements of
Regulation S-X promulgated by Securities and Exchange Commission. The Company
shall use its commercially reasonable efforts to cause the agreement pursuant to
which such engagement is effected to provide for such audit to be completed on
or before February 28, 2005, which provision shall not
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be amended or modified to provide for any later date for such completion without
the prior written consent of the Buyer.
7.15. Financing.
Notwithstanding any other provision of this Agreement, the Buyer shall
use its commercially reasonable efforts to cause the Equity Investment and the
Financing Commitments to be fulfilled in accordance with their terms. The Buyer
shall use its commercially reasonable best efforts to obtain the Bank Consents
within fifteen (15) Business Days after the date hereof, and if such Bank
Consents are not so obtained within fifteen (15) Business Days after the date
hereof, the Buyer shall continue to use its commercially reasonable best efforts
to obtain the Bank Consents as promptly as practicable thereafter. No amendments
to or modifications, terminations or cancellations of the terms and conditions
of the Financing Commitment Letter or the Equity Investment Agreements (except
for any amendment or modification that would not be reasonably expected to
affect the certainty of Closing or materially delay the consummation of the
Closing) shall be made by the Buyer without the prior written consent of the
Majority Sellers, which consent shall not be unreasonably withheld or delayed.
The Buyer shall not deliver any written instructions to the Equity Escrow Agent
pursuant to the Equity Escrow Agreement instructing the Equity Escrow Agent to
release the funds deposited into escrow under the Equity Escrow Agreement, other
than in connection with Closing or the termination of this Agreement in
accordance with the terms hereof, without the prior written consent of the
Majority Sellers, which consent shall not be unreasonably withheld or delayed.
The Buyer shall promptly notify the Company and the Principal Sellers in writing
of any fact or occurrence of which the Buyer becomes aware that would reasonably
be expected to cause any conditions to the financing provided for by the
Financing Commitment Letter or the Equity Investment Agreements not to be
satisfied. In the event that any or all of the borrowings or amounts provided
pursuant to the Equity Investment Agreements or to be provided pursuant to the
Financing Commitment Letter are unavailable for any reason in amounts sufficient
to permit consummation of the transactions contemplated hereby, including the
payment of the Purchase Price on the terms contemplated hereby, the Buyer shall
use its commercially reasonable efforts to obtain, and the Company and the
Principal Sellers shall use their respective commercially reasonable efforts to
assist the Buyer in obtaining, replacement financing from alternative sources on
terms and conditions that are commercially reasonable (it being understood and
agreed, however, that none of the Sellers shall have any obligation to offer to
provide all or any portion of such financing).
7.16. Public Statements.
Except for the joint press release attached hereto as Exhibit J, which
is being issued by the parties as of the date hereof, and except as required by
applicable Law or securities exchange rules, in which event the parties shall
consult with each other in advance, prior to the Closing Date, no press release
or other public announcement (if materially different than those previously
made) relating to the transactions contemplated by this Agreement shall be
issued, made or permitted to be issued or made by any party to this Agreement or
its representatives without prior consultation among the Buyer and the Company.
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7.17. Interest in Subsidiaries.
Upon the request of the Buyer at any time prior to the Closing, the
Company shall provide to the Buyer a list setting forth the following with
respect to each Subsidiary: (a) if such Subsidiary is a corporation, (a) the
number of shares of authorized capital stock of each class or series of its
capital stock, (b) the number of issued and outstanding shares of each class or
series of its capital stock and (c) the number of shares of its capital stock
held in treasury; and (b) if such Subsidiary is not a corporation, (i) the
amount of each class or series of its authorized equity interests and (i) the
amount of issued and outstanding interest of each class or series of its equity
interests.
7.18. Adjusted EBITDA Certificate.
Not less than ten (10) Business Days prior to the Closing Date, the
Company shall deliver to the Buyer a certificate (the "Adjusted EBITDA
Certificate"), executed by the Chief Financial Officer of the Company,
certifying as to the Adjusted EBITDA Amount for the twelve (12) month period
ending on December 31, 2004. Without limiting the generality of the provisions
of Section 7.3, the Company shall make available to the Buyer and its
representatives access to the work papers used by the Company to prepare the
Adjusted EBITDA Certificate and to such other books, records and information as
the Buyer may reasonably request for the purpose of verifying the accuracy of
the Adjusted EBITDA Amount so certified.
SECTION 8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Unless waived by the Buyer, the obligation of the Buyer to consummate
the transactions contemplated hereunder is subject to the fulfillment, prior to
or at the Closing, of each of the following conditions:
8.1. Representations and Warranties.
(a) The representations and warranties of the Company contained in
this Agreement that are qualified as to materiality or Material Adverse Effect
shall be true and correct, and the representations and warranties of the Company
in this Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date hereof, and, except to the extent
such representations and warranties refer to a specific date, as of the Closing
Date as though made on the Closing Date; provided, however, that this condition
shall be deemed satisfied unless the failure or failures of such representations
and warranties to be so true and correct (disregarding for this purpose all
qualifications in such representations and warranties relating to materiality or
Material Adverse Effect) in the aggregate would have a Material Adverse Effect.
(b) The representations and warranties of each Seller contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as though such representations and warranties were made at and
as of the Closing Date (except for representations and warranties (i) made as of
a specified date, which shall be true and correct in all material respects as of
the specified date, and (ii) containing materiality qualification, which, giving
effect to such qualification, shall be true and correct in all respects).
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8.2. Performance of Covenants.
(a) The Company shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
(b) Each Seller shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing.
8.3. Approvals.
(a) All waiting periods applicable under the HSR Act shall have
expired or been terminated; and
(b) All material consents, authorizations, approvals of, and
expirations of waiting periods imposed by, any Governmental Entity, the failure
of which to obtain or occur would make the consummation of the transactions
contemplated hereby illegal, shall have been obtained or shall have occurred.
8.4. Legal Matters.
No preliminary or permanent injunction or other judgment, order or
decree issued by a court of competent jurisdiction which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, and no statute, rule or regulation shall have been enacted,
promulgated or enforced by any Governmental Entity which makes the consummation
of the transactions contemplated hereby illegal; provided, however, that the
parties shall use their respective reasonable best efforts to have any temporary
or preliminary order or injunction lifted.
8.5. No Material Adverse Effect.
From the date of this Agreement to the Closing Date, there shall have
not occurred any condition, event or effect that has had or would reasonably be
expected to result in a Material Adverse Effect (it being understood that the
satisfaction of the condition set forth in Section 8.7, and the performance of
the Company and the Subsidiaries in connection with the satisfaction of such
condition, shall not be taken into consideration in determining whether the
condition set forth in this Section 8.5 has been satisfied).
8.6. Minimum Share Amount.
The Sellers shall have delivered to the Buyer (subject to the payment
by the Buyer of the applicable Per Share Purchase Price therefor payable at the
Closing as provided herein) Purchased Securities representing not less than
ninety percent (90%) of the outstanding shares of Company Common Stock.
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8.7. Adjusted EBITDA Amount.
The Adjusted EBITDA Amount for the twelve (12) month period ending on
December 31, 2004 shall be not less than the Adjusted EBITDA Target Amount.
SECTION 9. CONDITIONS PRECEDENT TO THE SELLERS' AND THE COMPANY'S OBLIGATIONS
Unless waived by the Majority Sellers, the obligation of any Seller to
consummate the transactions contemplated hereunder is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
9.1. Representations and Warranties.
The representations and warranties of the Buyer contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as though such representations and warranties were made at and as
of the Closing Date (except for representations and warranties (i) made as of a
specified date, which shall be true and correct in all material respects as of
the specified date, and (ii) containing a materiality qualification, which,
giving effect to such materiality qualification, shall be true and correct in
all respects).
9.2. Performance of Covenants.
The Buyer shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be so performed
or complied with by it at or prior to the Closing.
9.3. Approvals.
(a) All waiting periods applicable under the HSR Act shall have
expired or been terminated; and
(b) All material consents, authorizations, approvals of, and
expirations of waiting periods imposed by, any Governmental Entity, the failure
of which to obtain or occur would make the consummation of the transactions
contemplated hereby illegal, shall have been obtained or shall have occurred.
9.4. Legal Matters.
No preliminary or permanent injunction or other judgment, order or
decree issued by a court of competent jurisdiction which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, and no statute, law or regulation shall have been enacted,
promulgated or enforced by any Governmental Entity which makes the consummation
of the transactions contemplated hereby illegal; provided, however, that the
parties shall use their respective reasonable best efforts to have any temporary
or preliminary order or injunction lifted.
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SECTION 10. CLOSING
10.1. Time and Place of Closing.
The closing of the purchase and sale of the Purchased Securities (the
"Closing") pursuant to this Agreement shall take place at the offices of ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, five (5)
Business Days following the satisfaction of the conditions set forth in Sections
8.3 and 9.3 (subject to satisfaction or waiver of the conditions to the Closing
set forth in Section 8 and Section 9), or at such other date, time or place as
may be agreed to by the Buyer and the Majority Sellers (the date on which the
Closing occurs, the "Closing Date").
10.2. Deliveries at the Closing by the Sellers.
At the Closing, in addition to the other actions contemplated
elsewhere herein, the Sellers shall deliver or cause to be delivered to the
Buyer:
(a) from each Seller, stock certificates evidencing the Purchased
Securities to be purchased from such Seller at the Closing (as set forth on
Schedule I attached hereto), free and clear of all Encumbrances, accompanied by
a power duly executed in blank and sufficient to convey to the Buyer good and
valid title in and to such Purchased Securities;
(b) from each Principal Seller, a certificate, dated the Closing Date,
executed by a duly authorized officer of such Principal Seller, certifying with
respect to such Principal Seller as to the satisfaction of the conditions to the
Buyer's obligation to effect the Closing under Sections 8.1(b) and 8.2(b); and
(c) from each Seller (as applicable), an IRS Form W-9 or the
appropriate IRS Form W-8, duly executed by such Seller.
10.3. Deliveries at the Closing by the Company.
At the Closing, in addition to the other actions contemplated
elsewhere herein, the Company shall deliver or cause to be delivered to the
Buyer:
(a) a certificate, dated the Closing Date, executed, on behalf of the
Company, by the Secretary or an Assistant Secretary of the Company certifying as
of the Closing Date the following: (i) copies of the certificate of
incorporation of the Company, as certified by the appropriate Governmental
Entity as of a date not more than thirty (30) days prior to the Closing Date,
and all amendments thereto; (ii) copies of the bylaws of the Company, as
amended; (iii) copies of resolutions of the board of directors of the Company
authorizing the execution and delivery of this Agreement and any other
agreement, instrument or other document necessary for the Company to consummate
the transactions contemplated hereby; and (iv) the name, title and incumbency
of, and bearing the signatures of, the officers of the Company authorized to
execute and deliver this Agreement and any other agreement, instrument or
document necessary for the Company to consummate the transactions contemplated
hereby;
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(b) a certificate, dated the Closing Date, executed by a duly
authorized officer of the Company, certifying as to the satisfaction of the
conditions to the Buyer's obligation to effect the Closing under Sections 8.1(a)
and 8.2(a); and
(c) a certificate, dated the Closing Date, which is in a form
reasonably acceptable to the Buyer, duly executed by the Company in accordance
with Treasury Regulation (ss). 1.897.2(h), and certifies that the Company is not
and has not been a "U.S. real property holding corporation" (as defined in
Section 897(c)(2) of the Code) at any time during the five years preceding the
date of the certificate (or shorter period as may be specified by Section
897(c)(1)(A)(ii) of the Code) and (ii) a letter to the Internal Revenue Service,
dated the Closing Date, which is in a form reasonably acceptable to the Buyer,
duly executed by the Company in accordance with Treasury Regulation (ss).
1.897-2(h)(2), and contains the information required by Treasury Regulation
(ss). 1.897-2(h)(2).
10.4. Deliveries at the Closing by the Buyer.
At the Closing, in addition to the other actions contemplated
elsewhere herein, the Buyer shall deliver or cause to be delivered:
(a) to the Sellers, in accordance with Section 3.l(b), the Purchase
Price, by wire transfer of immediately available funds to accounts respectively
designated in writing by the Sellers (or by check, to any Seller who fails to
specify wire transfer instructions to its account);
(b) to the Option holders, in accordance with Section 3.5, the
Aggregate Option Consideration;
(c) to the Principal Sellers, a certificate (which certificate may be
relied upon by all of the Sellers), dated the Closing Date, executed, on behalf
of the Buyer, by the Secretary or an Assistant Secretary of the Buyer certifying
as of the Closing Date the following: (i) copies of resolutions of board of
directors of the Buyer authorizing the execution and delivery of this Agreement
and any other agreement, instrument or other document necessary to consummate
transactions contemplated hereby; and (ii) the name, title and incumbency of,
and bearing the signatures of, the officers of the Buyer authorized to execute
and deliver this Agreement and any other agreement, instrument or document
necessary to consummate the transactions contemplated hereby; and
(d) to the Sellers, a certificate, dated the Closing Date, executed by
a duly authorized officer of the Buyer, certifying as to the satisfaction of the
conditions to the Sellers' obligation to close under Sections 9.1 and 9.2.
10.5. Indebtedness Payoff.
For the avoidance of doubt, in the event that at or immediately after
the Closing, the Buyer causes the Company to pay an amount (the "Pay-Off
Amount") equal to the outstanding Indebtedness (other than the Surviving
Indebtedness) to the lenders in respect of such Indebtedness, (a) the Buyer
shall be deemed to have contributed to the capital of the Company an amount
equal to the Pay-Off Amount, and (b) the Company shall be deemed to
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have remitted the Pay-Off Amount to each such lender in order to satisfy such
Indebtedness. The Company shall deliver to Buyer, at or prior to Closing, such
documentation as is reasonably requested by Buyer's lenders, including, without
limitation, documentation providing for the release from all guaranties given
by, and of all liens or security interests upon or in any of the respective
properties and assets of, the Company or any Subsidiary, in each case arising
under or in connection with the Indebtedness (other than the Surviving
Indebtedness).
SECTION 11. TERMINATION AND ABANDONMENT
11.1. Termination.
This Agreement may be terminated and the transactions contemplated
herein may be abandoned at any time prior to the Closing:
(a) by the Buyer or the Principal Sellers, if (i) the Closing has not
occurred by March 15, 2005 or such other date agreed upon by the Buyer and the
Principal Sellers (other than due to the failure of the party seeking to
terminate this Agreement to perform in all material respects its obligations
under this Agreement required to be performed at or prior to the Closing) or
(ii) any court of competent jurisdiction shall have issued a final order, decree
or ruling or taken any other final action restraining, enjoining or otherwise
prohibiting the Closing and such order, decree, ruling or other action is or
shall have become final and nonappealable (provided that the terminating party
shall have used reasonable best efforts to resist or resolve any such action and
have any injunction lifted);
(b) by mutual written consent of the Buyer, the Company and the
Principal Sellers;
(c) by the Buyer, in the event of a breach of any representation,
warranty, covenant or other agreement contained in this Agreement which would
give rise to the failure of the conditions in Section 8.1 or 8.2, which is not
cured within thirty (30) days after receipt of written notice thereof by the
Company;
(d) by the Company and the Principal Sellers, in the event of a breach
of any representation, warranty, covenant or other agreement contained in this
Agreement which would give rise to the failure of the conditions in Section 9.1
or 9.2, which is not cured within thirty (30) days after receipt of written
notice thereof by the Buyer; or
(e) by the Company and the Principal Sellers, in the event that the
funding of the Equity Investment into escrow, in accordance with the terms of
the Equity Investment Agreements, shall not have been effected within fifteen
(15) Business Days following the date hereof.
11.2. Procedure for Termination.
Each party hereto terminating this Agreement pursuant to Section 11.1
shall give written notice thereof to the other parties hereto, whereupon this
Agreement (other than this Section 11.2 and Section 14) shall terminate and the
transactions contemplated herein shall be abandoned without further action by
any party and there shall be no liability on the part of any
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party; provided, however, that if such termination results from (a) the
deliberate failure of any party to fulfill a condition of performance of the
obligations of the other party under this Agreement, (b) the failure of any
party to perform a material covenant under this Agreement, or (c) the material
breach by any party of any representation or warranty contained in this
Agreement, and, at the time of termination, the terminating party was not in
breach of its obligations under this Agreement such that the non-terminating
party would have been entitled to terminate this Agreement, such non-terminating
party shall be liable for any damages incurred or suffered by any party hereto
as a result of such failure or breach.
SECTION 12. SURVIVAL AND INDEMNIFICATION
12.1. Survival of Representations, Warranties and Covenants and
Certain Claims.
None of the representations and warranties contained in this Agreement
shall survive the Closing; provided, however, that the representations and
warranties contained in (a) Sections 4.2 and 4.4 shall survive the Closing
indefinitely solely for the purposes of Section 12.2(a), (b) Section 5 (other
than Sections 5.3 and 5.16(g)(iii)) shall survive the Closing until the second
anniversary of the Closing Date solely for the purposes of Section 13.5 and
shall thereafter terminate, (c) Section 5.3 shall survive the Closing
indefinitely solely for the purposes of Sections 12.2(b) and 13.5 and (d)
Section 5.16(g)(iii) shall survive the Closing until the fourth anniversary of
the Closing Date solely for the purpose of Section 13.5 and shall thereafter
terminate. The covenants contained in this Agreement shall survive the Closing
until, by their respective terms, they are no longer operative.
12.2. Indemnity.
(a) Subject to all applicable terms, conditions and limitations set
forth in this Section 12.2 and Section 13.5, each Seller shall severally, but
not jointly, indemnify and hold harmless the Buyer Parties from and against any
Loss or Losses (each, an "Individual Loss") sustained or required to be paid by
any of the Buyer Parties resulting from or arising out of or in connection with
any breach of any representation or warranty made by such Seller in Section 4.4.
(b) Subject to all applicable terms, conditions and limitations set
forth in this Section 12.2 and Section 13.5, each Seller shall severally, but
not jointly, indemnify and hold harmless the Buyer Parties from and against such
Seller's Proportionate Interest of the amount of any Loss or Losses (each, a
"Several Loss") sustained or required to be paid by any of the Buyer Parties
resulting from or arising out of or in connection with any breach of any
representation or warranty made by the Company in Section 5.3 of this Agreement.
(c) Notwithstanding any other provision hereof, each Seller's
aggregate liability for: (i) any Individual Losses arising under Section 12.2(a)
shall not exceed an aggregate amount equal to the lesser of (A) the amount of
such Individual Losses attributable to such Seller and (B) such Seller's Pro
Rata Share; and (ii) any Several Losses arising under Section 12.2(b) shall not
exceed an aggregate amount equal to the lesser of (x) such Seller's
Proportionate Interest of such Several Losses and (y) such Seller's Pro Rata
Share; provided,
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however, that in no event shall the aggregate liability of any Seller for all
Individual Losses and Several Losses exceed an amount equal to such Seller's Pro
Rata Share.
(d) If any Seller makes any payment under this Section 12.2 in respect
of any Losses, such Seller shall be subrogated, to the extent of such payment,
to the rights of the indemnified party against any third party with respect to
such Losses.
(e) All payments made by any Seller pursuant to this Section 12.2 in
respect of the indemnification of any Buyer Party hereunder shall be paid by
such Seller to the Buyer (for the benefit of each relevant Buyer Party). All
payments pursuant to this Section 12.2 shall be treated as an adjustment to the
Purchase Price for all Tax purposes.
SECTION 13. CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
13.1. Tax Matters.
(a) The Company shall prepare and file, or cause to be prepared and
filed, all Tax Returns required to be filed by or on behalf of the Company or
any Subsidiary consistent with past practices for taxable periods commencing
before the Closing Date and not yet filed on the Closing Date and shall cause
the Company to pay the Taxes shown to be due thereon. The Company shall provide
to the Buyer a copy of each material Tax Return that is required to be filed
between the date hereof and the Closing Date twenty-five (25) days before the
due date thereof for the Buyer's review. The Company shall consider in good
faith whether to accept all comments made by Buyer with respect to such Tax
Returns.
(b) All of the parties hereto agree to treat for Tax purposes as
occurring at the beginning of the day immediately following the Closing Date in
accordance with Treasury Regulation (ss). 1.1502-76(b)(1)(ii)(B) (i) the
settlement of all of the Options settled pursuant to this Agreement and (ii) the
payment of (A) any employee change-of-control payments obligated to be made by
the Company as set forth in Section 1.1 of the Disclosure Schedule, (B) the
Bonus Amount, (C) the Retention Payment and (D) all amounts paid under Sections
13.2(d) and 13.2(f), other than those amounts paid in accordance with the first
and second sentences of Section 13.2(f).
(c) The following payments made on the Closing Date shall be deemed to
occur in the following order on the day after the Closing Date: (i) first, any
payments of wages or salary to officers and employees of the Company and its
Subsidiaries, to the extent paid on the Closing Date pursuant to the Company's
normal payroll practice, (ii) second, any and all payments made pursuant to
Section 13.2(f), (iii) third, any and all payments made pursuant to Section
13.2(d), (iv) fourth, the payment of the Bonus Amount, (v) fifth, the payment of
the Retention Payments and (vi) sixth, the payment of the Aggregate Option
Consideration, including, without limitation, the excess of the Unallocated
Option Payment over the Company's portion of the Retention Payments.
(d) Any sales, recording, transfer, stamp, conveyance, value added,
use, or other similar Taxes, duties, excise, governmental charges or fees
("Transfer Taxes") imposed as a result of the sale of the Purchased Securities
to the Buyer pursuant to this Agreement shall be borne by the Seller whose sale
gave rise to such Transfer Taxes. Where the Buyer is required by
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Law to remit such Transfer Taxes to a Governmental Entity, each appropriate
Seller shall remit its share of the Transfer Taxes to the Buyer ten (10) days
prior to the due date for such Transfer Taxes. The Principal Sellers and the
Buyer, to the extent required by Applicable Law, shall prepare and file all Tax
Returns on a timely basis relating to any such Transfer Taxes.
(e) All Tax allocation, indemnity, sharing or similar agreements or
arrangements (whether or not written) with respect to or involving the Companies
or any Subsidiary (other than those that are solely among the Company and/or
Subsidiaries that are wholly owned, directly or indirectly, by the Company)
shall be terminated as of immediately prior to the Closing, and after the
Closing, neither the Companies nor any Subsidiary shall be bound thereby or have
any liability thereunder, and such agreements or arrangements shall have no
further effect for any Tax year (whether the current year, a future year or a
past year).
13.2. Employee Benefits Matters.
(a) From and after the Closing and until December 31, 2005, the Buyer
shall provide compensation to the continuing employees of the Company and its
Subsidiaries and employee benefits to the employees and former employees of the
Company and its Subsidiaries (such employees and former employees, "Employee
Beneficiaries") that are no less favorable in the aggregate per employee than
those provided to such individuals immediately prior to the Closing Date, taking
into account the provisions of Section 13.2(f). From and after the Closing, with
respect to any employee benefits that are provided to Employee Beneficiaries
under the Buyer's employee benefits plans, the Buyer shall cause service by
Employee Beneficiaries with the Company and its Subsidiaries and their
respective predecessors to be taken into account for purposes of eligibility to
participate, eligibility to commence benefits, credit for years of service and,
solely for purposes of vacation and severance benefits, benefit accruals (except
to the extent such treatment would result in duplicative accrual of benefits for
the same period of service) under the benefit plans of the Buyer in which such
employees participate.
(b) From and after the Closing, with respect to any welfare benefits
that are provided to Employee Beneficiaries under the Buyer's employee benefits
plans, the Buyer shall cause to be (i) waived any pre-existing condition
limitations and (ii) credited any deductibles and out-of-pocket expenses
incurred by such employees and their beneficiaries and dependents during the
portion of the calendar year in which participation commences prior to
participation in the benefit plans provided by the Buyer.
(c) The Buyer shall, and shall cause the Company to, honor each Plan
and arrangement set forth in Section 13.2(c) of the Disclosure Schedule in
accordance with its respective terms; provided, however, that for such period
following the Closing Date as is set forth in Section 13.2(c) of the Disclosure
Schedule, the Buyer shall not terminate any such Plan or arrangement or make any
amendment to such Plan or arrangement that would adversely affect the rights of
participants or beneficiaries thereunder (except to the extent required by
changes in applicable Law).
(d) With respect to (i) each individual set forth on Section 13.2(d)
of the Disclosure Schedule delivered by the Company on the date hereof and (ii)
each additional individual that the Buyer notifies the Company in writing not
less than five (5) Business Days
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prior to the Closing Date whose employment with the Company or any Subsidiary
shall terminate effective as of immediately following the Closing (collectively,
the "Listed Individuals"), the Buyer shall, and shall cause the Company to,
immediately upon such termination make payments and provide benefits to each of
the Listed Individuals in accordance with the terms set forth in Section 13.2(d)
of the Disclosure Schedule.
(e) The Buyer shall honor, and shall cause the Company and any of its
Subsidiaries to honor, all earned but unused vacation and other time-off accrued
by the Employee Beneficiaries prior to the Closing in accordance with the
applicable policies in effect with respect to the Employee Beneficiaries as of
the date hereof.
(f) The Buyer shall, or shall cause the Company to, pay any earned but
unpaid annual bonus award under the Company Management Incentive Bonus Plan in
respect of fiscal year 2004 determined under the terms of such plan within five
(5) Business Days following the Closing Date (to the extent not previously
paid), to each of the Listed Individuals and each employee of the Company as of
December 31, 2004 subject to an award thereunder (collectively, the "MIP
Specified Employees"), and to each employee of ▇▇▇▇▇▇▇ and Sunbeam and their
respective Subsidiaries as of December 31, 2004 subject to an award thereunder.
The Buyer shall, or shall cause the Company to, pay any earned but unpaid
long-term incentive compensation award under the Company's Key Executive
Long-Term Incentive Plan in respect of the performance cycle ended in fiscal
year 2004 determined under the terms of such plan, but assuming in all cases
participation and continued employment for the entirety of such performance
cycle, within five (5) Business Days following the Closing Date (to the extent
not previously paid), to each of the Listed Individuals and each employee of the
Company subject to an award thereunder (collectively, the "LTIP Specified
Employees") and to each employee of ▇▇▇▇▇▇▇ and Sunbeam and their respective
Subsidiaries as of December 31, 2004 subject to an award thereunder. With
respect to each uncompleted performance cycle under the Company's Key Executive
Long-Term Incentive Plan, the Buyer shall, or shall cause the Company to, pay
(i) to each of the LTIP Specified Employees, within five (5) Business Days
following the Closing Date, the aggregate value of his or her outstanding
long-term incentive compensation award with respect to such uncompleted
performance cycle, based on actual performance for any completed periods and
target level performance for the 2005 and 2006 fiscal years for such performance
cycles, assuming participation and continued employment for the entirety of each
such uncompleted performance cycle (the "Uncompleted Performance Cycle
Payments") and (ii) to all participating employees of ▇▇▇▇▇▇▇ and Sunbeam and
their Subsidiaries, the aggregate value of all long-term incentive compensation
awards determined under the terms of such plan with respect to the 2005 and 2006
fiscal years, based on actual performance for the 2005 and 2006 fiscal years,
when and if such amounts become due and payable thereunder. The Sellers shall
set forth on Section 13.2(f) of the Disclosure Schedule, the projected
Uncompleted Performance Cycle Payment to each of the LTIP Specified Employees.
The aggregate Uncompleted Performance Cycle Payments shall not be (x) less than
the aggregate projected amounts in Section 13.2(f) of the Disclosure Schedule or
(y) more than the aggregate projected amounts in Section 13.2(f) of the
Disclosure Schedule by more than $500,000. Prior to the Closing, the Board
shall, in its sole discretion, make any and all determinations necessary to
determine achievement of business objectives and performance factors (A) under
the Company Management Incentive Bonus Plan with respect to the 2004 fiscal year
and (B) under the Company's Key Executive Long-Term Incentive Plan in respect to
all individuals described
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above pursuant to this Section 13.2(f). The Board shall make such determinations
consistent with the past practice of the Board in making similar determinations
in one or both of the last two (2) fiscal years provided, however, that the
Board may also make adjustments, if any, based on changes in vacation policies,
insurance settlements and recoveries, restructuring activities, changes in the
Company's and its Subsidiaries' retiree medical plans and warranty, bad debt,
product liability and other judgmental reserves. No later than five (5) Business
Days prior to the Closing, the Company shall deliver to Buyer for its review a
schedule of the Uncompleted Performance Cycle Payment to be paid to each of the
LTIP Specified Employees and a schedule of the achievement of business
objectives and performance factors including any adjustments approved in
determining such achievement.
(g) On the Closing Date and immediately following the payment of the
Purchase Price by Buyer, the Company shall, and the Buyer shall cause the
Company to, (i) make a payment (collectively, the "Bonus Amount") in the
aggregate amount set forth on Section 13.2(g) of the Disclosure Schedule to such
individuals, and in such amounts, in accordance with the terms set forth in such
schedule (in each case, less any applicable withholding Taxes on such amounts),
(ii) make a payment (the "Unallocated Option Payment") in an aggregate amount
equal to the excess of the Aggregate Option Consideration over the aggregate
amount of payments made pursuant to Section 3.5 to holders of outstanding
Options, as follows: (A) subject to clause (B) below, payment of the Unallocated
Option Payment shall be made to such individuals and in such amounts in
accordance with the terms set forth in Section 13.2(g) of the Disclosure
Schedule and (B) a portion of the Unallocated Option Payment equal to Two
Million Dollars ($2,000,000) shall be used to pay the Company's half of the
Retention Payments described in (iii) below, and (iii) make a payment in an
aggregate amount equal to Four Million Dollars ($4,000,000) (the "Retention
Payments") to such individuals and in such amounts in accordance with the terms
set forth in Section 13.2(g) of the Disclosure Schedule.
(h) Following the Closing Date, the Board shall, and the Buyer and the
Company shall cause the Board to, honor all outstanding awards under the Company
Management Incentive Plan and the Company's Key Executive Long Term Incentive
Plan (other than with respect to the MIP Specified Employees and the LTIP
Specified Employees, as applicable), in accordance with the terms of such plans.
13.3. Merger Following the Closing.
No later than fifteen (15) Business Days following the Closing Date,
the Buyer shall take all necessary and appropriate action to cause to become
effective a merger of the Company with a wholly owned subsidiary of the Buyer
(the "Merger"), with the Company as the surviving corporation, pursuant to which
each outstanding Defaulted Share shall be cancelled and converted into the right
to receive from the Buyer the Per Share Purchase Price. As soon as reasonably
practicable following the effective time of the Merger, subject to the receipt
by the Company from each holder of Defaulted Shares of a Letter of Transmittal
and share certificates representing such Defaulted Shares, the Buyer shall pay
to such holder (by check) with respect to each such Defaulted Share an amount
equal to (a) the Per Share Purchase Price, less the Per Share Holdback Amount,
multiplied by (b) the number of Defaulted Shares held by such holder. Upon the
effectiveness of the Merger: (a) such Defaulted Shares shall be deemed Purchased
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Securities for all purposes hereunder; (b) such holder shall be deemed a Seller
for all purposes under this Agreement, and as such shall, without limitation, be
subject to the Sellers' rights and obligations hereunder, as though each such
holder had been a Seller as of the Closing Date; and (c) Schedule I attached
hereto shall be amended to reflect the foregoing.
13.4. Joinder.
From the date hereof through the date of consummation of the Merger,
in connection with the purchase by the Buyer of any shares of Company Common
Stock, including any Defaulted Shares (pursuant to Section 3.7 of the
Securityholders' Agreement or otherwise), any Securityholder not executing this
Agreement on the date hereof (each, a "Joining Securityholder") holding such
Company Common Stock shall be requested to execute and deliver to the Buyer a
Joinder Agreement. Upon such execution and delivery of a Joinder Agreement by
such Joining Securityholder, and the delivery by such Joining Securityholder to
the Buyer of certificates representing such shares of Company Common Stock
(together with stock powers in respect thereof, duly executed in blank) against
the payment by the Buyer to such Joining Securityholder of the Per Share
Purchase Price (less the Per Share Holdback Amount) in respect of each such
share of Company Common Stock, as provided in Section 3.1(b):
(a) such Company Common Stock held by such Joining Securityholder
shall be deemed Purchased Securities for all purposes hereunder;
(b) such Joining Securityholder shall be deemed a Seller for all
purposes under this Agreement, and as such shall, without limitation, be subject
to the Sellers' rights and obligations hereunder, as though each such Joining
Securityholder had been a Seller as of the date hereof; and
(c) Schedule I attached hereto shall be appropriately amended to
reflect such Joining Securityholder as a Seller hereunder and the Company Common
Stock held by such Joining Securityholder as Purchased Securities hereunder.
13.5. Holdback Amount.
(a) The Holdback Amount shall be withheld by the Buyer from the
Purchase Price (as provided herein) and, subject to the applicable terms of this
Agreement, shall be available to satisfy any claims made by the Buyer Parties
pursuant to Sections 12.2(b) and this Section 13.5.
(b) Except as otherwise provided in Section 12.2, the Holdback Amount
shall provide the sole and exclusive rights and remedies of the Buyer Parties
with respect to the transactions contemplated by this Agreement, subject to the
limitations set forth in this Section 13.5(b), and the Holdback Amount shall be
a cap and limit on the Sellers' obligations under this Agreement relating to or
arising under this Agreement, and the Sellers shall not be liable for any
obligations relating to or arising under this Agreement in excess of the
Holdback Amount, including, without limitation, with respect to any
misrepresentation, breach or default of or under any of the representations,
warranties, covenants and agreements contained in this Agreement; provided,
however, that nothing set forth herein shall be deemed to limit any party's
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rights or remedies in the event that the other party has committed fraud. The
Buyer shall be entitled to any and all interest or other income accruing or
earned on the Holdback Amount.
(c) Subject to the applicable terms, conditions and limitations of
this Section 13.5, the Buyer Parties shall be entitled to collect amounts from
the Holdback Amount from time to time to satisfy claims for any Company
Liabilities sustained or required to be paid by any Buyer Party, and the
Holdback Amount shall be reduced by any amounts so collected.
(d) Any Buyer Party shall be entitled to control, contest and defend
(through counsel reasonably acceptable to the Majority Sellers) any Proceeding
instituted by any third party (any such third-party Proceeding being referred to
as a "Third-Party Claim") in respect of which such Buyer Party may seek to
satisfy a claim pursuant to this Section 13.5; provided that the Buyer Party
shall defend such Third-Party Claim in good faith. So long as the Buyer Party is
conducting the defense of the Third-Party Claim in accordance with this Section
13.5, each of the Principal Sellers shall be entitled, at its own cost and
expense, to participate in, but not control, such contest and defense and be
represented by attorneys of its or their own choosing. In the event that the
Buyer Party elects not to control, contest and defend such Third-Party Claim,
the Majority Sellers may control, contest and defend such Third-Party Claim and
shall be entitled to reimbursement from the Holdback Amount of their reasonable
costs and expenses in connection therewith; provided, however, that the Buyer
Party may assume within a reasonable period of time under the circumstances its
right to control, contest and defend such Third-Party Claim upon providing
written notice thereof to the Majority Sellers. If the Buyer Party assumes the
defense of any Third-Party Claim, no compromise or settlement of such claims may
be effected by the Buyer Party without the Majority Sellers' consent (which
consent shall not be unreasonably withheld or delayed), unless such compromise
or settlement does not involve any monetary damages to which the Holdback Amount
is applied by the Buyer. If the Majority Sellers assume the defense of any
Third-Party Claim, no compromise or settlement of such claims may be effected by
the Majority Sellers without the Buyer's consent (which consent shall not be
unreasonably withheld or delayed), unless (i) there is no finding or admission
of any violation of Law and no material adverse effect on any other claims that
have theretofore been made against a Buyer Party and (ii) the sole relief
provided is monetary damages that are paid in full from the Holdback Amount,
and, in the case of a Third-Party Claim relating to Taxes, such resolution is
not reasonably likely to adversely affect the Buyer Parties in any taxable
period ending after the Closing Date. Notwithstanding anything to the contrary
contained herein, in the event of any Third-Party Claim for which the Buyer
Parties are entitled to the satisfaction or payment of any claim under this
Section 13.5, the Buyer may choose to be fully responsible for such Third-Party
Claim, in which case, no Seller shall have any right to control, contest or
defend such Third-Party Claim. Each of the Principal Sellers shall be entitled,
at its own cost and expense, to participate in, but not control, and be
represented by attorneys, advisors and professionals of its or their own
choosing with respect to any matter to which the Buyer Parties are making a
claim that the Holdback Amount applies. In connection with any such claim, the
Buyer shall promptly provide copies to the Principal Sellers of all material
notices, pleadings, filings, correspondence and other submissions and reports
and shall give each of the Principal Sellers a reasonable opportunity (at such
Principal Seller's own expense) to comment in advance, if practicable, on such
documents and on any submissions the Buyer intends to deliver or submit to the
appropriate Governmental Entity prior to said submission (it being understood
that no Buyer Party shall be obligated hereby or otherwise to accept any such
comments or to otherwise
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reflect any of them in any such documents or submissions). The Principal Sellers
may, at their own expense, hire their own consultants, attorneys or other
professionals in connection with any such claim, and the Buyer shall reasonably
cooperate with the Principal Sellers' in connection therewith, including (upon
reasonable prior notice) making relevant employees of the Company and its
Subsidiaries reasonably available to the Principal Sellers in connection with
such claim. Notwithstanding the above, the Principal Sellers shall not
unreasonably interfere with the Buyer's business or operations or any matter
before the Governmental Entity.
(e) The Holdback Amount shall not be available to the Buyer Parties
for any Environmental Damages for a particular Environmental Site, unless the
amount of the Environmental Damages for such Environmental Site exceeds the
Environmental Reserved Amount for such Environmental Site, and then only for the
amount of Environmental Damages incurred above the Environmental Reserved Amount
for such Environmental Site. To the extent that all or any portion of the
then-remaining Environmental Reserved Amount for any particular Environmental
Site exceeds the amount required to be reserved on the books and records of the
Company in accordance with GAAP with respect to such Environmental Site (such
excess hereinafter referred to as "Excess Environmental Reserves"), then, prior
to utilizing the Holdback Amount for any other Environmental Site, the Buyer
Parties shall first be required to apply the Excess Environmental Reserves in
their entirety (in addition to any Environmental Reserved Amount for such other
Environmental Site).
(f) The Holdback Amount shall not be available to the Buyer Parties
for any Litigation Damages for a particular Specified Proceeding, unless the
amount of the Litigation Damages for such Specified Proceeding exceeds the
Litigation Reserved Amount for such Specified Proceeding, and then only for the
amount of Litigation Damages incurred above the Litigation Reserved Amount for
such Specified Proceeding. To the extent that all or any portion of the
then-remaining Litigation Reserved Amount for any particular Specified
Proceeding exceeds the amount required to be reserved on the books and records
of the Company in accordance with GAAP with respect to such Specified Proceeding
(such excess hereinafter referred to as "Excess Litigation Reserves"), then,
prior to utilizing the Holdback Amount for any other Specified Proceeding, the
Buyer Parties shall first be required to apply the Excess Litigation Reserves in
their entirety (in addition to any Litigation Reserved Amount for such other
Specified Proceeding).
(g) Subject to the applicable terms, conditions and limitations of
this Section 13.5, the Buyer Parties shall be entitled to collect from the
Holdback Amount with respect to 90% of the amount of Environmental Damages,
Litigation Damages or (to the extent resulting from a Third-Party Claim) Breach
Damages, as the case may be, and the Buyer Parties shall be solely responsible
for 10% of the amount of such Environmental Damages, Litigation Damages or (to
the extent resulting from a Third-Party Claim) Breach Damages, with no right or
remedy against the Sellers with respect to such 10% amount. The Holdback Amount
shall not be available to the Buyer Parties for any Breach Damages unless the
aggregate amount of all such Breach Damages exceeds One Million Dollars
($1,000,000), in which case the Buyer Parties shall be entitled to collect from
the Holdback Amount the entire amount of such Breach Damages (up to the Holdback
Amount).
(h) With respect to Environmental Damages (subject to Section
13.5(g)):
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(i) Notwithstanding anything to the contrary set forth in this
Section 13.5, the Buyer shall have the right to control the management of
an investigation or Remediation of a release of Hazardous Materials at any
Environmental Site; provided, however, that such activities by the Buyer
shall be performed at a reasonable cost, in accordance with applicable Laws
and consistent with good environmental consulting and engineering
practices. The Buyer shall promptly provide copies to the Principal Sellers
of all material notices, correspondence, draft reports, submissions, work
plans, and final reports and shall give each of the Principal Sellers a
reasonable opportunity (at such Principal Seller's own expense) to comment
in advance, if practicable, on such documents and on any submissions the
Buyer intends to deliver or submit to the appropriate Governmental Entity
prior to said submission (it being understood that no Buyer Party shall be
obligated hereby or otherwise to accept any such comments or to otherwise
reflect any of them in any such documents or submissions). The Principal
Sellers may, at their own expense, hire their own consultants, attorneys or
other professionals to monitor the investigation and remediation, including
any field work undertaken by the Buyer, and the Buyer shall reasonably
cooperate with the Principal Sellers' monitoring, including (upon
reasonable prior notice) making relevant employees of the Company and its
Subsidiaries available in connection with, and shall promptly provide the
Principal Sellers with the results of, all such field work. Notwithstanding
the above, the Principal Sellers shall not unreasonably interfere with the
Buyer's business or operations or the performance of any such investigation
or remediation.
(ii) With respect to cleanup costs (or other reasonably
associated expenses), the Buyer Parties may only seek reimbursement from
the Holdback Amount to the extent that: (A) cleanup (or other reasonably
associated activities) of the Hazardous Materials is required by a
Governmental Entity under an applicable Environmental Law; (B) the
Remediation Standards that must be met in order to satisfy the requirements
of the applicable Environmental Law or Governmental Entity as of the date
of any cleanup (or other reasonably associated activity) are those
Remediation Standards that would be the least stringent Remediation
Standards that would be applicable given the use of the Environmental Site
as of the day before the Closing Date; and (C) such cleanup (or other
reasonably associated activity) is conducted using cost effective methods
for investigation, removal, remediation and/or containment consistent with
applicable Environmental Law or the requirements of a Governmental Entity.
To the extent that the cleanup costs incurred by the Buyer Parties in
connection with a cleanup to which the Holdback Amount applies do not
satisfy the conditions set forth in this Section 13.5(h), then the Buyer
Parties shall be entitled to reimbursement from the Holdback Amount for
only such amount of such cleanup costs that they would have incurred if
they had conducted the cleanup in accordance with the conditions of this
Section 13.5(h).
(iii) Notwithstanding anything to the contrary herein, the
Sellers and the Buyer agree that: (A) if the cost of cleanup or correcting
a non-compliance with the Environmental Law for an Environmental Site is
increased after the Closing Date due to an act or omission after the
Closing by any Person other than the Sellers or their Affiliates (which
shall not include the Company or its Subsidiaries) or any of their
respective employees or representatives or any Governmental Entity, the
Buyer Parties shall not be entitled to reimbursement from the Holdback
Amount for any such increase
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in costs incurred; (B) the Buyer Parties shall not be entitled to
reimbursement from the Holdback Amount for any capital improvements and
repairs and modifications to capital improvements associated with any
Environmental Site, other than to the extent required in connection with
the cleanup of environmental conditions (or other reasonably associated
activities) at an Environmental Site that existed on the Closing Date; and
(C) the Buyer shall not be entitled to reimbursement from the Holdback
Amount to the extent any costs are incurred due to any change related to
the Environmental Site that the Company owned, operated, occupied or leased
as of the Closing Date, or arising from the closure or sale of a facility
or business, the construction of new structures or equipment, a
modification to existing structures or equipment, the excavation or
movement of soil, or a change in use of the facilities from manufacturing
to any other use.
(i) On the fourth anniversary of the Closing Date, an amount equal to
(i) the Holdback Amount, less (ii) the sum of (A) any amounts previously paid
out of the Holdback Amount in respect of any Company Liabilities as provided in
this Section 13.5; (B) an estimate (mutually agreed upon by the Buyer and the
Majority Sellers) of any amounts (collectively, the "Holdback Reserve Amount")
necessary to satisfy pending claims by any Buyer Party in respect of any (x)
Company Liabilities (other than Environmental Damages, Litigation Damages and
Breach Damages resulting from a breach of the representations and warranties set
forth in Section 5.16(g)(iii) ( "Section 5.16(g)(iii) Damages")) for which
notice was received by the Principal Sellers on or prior to the second
anniversary of the Closing Date and (y) Environmental Damages, Litigation
Damages and/or Section 5.16(g)(iii) Damages for which notice was received by the
Principal Sellers on or prior to the fourth anniversary of the Closing Date, and
(C) the aggregate amounts released from the Holdback Amount prior to such date
and paid to the Sellers pursuant to Section 13.5(d) or 13.5(j) shall be paid by
the Buyer to the Sellers pro rata, in accordance with each Seller's
Proportionate Interest, in accordance with written instructions from the
Majority Sellers, out of the then remaining Holdback Amount (if any), without
any interest or other income accruing or earned thereon; provided, however, that
promptly after the satisfaction or resolution of all pending claims for which
notice was received by the Principal Sellers prior to, with respect to Company
Liabilities (other than Environmental Damages and Litigation Damages and Section
5.16(g)(iii) Damages), the second anniversary of the Closing Date and, with
respect to Environmental Damages, Litigation Damages and/or Section 5.16(g)(iii)
Damages, the fourth anniversary of the Closing Date, the then remaining portion
of the Holdback Reserve Amount (less the amount paid to satisfy such claims
pursuant to this Section 13.5) shall be paid by the Buyer to the Sellers pro
rata, in accordance with each Seller's Proportionate Interest, in accordance
with written instructions from the Majority Sellers), without any interest or
other income accruing or earned thereon. In the event that the Buyer and the
Majority Sellers are unable to mutually agree upon the amount of the Holdback
Reserve Amount, then, pending resolution of such dispute, the Buyer shall be
entitled to continue to reserve and retain (in accordance with the terms and
provisions of this Section 13.5) the Buyer's estimate of the Holdback Reserve
Amount.
(j) Notwithstanding anything herein to the contrary, any damages,
awards, judgments, settlements or other recoveries ("Recoveries") actually
received by any Buyer Party (including, from and after the Closing, the Company
or any Subsidiary) from time to time after the Closing arising from or relating
to the Proceedings listed in Section 13.5(j) of the Disclosure Schedule (or any
other Proceedings or claims resulting from the same underlying facts or
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occurrences) (the "Insurance Proceedings") shall be for the credit of the
Sellers and, promptly upon receipt of any such Recoveries by the Buyer Parties,
a portion of the Holdback Amount equal to the amount of such Recoveries (net of
costs and expenses incurred by the Buyer Parties in connection obtaining such
Recoveries) shall be released and paid by the Buyer to the Sellers pro rata, in
accordance with each Seller's Proportionate Interest, in accordance with written
instructions from the Majority Sellers); provided, however, that in no event
shall the aggregate amount released to the Sellers pursuant to this Section
13.5(j) exceed the then remaining balance of the Holdback Amount. In connection
therewith, the Buyer shall cause the Company or the appropriate Subsidiary to
use its commercially reasonable efforts to perfect and preserve any potential
claim under such Insurance Proceedings.
SECTION 14. MISCELLANEOUS
14.1. Construction.
Within this Agreement and all other documents required to consummate
the transactions contemplated herein, including, without limitation, the Seller
Closing Documents, the Company Closing Documents and the Buyer Closing
Documents, the singular shall include the plural and the plural shall include
the singular, and any gender shall include all other genders, all as the meaning
and the context of this Agreement shall require. Unless otherwise specified,
references to section numbers contained herein shall mean the applicable section
of this Agreement and references to exhibits and schedules (including sections
of the Seller Disclosure Schedule and the Disclosure Schedule) shall mean the
applicable exhibits and schedules to this Agreement (and the applicable sections
of the Seller Disclosure Schedule and the Disclosure Schedule). The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. All
references in this Agreement to "dollars" or "$" shall mean United States
dollars.
14.2. Further Assurances.
Each party hereto shall use its commercially reasonable efforts to
comply with all requirements imposed hereby on such party and to cause the
transactions contemplated herein to be consummated as contemplated herein and
shall, from time to time and without further consideration, either before or
after the Closing, execute such further instruments and take such other actions
as any other party hereto shall reasonably request in order to fulfill its
obligations under this Agreement and to effectuate the purposes of this
Agreement and to provide for the orderly and efficient transition to the Buyer
of the ownership of the Purchased Securities. Each party shall promptly notify
the other parties of any event or circumstance that results in a breach or
non-compliance with any of the terms, conditions, representations, warranties or
agreements of any of the parties to this Agreement.
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14.3. Costs and Expenses.
Except as otherwise expressly provided herein, each party shall bear
its own expenses in connection herewith. The Company shall be responsible for
the payment of half, and the Buyer shall be responsible for the payment of the
other half, of all HSR Fees.
14.4. Notices.
All notices or other communications permitted or required under this
Agreement shall be in writing and shall be sufficiently given if and when hand
delivered or sent by facsimile to the Persons set forth below or if sent by
documented overnight delivery service or certified mail, postage prepaid, return
receipt requested, addressed as set forth below or to such other Person or
Persons and/or at such other address or addresses (or facsimile number) as shall
be furnished in writing by any party hereto to the others. Any such notice or
communication shall be deemed to have been given as of the date received, in the
case of personal delivery, or on the date shown on the receipt or confirmation
therefor in all other cases.
To the Buyer (or the Company after the Closing), at:
Jarden Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To any Principal Seller, at the address of such Principal Seller
listed below:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Wachovia Bank National Association
Wachovia Securities
Special Situations Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wachovia Securities, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Banc of America Strategic Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Bank of America Securities LLC
Hearst Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To any Seller other than a Principal Seller, at such Seller's address
set forth in the books and records of the Company.
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With copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company (prior to the Closing), at:
American Household, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
14.5. Assignment and Benefit.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and permitted assigns.
Neither this Agreement, nor any of the rights hereunder or thereunder, may be
assigned by any party, nor may any party delegate any obligations hereunder or
thereunder, without the written consent of the other party hereto or thereto;
provided, however, that (i) the Buyer may assign its rights hereunder to one or
more of its wholly owned subsidiaries or, from and after the Closing, to the
Buyer's lenders; provided, that no such assignment shall relieve the Buyer of
any of its obligations hereunder, and (ii) following the Closing Date, any
Seller may assign its rights, but not its obligations, hereunder. Any assignment
or attempted assignment other than in accordance with this Section 14.5(a) shall
be void ab initio.
(b) Except as otherwise provided in Sections 7.13, 12.2, 13.2 and
13.5, this Agreement shall not be construed as giving any Person, other than the
parties hereto and their permitted successors, heirs and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any of
the provisions herein contained, this Agreement and all provisions and
conditions hereof being intended to be, and being, for the sole and exclusive
benefit of such parties, and permitted successors, heirs and assigns and for the
benefit of no other Person. The parties hereto expressly intend the provisions
of Sections 7.13, 12.2, 13.2 and 13.5 to confer a benefit upon and be
enforceable by, as third party beneficiaries of this Agreement, the third
persons referred to in, or intended to be benefited by, such provisions.
-71-
14.6. Amendment, Modification and Waiver.
The parties hereto may amend or modify, or may waive any right or
obligation under, this Agreement in any respect, provided that any such
amendment, modification or waiver shall be in writing and executed by the Buyer,
the Company and the Majority Sellers. The waiver of any breach of any provision
of this Agreement shall not constitute or operate as a waiver of any other
breach of such provision or of any other provision hereof, nor shall any failure
to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
14.7. Governing Law; Consent to Jurisdiction.
This Agreement is made pursuant to, and shall be construed and
enforced in accordance with, the laws of the State of Delaware (and United
States federal Law, to the extent applicable), irrespective of the principal
place of business, residence or domicile of the parties hereto, and without
giving effect to otherwise applicable principles of conflicts of law. Any legal
action, suit or Proceeding arising out of or relating to this Agreement (other
than in connection with the dispute resolved by the Resolving Accountant
pursuant to Section 3.2) shall be instituted in any federal court or in any
state court in the State of New York, and each party waives any objection which
such party may now or hereafter have to the laying of the venue of any such
action, suit or Proceeding, and irrevocably submits to the jurisdiction of any
such court. Any and all service of process and any other notice in any such
action, suit or Proceeding shall be effective against any party if given as
provided herein. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any other manner permitted by Law.
14.8. Section Headings and Defined Terms.
The Section headings contained herein are for reference purposes only
and shall not in any way affect the meaning and interpretation of this
Agreement. Except as otherwise indicated, all agreements defined herein refer to
the same as from time to time amended or supplemented or the terms thereof
waived or modified in accordance herewith and therewith.
14.9. Severability.
The invalidity or unenforceability of any particular provision, or
part of any provision, of this Agreement shall not affect the other provisions
or parts hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions or parts were omitted.
14.10. Effectiveness; Counterparts.
(a) This Agreement shall become effective, and shall be binding upon
the Buyer, the Company and the Sellers, at such time as it shall have been
executed and delivered by the Buyer, the Company and the Principal Sellers.
(b) This Agreement and the other documents required to consummate the
transactions contemplated herein may be executed in one or more counterparts,
each of which shall be deemed an original (including facsimile signatures), and
any Person may become a party
-72-
hereto by executing a counterpart hereof, but all of such counterparts together
shall be deemed to be one and the same instrument. The parties hereto may
deliver this Agreement and the other documents required to consummate the
transactions contemplated herein by telecopier machine/facsimile and each party
shall be permitted to rely upon the signatures so transmitted to the same extent
and effect as if they were original signatures.
14.11. Entire Agreement.
This Agreement, together with the Disclosure Schedule, the Seller
Disclosure Schedule and the exhibits hereto, all of which shall be incorporated
herein, the Seller Closing Documents, the Company Closing Documents and the
Buyer Closing Documents and the Confidentiality Agreement, and the schedules and
certificates referred to herein or delivered pursuant hereto, constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings with respect to
such subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Securities Purchase Agreement as of the date first above written.
COMPANY:
--------
AMERICAN HOUSEHOLD, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
BUYER:
------
JARDEN CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
SELLERS:
--------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
WACHOVIA BANK NATIONAL ASSOCIATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Managing Director
BANC OF AMERICA STRATEGIC
SOLUTIONS, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
1st TRUST & CO. FBO, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ROLLOVER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
1st TRUST & CO. FBO, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇ SEP
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
▇▇▇▇ ▇. ▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Title: Trustee