EXHIBIT B
STOCK PURCHASE AGREEMENT
BY AND AMONG
YORK INSURANCE HOLDINGS, INC.,
YORK INSURANCE ACQUISITION, INC.
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
DATED AS OF DECEMBER 23, 2005
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of December 23,
2005 by and among York Insurance Holdings, Inc., a Delaware corporation
("Parent"), York Insurance Acquisition, Inc., a Delaware corporation ("Buyer"
and together with Parent, "Buyer Parties"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an
individual ("Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller holds 500 common shares (the "MacArthur Shares") of York
Insurance Services Group, Inc., a Delaware corporation ("York"), which common
shares constitute fifty percent of the outstanding Equity Securities of York,
and desires to (i) sell such number of the MacArthur Shares to Buyer equal to
the MacArthur Sale Amount (the "MacArthur Sale") and (ii) contribute such number
of the MacArthur Shares (the "MacArthur Contribution Shares") to Parent equal to
the MacArthur Contribution Amount (the "MacArthur Contribution" and, together
with the MacArthur Sale, the "MacArthur Transactions");
WHEREAS, the parties hereto intend that the MacArthur Contribution and the
Parent Capitalization will be effective simultaneously at the Closing and that
the MacArthur Contribution, taken together with the simultaneous Parent
Capitalization and the MacArthur Sale, shall qualify as a transaction described
in Section 351(a) and Section 351(b) of the Code;
WHEREAS, Bexil Corporation, a Maryland corporation ("Bexil"), holds 500
common shares of York (the "Bexil Shares"), which common shares constitute fifty
percent of the outstanding Equity Securities of York, and Bexil and Buyer
executed, simultaneously with the execution of this Agreement, a stock purchase
agreement (the "Bexil Purchase Agreement"), pursuant to which Bexil is agreeing
to sell all of the Bexil Shares to Buyer (the "Bexil Sale" and, together with
the MacArthur Transactions, the "Transactions"); and
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the meanings set forth in Article X hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, agreements, terms and conditions
contained herein, the parties hereto do hereby agree as follows:
ARTICLE I
SALE; CLOSING
1.1 Sale and Contribution of the Equity Securities.
(a) Upon the terms and subject to the conditions contained herein, on the
Closing Date, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase from Seller, all of the MacArthur Shares (less the
MacArthur Contribution Shares) free and clear of all Encumbrances.
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(b) Upon the terms and subject to the conditions contained herein, on the
Closing Date, Seller shall contribute, assign, transfer, convey and deliver to
Parent, and Parent shall acquire and accept from Seller, all of the MacArthur
Contribution Shares free and clear of all Encumbrances.
1.2 Purchase Price for the Equity Securities. Upon the terms and subject to
the conditions contained herein, as consideration for the acquisition of all of
the MacArthur Shares, Buyer Parties shall pay the following (collectively, the
"Purchase Price"):
(a) to Seller, an amount in cash equal to the Net Consideration Per Share
multiplied by an amount equal to (i) the number of MacArthur Shares less (ii)
the number of the MacArthur Contribution Shares;
(b) to Seller as consideration for the MacArthur Contribution, the Rollover
Shares; and
(c) to the Escrow Agent, an amount in cash equal to the Escrow Amount
pursuant to the terms of the escrow agreement, dated as of the Closing Date (the
"Escrow Agreement"), among Parent, Seller and the Escrow Agent, substantially in
the form of Exhibit A hereto.
1.3 Closing Costs; Transfer Taxes and Fees. Seller shall be responsible for
any documentary and transfer Taxes and any sales, use or other Taxes imposed on
the transfer of the MacArthur Shares provided hereunder and any deficiency,
interest or penalty asserted with respect thereto and shall timely file all Tax
Returns with respect to such transfer Taxes.
1.4 The Closing. The Closing of the transactions provided for in this
Agreement shall be held in New York, New York at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. on the first business
day following satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their nature must be satisfied on the date
of the Closing) or at such other time and place as the parties may mutually
agree (the "Closing Date").
1.5 Conveyances and Deliveries at the Closing.
(a) Deliveries by Seller. On the Closing Date, Seller shall deliver or
cause to be delivered to Buyer Parties the following:
(i) the Ancillary Agreements to which Seller is a party;
(ii) stock certificates representing the MacArthur Shares, duly
endorsed in blank or accompanied by duly executed stock transfer powers;
(iii) a termination agreement duly executed by each of Seller and York
pursuant to which the stockholders agreement, dated as of January 18, 2002,
among Seller, York and Bexil (the "Existing Stockholders Agreement") is
terminated;
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(iv) an affidavit, stating, under penalty of perjury, as to
non-foreign status of Seller as required by Section 1445(b)(2) of the Code
and any clearance certificate or similar document(s) that may be required
by any state taxing authority in order to relieve Buyer Parties of any
obligation to withhold any portion of the Purchase Price;
(v) all Approvals from third parties as are required in order for
Seller to consummate the transactions contemplated hereby;
(vi) the certificates of Seller referred to in Section 7.1(e);
(vii) the Closing Purchase Price Certificate and the Transaction
Expense Statement delivered in accordance with Section 5.9;
(viii) a duly executed payoff letter from Wachovia Bank in form and
substance reasonably satisfactory to Buyer Parties evidencing the repayment
of all amounts owing under the Wachovia Agreement, the termination of the
Wachovia Agreement and the release of all Encumbrances granted to Wachovia
Bank by York and its Subsidiaries, which shall be delivered against payment
to Wachovia Bank by any Buyer Party or York;
(ix) a properly executed IRS Form W-9 from Seller; and
(x) such other documents and instruments as are required pursuant to
this Agreement or as may reasonably be requested by any Buyer Party or
their counsel.
(b) Deliveries by Buyer Parties. On the Closing Date, Buyer Parties shall
deliver or cause to be delivered the following:
(i) the Ancillary Agreements to which any Buyer Party is a party;
(ii) stock certificates representing the Rollover Shares duly endorsed
in blank or accompanied by duly executed stock transfer powers;
(iii) resolutions adopted by the board of directors of each Buyer
Party approving this Agreement, the Ancillary Agreements to which the
respective Buyer Party is a party and the transactions contemplated hereby
or thereby, certified by each Buyer Party's corporate secretary;
(iv) all Approvals from third parties as are required in order for
each Buyer Party to consummate the transactions contemplated hereby;
(v) the payment required by Section 1.2(a);
(vi) the payment to the Escrow Agent required by Section 1.2(c);
(vii) the certificates of each Buyer Party referred to in Section
7.2(f); and
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(viii) such other documents and instruments as are required pursuant
to this Agreement or as may reasonably be requested by Seller or its
counsel.
(c) Form of Documents. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably and mutually satisfactory to Buyer Parties and Seller.
1.6 Withholding Rights. Buyer Parties shall be entitled to deduct and
withhold from the Purchase Price and any other amounts otherwise payable
pursuant to this Agreement such amounts as Buyer Parties are required to deduct
and withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign Tax Law. To the extent that amounts are so
withheld by Buyer Parties, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Person in respect of which
such deduction and withholding was made. As of the date of this Agreement,
assuming Seller provides a properly executed IRS Form W-9 and the materials
specified in Section 1.5(a)(iv) on the Closing Date, the parties hereto believe
that Buyer Parties are not required under the Code or any provision of state,
local or foreign Tax Law currently in effect to deduct or withhold any amounts
with respect to the making of the payment of the Purchase Price or any other
amounts otherwise payable to Seller pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES
Buyer Parties, jointly and severally, represent and warrant to Seller as of
the date hereof and as of the Closing Date, except as to any representation or
warranty that specifically relates to another date or another period, in which
case such representation or warranty shall relate to such other date or other
period, as follows:
2.1 Organization and Related Matters(a). Each Buyer Party is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware. Each Buyer Party has all necessary corporate power and
authority to carry on its business as it is now being conducted. Each Buyer
Party has the necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the Ancillary Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The certificate of incorporation and bylaws of Parent are attached
hereto as Exhibit C, and the certificate of incorporation and bylaws of Buyer
are attached hereto as Exhibit D, respectively.
2.2 Authorization; Consents and Approvals. The execution, delivery and
performance of this Agreement and the Ancillary Agreements by each Buyer Party
and each other agreement, document, instrument or certificate contemplated
hereby or thereby or to be executed in connection with the consummation of the
transactions contemplated hereby or thereby by such Buyer Party, and the
consummation by such Buyer Party of the transactions contemplated hereby and
thereby, have been duly and validly authorized by the board of directors of each
Buyer Party and by all other necessary corporate action on the part of such
Buyer Party. This Agreement has been, and each of the Ancillary Agreements, upon
execution thereof by each Buyer Party, shall be, duly and validly executed and
delivered by such Buyer
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Party and constitutes or will constitute the legal, valid and binding
obligation of such Buyer Party, enforceable against such Buyer Party in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or
hereafter in effect and equitable principles relating to or limiting creditors'
rights and remedies generally. No filing or registration with, no notice to and
no permit, authorization, consent or approval of any third party or any
Governmental Entity is necessary for the consummation by the Buyer Parties of
the transactions contemplated hereby that has not been obtained by the Buyer
Parties, except for filings and registrations pursuant to the HSR Act.
2.3 No Conflicts. The execution, delivery and performance of this Agreement
and each of the Ancillary Agreements to which it is a party by each Buyer Party,
the consummation of the transactions contemplated hereby and thereby, and
compliance with the terms hereof and thereof, will not conflict with, violate
the provisions of, or constitute a breach or default, whether upon lapse of time
and/or the occurrence of any act or event or otherwise, or require any Approval
under (a) the charter documents or by-laws of a Buyer Party, (b) any Law to
which a Buyer Party or its property or assets is subject or (c) any Contract to
which a Buyer Party is a party.
2.4 No Brokers or Finders. No agent, broker, finder, financial advisor or
investment or commercial banker, or other Person or firm engaged by or acting on
behalf of the Buyer Parties or their respective Affiliates or any of their
respective partners, directors, officers, employees or agents in connection with
the negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any broker's or
finder's or similar fees or other commissions as a result of this Agreement or
such transactions.
2.5 Legal Proceedings. There is no Order or Action pending or, to the
Knowledge of any Buyer Party, threatened against any Buyer Party or any
director, officer or employee of such Buyer Party (in his or her capacity as
such) that individually or when aggregated with one or more other Orders or
Actions has had or might reasonably be expected to have a material adverse
effect on any Buyer Party's ability to perform this Agreement.
2.6 Operation of Buyer Parties. Each Buyer Party was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement and the
Bexil Purchase Agreement, has engaged in no other business activities and has
conducted its operations only as contemplated in this Agreement and the Bexil
Purchase Agreement.
2.7 Financing. Buyer Parties have entered into binding commitments from
debt and equity financing sources that, if funded, would be sufficient for the
payment of the Purchase Price and the amount payable to Bexil under the Bexil
Purchase Agreement. Such commitments (the "Commitment Letters") are attached
hereto as Schedule 2.7.
2.8 Investment Representations.
(a) Buyer Parties are acquiring the MacArthur Shares for their own account
for investment and not with a view to the sale or distribution thereof or with
any present intention of selling or distributing any thereof. Buyer Parties
understand and acknowledge that
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the MacArthur Shares are not registered under the Securities Act of 1933,
as amended (the "Securities Act"), and will not be transferable except (i)
pursuant to an effective registration statement under the Securities Act or (ii)
if the proposed transfer is exempt from registration or qualification under the
Securities Act and applicable state securities Laws.
(b) Buyer Parties understand that no public market now exists or may in the
future exist for any of the MacArthur Shares.
(c) Buyer Parties have sufficient knowledge and experience so that they are
capable of evaluating the risks and merits of their acquisition of the MacArthur
Shares and Buyer Parties are able to bear the risk of loss of their entire
investment in the MacArthur Shares.
2.9 Rollover Shares. The Rollover Shares shall, as of the Closing as
contemplated hereby, be validly issued, fully paid and nonassessable, issued in
conformity with applicable Law and shall be owned of record and beneficially by
Seller, free and clear of any and all Encumbrances, except for those
Encumbrances arising under the Stockholders Agreement and any Encumbrances
created by Seller.
2.10 Capitalization of Parent.
Prior to the Closing, Parent shall have one share of common stock issued
and outstanding. At the Closing, the Rollover Shares and the Parent
Capitalization will be contributed to the Parent in exchange for all shares of
Parent Company Stock to be outstanding immediately following the Closing, except
for one share of Parent Common Stock. Upon the Closing, (i) the shares of common
stock of Parent (the "Parent Common Stock") issued pursuant to the Parent
Capitalization and the MacArthur Contribution shall be the only shares of
capital stock of Parent that will be issued and outstanding and (ii) a minimum
of 500,000 shares of Parent Common Stock shall be issued and outstanding. Except
pursuant to the Stockholders Agreement, a stock option plan or similar plan to
be adopted by the board of directors of Parent substantially containing the
terms set forth in Exhibit F-1 attached hereto (the "Stock Option Plan"), the
stockholders agreement to be entered into by each of the Executives
substantially in the form of Exhibit E hereto (the "Executive Stockholders
Agreement") or any other stockholders agreement to be entered into by any Person
(other than the Executives and MacArthur) acquiring shares of Parent Common
Stock as part of the Parent Capitalization (all of such agreements,
collectively, the "Other Management Stockholders Agreement"), Parent will not as
of the Closing Date have any outstanding commitments to issue or sell any Equity
Securities. As of the Closing, the Rollover Shares, as a percentage of the
issued and outstanding shares of Parent Common Stock, shall equal the percentage
obtained by dividing the (i) MacArthur Contribution Amount by (ii) the sum of
the Parent Capitalization Shares and the MacArthur Contribution Amount. There
are no outstanding obligations, written or otherwise, of Parent to repurchase,
redeem or otherwise acquire any Equity Securities held by any stockholder of
Parent, except under the Stockholders Agreement, any Contracts to be entered
into pursuant to the Stock Option Plan, the Other Management Stockholders
Agreement and the Executive Stockholders Agreement. Except for the Stockholders
Agreement, any Contracts to be entered into pursuant to the Stock Option Plan,
the Other Management Stockholders Agreement and the Executive Stockholders
Agreement, Parent is not a party to any voting trust or other Contract with
respect to voting, redemption, sale, transfer or other disposition of its Equity
Securities.
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2.11 Assets of Buyer Parties. Prior to the Closing, neither Parent nor
Buyer shall have any assets or liabilities, except (i) pursuant to this
Agreement, the Ancillary Agreements, the Bexil Purchase Agreement, the
Commitment Letters and any definitive agreements entered into in relation to the
Commitment Letters or the financing of the Transactions by the Buyer Parties and
(ii) with respect to Parent, as may be related to the ownership by Parent of all
of the issued and outstanding Equity Securities of Buyer.
2.12 Disclosure. No representation or warranty of Buyer Parties contained
in this Agreement or any of the Ancillary Agreements, and no statement contained
in any document, certificate or schedule furnished or to be furnished by or on
behalf of a Buyer Party to Seller pursuant to this Agreement or any of the
Ancillary Agreements contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING YORK
Seller represents and warrants to Buyer Parties as of the date hereof and
as of the Closing Date, except as to any representation or warranty that
specifically relates to another date or another period, in which case such
representation or warranty shall relate to such other date or other period, and
except as set forth in the Seller Disclosure Schedule, as follows:
3.1 Organization, Subsidiaries, etc. York is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Each Subsidiary of York has been duly organized, and is validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, as the case may be. Section 3.1 of the Seller Disclosure Schedule
correctly sets forth each jurisdiction in which York and each of its
Subsidiaries is or is required to be qualified or licensed to do business as a
foreign Person, except where failure to be so qualified or licensed is not and
will not be material to York and its Subsidiaries, taken as a whole. Each of
York and its Subsidiaries has all necessary corporate or other power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted and is duly qualified or licensed to do business as
a foreign corporation in good standing in all jurisdictions in which the
character or the location of the assets owned or leased by York or any of its
Subsidiaries or the nature of the business being conducted by York or any of its
Subsidiaries requires licensing or qualification, except where the failure to be
so qualified or licensed is not material to York and its Subsidiaries taken as a
whole. Section 3.1 of the Seller Disclosure Schedule correctly lists the current
directors and executive officers (or Persons performing similar functions) of
York and each of its Subsidiaries. True, correct and complete copies of the
charter documents and by-laws of York and its Subsidiaries as in effect on the
date hereof and on the Closing Date have been made available to Buyer Parties.
Each of York and its Subsidiaries is not and is not required to be a registered
or reporting company under the Exchange Act. Neither York nor its Subsidiaries
has any direct or indirect stock or other equity or ownership interest (whether
controlling or not) in any corporation, association, partnership, joint venture
or other entity (other than York's Subsidiaries).
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3.2 Authorization. York has all requisite power, authority and legal
capacity to execute and deliver each agreement, document, instrument or
certificate to which it is a party as contemplated by this Agreement or the
Ancillary Agreements or to be executed in connection with the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements,
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of each agreement, document, instrument or
certificate to be delivered by York pursuant hereto have been duly and validly
authorized by the board of directors of York and by all other necessary
corporate action on the part of York. Upon execution and delivery by York, each
agreement, document, instrument or certificate to which York is a party shall
constitute the legal, valid and binding obligation of York, enforceable against
York in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar Laws and
equitable principles relating to or limiting creditors' rights generally.
3.3 Absence of Certain Changes or Events. Since May 31, 2005, except as set
forth on Section 3.3 of the Disclosure Schedule, York and its Subsidiaries have
been operated in the ordinary course of business consistent with past practice.
Without limiting the generality of the foregoing, with respect to York or its
Subsidiaries there has not been any:
(a) Actual or, to the Knowledge of York, threatened adverse change (other
than as a result of the Stockholder Distributions) in the financial condition,
working capital, stockholders' equity, assets, liabilities, obligations,
reserves, revenues, income, earnings, or prospects of York or any of its
Subsidiaries that would have a Material Adverse Effect on York;
(b) Change in accounting methods, principles or practices by York or any of
its Subsidiaries affecting its assets or its liabilities (other than changes
required by GAAP or Law after the date of this Agreement);
(c) Material revaluation by York or its Subsidiaries of any assets,
including without limitation, writing down the value of goodwill or inventory or
writing off notes or accounts receivable, other than as required by GAAP in the
ordinary course of business;
(d) Material Destruction or Loss (whether or not covered by insurance)
affecting York's or its Subsidiaries' assets;
(e) Cancellation of any Funded Debt or waiver, compromise or release of any
right or claim of York or its Subsidiaries relating to its activities,
properties or other assets, other than in the ordinary course of business;
(f) Other than Stockholder Distributions made in compliance with applicable
Law prior to the date hereof in the amount of $25,341,382 and additional
Stockholder Distributions made in compliance with applicable Law and reflected
on the Closing Purchase Price Certificate, declaration, setting aside, or
payment of dividends or distributions by York or any of its Subsidiaries in
respect of the Equity Securities of York or any of its Subsidiaries or any
redemption, repurchase or other acquisition of any outstanding Equity Securities
of York or any of its Subsidiaries;
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(g) Except as required to comply with any applicable Law or contract,
agreement or Plan in effect on the date of the Agreement and described on
Schedule 3.14(a) of the Seller Disclosure Schedule or Year-End Compensation
Arrangements, increase in the rate of compensation payable or to become payable
to any director, officer or other employee of York or its Subsidiaries or any
consultant, Representative or agent of York or its Subsidiaries, including
without limitation, the making of any loan to, or the payment, grant or accrual
of any bonus, incentive compensation, service award or other similar benefit to,
any such Person, or the addition to, modification of, or contribution to any
Plan, employment arrangement, or employment practice described in Section
3.14(a) of the Seller Disclosure Schedule;
(h) Change in employee relations which has or is reasonably likely to have
a Material Adverse Effect on York and its Subsidiaries or the relationships
between the employees of York and its Subsidiaries and the management of York
and its Subsidiaries;
(i) Amendment, cancellation or termination of any Material Agreement or
material Permit relating to York and its Subsidiaries or entry into any Material
Agreement or material Permit which is not in the ordinary course of business,
including without limitation, any employment or consulting agreements, other
than an expiration of a Material Agreement pursuant to its terms or the
execution of any amendment or agreement that was approved by Buyer Parties, such
approval not to be unreasonably withheld or delayed;
(j) Mortgage, pledge or other encumbrance of any assets of York and its
Subsidiaries, except for Permitted Liens or as approved by Buyer Parties, such
approval not to be unreasonably withheld or delayed;
(k) Acquisition of any material assets (other than Intellectual Property)
or sale, assignment, transfer, conveyance, lease or other disposal of any
material assets of York and its Subsidiaries other than sales of obsolete
equipment in the ordinary course of business;
(l) Incurrence of Funded Debt by York and its Subsidiaries for borrowed
money or commitment to borrow money entered into by York and its Subsidiaries,
or loans made or agreed to be made by York and its Subsidiaries, or Funded Debt
guaranteed by York and its Subsidiaries, other than borrowings under the
Wachovia Agreement to be used for the sole purposes of funding Stockholder
Distributions or general operating purposes;
(m) Payment, discharge or satisfaction of any liabilities or obligations of
York and its Subsidiaries other than the payment, discharge or satisfaction in
the ordinary course of business of liabilities and obligations set forth or
reserved for on the Interim Balance Sheet or incurred in the ordinary course of
business;
(n) Material capital expenditure by York or its Subsidiaries, the execution
of any lease (other than renewals or extensions of existing leases in the
ordinary course of business) by York or its Subsidiaries or the incurrence of
any obligation by York or its Subsidiaries to make any material capital
expenditure or execute any lease other than in the ordinary course;
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(o) Failure to pay or satisfy when due any liability or obligation of York
or its Subsidiaries after the expiration of any applicable grace periods unless
being disputed in good faith by York or any of its Subsidiaries;
(p) Failure of York and its Subsidiaries to operate diligently in a
reasonable commercial manner and in the ordinary course so as to keep available
to Buyer Parties the assets of York's and its Subsidiaries' businesses, the
services of York's and its Subsidiaries' employees and the assets and goodwill
of York's suppliers, customers, distributors and others having business
relations with them;
(q) Disposition, transfer, license, sale, abandonment or lapsing of any
Intellectual Property, except in the ordinary course of business;
(r) Disposition of any Intellectual Property Rights other than in the
ordinary course of business, or disclosure to any Person of any Intellectual
Property Rights not theretofore a matter of public knowledge other than pursuant
to a confidentiality agreement in the ordinary course of business;
(s) any other event or condition which in any one case or in the aggregate
has or might reasonably be expected to have a Material Adverse Effect on York;
(t) Payment from York or its Subsidiaries to or on behalf of any officer,
director, stockholder or employee of York or its Subsidiaries, pursuant to any
agreement between York or its Subsidiaries and any such Person or otherwise,
except as required to comply with any Law or any Contract, agreement or Plan in
effect on the date of this Agreement and described on Schedule 3.14(a) or
pursuant to Year-End Compensation Arrangements; or
(u) Agreement by York or its Subsidiaries to do any of the things described
in the preceding clauses (a) through (t) other than as expressly provided for
herein.
3.4 No Conflicts. Except as set forth in Section 3.4 of the Seller
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements or compliance by York with any of the
provisions hereof or thereof will not (a) violate the provisions of, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise), or result in the creation or vesting of any
payment or other right of any Person, under (i) the charter documents or by-laws
of York or any of its Subsidiaries, (ii) any Law or Order of any Governmental
Entity applicable to York or any of its Subsidiaries or by which any of the
properties or assets of York and its Subsidiaries are bound (provided that all
required regulatory Approvals are received as contemplated by Section 3.5) or
(iii) any material Agreement, material License or material Permit to which York
or any of its Subsidiaries is a party (including the Existing Stockholders
Agreement) or by which any of the properties or assets of York and its
Subsidiaries are bound or (b) result in the imposition of any Encumbrance
against any properties or assets of York or any of its Subsidiaries, except to
the extent such Encumbrance results from the acts of any Buyer Party.
3.5 Consents, etc. Section 3.5 of the Seller Disclosure Schedule lists all
Permits, Orders, Approvals of any Governmental Entity or any other Person, if
any, required to
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be obtained by York or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereunder. York has obtained all such Permits, Orders and Approvals
necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby except for filings and registrations to
be made pursuant to the HSR Act and to be effective on or prior to the Closing
Date.
3.6 Capitalization.
(a) Section 3.6(a) of the Seller Disclosure Schedule sets forth the number
and class of each of the authorized, issued and outstanding Equity Securities of
York and each of its Subsidiaries and a list of the holders of all such Equity
Securities of all classes. True, correct and complete copies of all documents
evidencing the rights of holders of each class of Equity Securities of York and
each of its Subsidiaries have been made available to Buyer Parties. On the date
hereof and on the Closing Date, all of such outstanding Equity Securities are
validly issued, fully paid and non-assessable, were issued in conformity with
applicable Law, and are owned of record and beneficially by the Persons listed
on Section 3.6(a) of the Seller Disclosure Schedule, free and clear of any and
all Encumbrances, except for those Encumbrances arising under the Existing
Stockholders Agreement.
(b) Except for the Existing Stockholders Agreement, York does not have any
outstanding commitments to issue or sell any Equity Securities, and no
securities or obligations evidencing any such right are outstanding. There are
no outstanding obligations, written or otherwise, of York to repurchase, redeem
or otherwise acquire any Equity Securities held by any stockholder of York,
except under the Existing Stockholders Agreement. Except for the Existing
Stockholders Agreement, York is not a party to any voting trust or other
Contract with respect to voting, redemption, sale, transfer or other disposition
of its Equity Securities.
(c) Section 3.6(c) of the Seller Disclosure Schedule sets forth a complete list
of the dates and amount of each Stockholder Distribution since the Reference
Balance Sheet Date through the date hereof.
3.7 Financial Statements.
(a) York has heretofore delivered to Buyer Parties (x) the audited
consolidated financial statements of York and its Subsidiaries for each of the
years ended December 31, 2002 through 2004, in each case including a balance
sheet as of such date and the related statements of income, stockholders' equity
and cash flows for each of the respective periods then ended (collectively, the
"Audited Financial Statements"), (y) the unaudited consolidated financial
statements of York and its Subsidiaries as of and for the five months ended May
31, 2005, in each case including a balance sheet as of such date and the related
statements of income, stockholders' equity and cash flows for the five month
period ended May 31, 2005 (collectively, the "Reference Financial Statements")
and (z) the unaudited consolidated financial statements of York and its
Subsidiaries as of and for each of the year-to-date periods ended June 30, 2005,
September 30, 2005, October 31, 2005 and November 30, 2005, respectively, in
each case including a balance sheet as of such date and the related statements
of income, stockholders' equity and cash flows for each of the respective
year-to-date and monthly
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periods then ended (collectively, the "Interim Financial Statements" and
together with the Audited Financial Statements and the Reference Financial
Statements, the "Financial Statements"). The Financial Statements (i) have been
prepared from the Books and Records of York, (ii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
and (iii) fairly present in all material respects the assets and liabilities
(including all reserves) and the financial condition, results of operations and
cash flows of York and its Subsidiaries as of the respective dates and for the
respective periods thereof, except that the Reference Financial Statements and
Interim Financial Statements (A) do not have footnotes as required by GAAP and
(B) are subject to normally recurring year-end adjustments that are not, in the
aggregate, material. The Audited Financial Statements have been examined by
Deloitte & Touche, LLP, independent certified public accountants, whose report
thereon is included with the Audited Financial Statements. York has not received
any notice from its independent auditors, and Seller otherwise does not have
Knowledge, of any matter that would be considered a "significant deficiency" or
"material weakness" (as such terms are defined in Auditing Standards No. 2
adopted by the Public Company Accounting Oversight Board) with respect to York's
internal control over financial reporting. Since December 31, 2004, there has
been no change in any of the significant accounting policies, practices or
procedures of York and its Subsidiaries, except as disclosed in the Financial
Statements. York has no debts, liabilities or obligations, whether accrued,
absolute, contingent or otherwise, whether currently due or to become due,
except those (i) set forth in the Financial Statements in the amounts set forth
therein, which have been paid or discharged as they have become due after the
expiration of any applicable grace periods, or are being disputed in good faith,
since the date thereof, or that consist of normal year-end reclassifications and
adjustments made in accordance with GAAP that are not, in the aggregate,
material or (ii) incurred since November 30, 2005 in the ordinary course of
business consistent with past practice and in amounts that are not material to
York and its Subsidiaries taken as a whole.
(b) The accounts receivable of York and its Subsidiaries shown in the
Financial Statements represent sales actually made or services actually rendered
by York in the ordinary course. The amount of such accounts receivable in the
Financial Statements reflects a reserve for uncollectible accounts which was
determined in accordance with GAAP and York's past practices and collection
experience. The reserves for such accounts receivable are sufficient based on
the past practices and experiences of York and its Subsidiaries relating to
their accounts receivable.
(c) Section 3.7(c) of the Seller Disclosure Schedule sets forth a complete
list of the Funded Debt as of May 31, 2005 and as of November 30, 2005,
including the balance of each item of Funded Debt as of May 31, 2005 and as of
November 30, 2005, respectively. York has made available to Buyer Parties all
Contracts and other documentation regarding such Funded Debt.
3.8 Government Authorizations and Compliance with Laws.
(a) Section 3.8(a) of the Seller Disclosure Schedule contains a complete
and accurate list of all Licenses and material Permits held by York, its
Subsidiaries and their employees. None of York, its Subsidiaries or any of their
employees is in Default, nor have they received any written notice of any claim
of Default with respect to any material Permits or
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material Licenses. Except as set forth in Section 3.8(a) of the Seller
Disclosure Schedule, each of York, its Subsidiaries and their employees hold all
Licenses and Permits necessary for the lawful conduct in all material respects
of the business of York and its Subsidiaries under and pursuant to, and are in
compliance in all material respects with, all applicable Laws of any
Governmental Entity having, asserting or claiming jurisdiction over either York,
its Subsidiaries or their employees or over any part of the operations of York
or any of its Subsidiaries. All material Permits and material Licenses are valid
and in full force and effect and no material Permit or material License is the
subject of a limitation, proceeding for suspension or revocation or similar
proceedings. All material Permits and material Licenses will remain in full
force and effect immediately after giving effect to the transactions
contemplated hereby and no notice or additional filings must be made in
connection therewith.
(b) Since the Acquisition Date, each of York, its Subsidiaries and their
employees have at all times been in compliance with all applicable Laws and
Orders and are not in violation of any such Laws and Orders, provided, however,
no representation and warranty is made in this sentence with respect to Permits
and Licenses. Since the Acquisition Date, no written notice has been received by
York, its Subsidiaries or any of their employees and no investigation or review
is pending or, to the Knowledge of York, threatened by any Governmental Entity
with respect to (i) any alleged violation by York, its Subsidiaries or any of
their employees of any Law or (ii) any alleged failure to have any Permit or
License required in connection with the operation of its business and are not in
violation of any Laws or requirements regarding such Permit or License. Neither
York, its Subsidiaries nor any of their employees has conducted any internal
investigation concerning any alleged violation of any Law applicable to York and
its Subsidiaries.
3.9 Tax Matters. Since the Acquisition Date:
(a) There have been properly completed and filed on a timely basis and in
correct form all Tax Returns required to be filed by any Taxpayer on or prior to
the date hereof. As of the time of filing, the foregoing Tax Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities, status, or other matters of the applicable Taxpayer(s) or any other
information required to be shown thereon.
(b) With respect to all amounts in respect of Taxes imposed on any Taxpayer
for which any such Taxpayer is or could be liable, whether to taxing authorities
(as, for example, under law) or to other persons or entities (as, for example,
under tax allocation agreements), with respect to all taxable periods or
portions of periods ending on or before the Closing Date, all applicable tax
laws and agreements have been fully complied with, and all such amounts required
to be collected or withheld, or paid to taxing authorities or others, on or
before the date hereof, have been collected, withheld or paid, as applicable.
(c) No issues have been raised (and are currently pending) by any taxing
authority in connection with any Tax Return of any Taxpayer. No waivers of
statutes of limitation with respect to any such Tax Returns have been given by
or requested from the applicable Taxpayer. Section 3.9(c) of the Seller
Disclosure Schedule sets forth (i) the taxable years of each Taxpayer as to
which the respective statutes of limitations with respect to Taxes have not
expired and (ii) with respect to such taxable years, those years for which
examinations have been completed, those years for which examinations
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are presently being conducted, those years for which examinations have not
been initiated, and those years for which required Tax Returns have not yet been
filed. Except to the extent shown on Section 3.9(c) of the Seller Disclosure
Schedule, all deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are fully reflected as a liability in the
financial statements of the applicable Taxpayer, or are being contested and an
adequate reserve therefor has been established and is reflected in the Financial
Statements. No Taxpayer has received written notice from any Governmental Entity
in a jurisdiction in which such entity does not file a Tax Return stating that
such entity is or may be subject to taxation by that jurisdiction.
(d) There are no liens for Taxes (other than for current Taxes not yet due
and payable) on any of the assets of the Taxpayers.
(e) No Taxpayer is a party to or bound by (nor will any such member of the
Taxpayer become a party to or bound by) any tax-indemnity, tax-sharing, or
tax-allocation agreement.
(f) None of the Taxpayers has any liability for the Taxes of any person
(other than York or York's Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state Law), as a transferee or successor,
by contract or otherwise.
(g) None of the Taxpayers' assets is property required to be treated as
being owned by any other person pursuant to the "safe harbor lease" provisions
of former Section 168(f)(8) of the Code.
(h) None of the Taxpayers' assets directly or indirectly secures any debt
the interest on which is tax-exempt under Section 103(a) of the Code.
(i) None of the Taxpayers' assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(j) No Taxpayer is a party to any agreement, contract, arrangement, or plan
that has resulted or would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code.
(k) No Seller is a person other than a United States person within the
meaning of the Code.
(l) None of the Taxpayers has been a party to a transaction that, as of the
date of this Agreement, constitutes a "listed transaction" for purposes of
Section 6011 of the Code and applicable Treasury Regulations thereunder (or a
similar provision of state Law). To the Knowledge of York, the Taxpayers have
disclosed on Section 3.9(l) of the Seller Disclosure Schedule all "reportable
transactions" within the meaning of Treasury Regulation Section 1.6011-4(b) (or
a similar provision of state Law) to which such Taxpayer has been a party.
(m) No Taxpayer has or has had a permanent establishment in any foreign
country, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
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(n) Each Taxpayer that is not a corporation has at all times been properly
classified for federal and applicable state income tax purposes as a
partnership, and not as an association or publicly traded partnership taxable as
a corporation. Except as set forth on Section 3.9(n) of the Seller Disclosure
Schedule, no Taxpayer is a party to any joint venture, partnership, limited
liability company agreement, or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(o) The Financial Statements reflect an adequate reserve for all material
Taxes payable by the Taxpayers for all taxable periods and portions thereof
accrued through the date of such financial statements. Since the date of the
Financial Statements, none of the Taxpayers has incurred a liability for Taxes
outside the ordinary course of business. The unpaid Taxes of the Taxpayers do
not exceed the reserve for tax liability (excluding any reserve for deferred
Taxes established to reflect timing differences between book and tax income) set
forth or included in the Financial Statements.
(p) York is the common parent of the affiliated group within the meaning of
Section 1504(a) of the Code that includes each Subsidiary of York that is a
corporation.
(q) The Taxpayers will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the Closing
Date, (ii) intercompany transaction, (iii) installment sale or open transaction
disposition made on or prior to the Closing Date or (iv) prepaid amount received
on or prior to the Closing Date.
(r) No Taxpayer nor any of its Affiliates or predecessors by merger or
consolidation has within the past three (3) years been a party to a transaction
intended to qualify under Section 355 of the Code or under so much of Section
356 of the Code as relates to Section 355 of the Code.
3.10 Title to and Condition of Properties; Absence of Liens and
Encumbrances, etc.
(a) Except as set forth on Section 3.10(a) of the Seller Disclosure
Schedule, York and its Subsidiaries have good and marketable title to each of
the items of tangible personal property reflected on the Interim Balance Sheet
(except as sold or disposed of subsequent to the date thereof in the ordinary
course of business consistent with past practice), free and clear of all
Encumbrances, except for Permitted Liens, and all such property and assets
conform in all material respects to all applicable Laws relating to their use
and operation.
(b) Section 3.10(b) of the Seller Disclosure Schedule designates any
leasehold interests in real property and includes an address for each such
leasehold interest in real property (the "Leased Property") and all leases
pursuant to which York or any of its Subsidiaries leases such Leased Property
(the "Real Property Leases"). York does not hold fee simple title to any real
property. The Real Property Leases constitute all leases, subleases or other
occupancy agreements pursuant to which York or any of its Subsidiaries occupies
or uses the Leased Property. Each of York and its Subsidiaries, as applicable,
has good and valid leasehold interest
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in the Leased Property, free and clear of any and all Encumbrances except
Permitted Liens and any Encumbrances which would not permit the termination of
the Lease therefor by the lessor. With respect to each such parcel of Leased
Property, (1) there are no pending or, to the Knowledge of York, threatened
Actions (including, without limitation, condemnation proceedings or any other
matter affecting the current or currently proposed use, occupancy or value)
relating to such Leased Property or any portion thereof, (2) none of York, any
of its Subsidiaries or, to the Knowledge of York, any third party has entered
into any sublease, license, option, right, concession or other agreement or
arrangement, written or oral, granting to any Person the right to use or occupy
such Leased Property or any portion thereof or interest therein and (3) neither
York nor any of its Subsidiaries has received written notice of any pending or
threatened special assessment relating to such Leased Property and, to the
Knowledge of York, there is no pending or threatened special assessment relating
thereto. Each Leased Property is supplied with utilities necessary for the
operation of such Leased Property and abuts on or has direct, permanent
vehicular access to a public road.
(c) Except as set forth on Section 3.10(c) of the Seller Disclosure
Schedule, each of York or its Subsidiaries has good and marketable title (or
valid leasehold interests in all properties held under lease) to all its
property and assets (real and personal, tangible and intangible), free and clear
of all Encumbrances, except for Permitted Liens and Encumbrances incurred
pursuant to the Wachovia Agreement, and all such property and assets comply in
all material respects to all applicable Laws relating to their use and
operation.
(d) The assets of York and its Subsidiaries constitute all of the tangible
and intangible assets that are required to conduct their businesses in a manner,
and at levels of activity and productivity, consistent with the manner and
levels at which such businesses are currently conducted by York and its
Subsidiaries, and constitute all of the assets actually used by York and its
Subsidiaries in the conduct of their businesses.
3.11 Material Agreements.
(a) Section 3.11(a) of the Seller Disclosure Schedule lists every Material
Agreement to which York or any of its Subsidiaries is a party or by which York
or any of its Subsidiaries or any of York's or its Subsidiaries' properties or
assets (real, personal or mixed, tangible or intangible) is bound. Unless
otherwise noted on Section 3.11(a) of the Seller Disclosure Schedule, each such
agreement was entered into in the ordinary course of business. As used herein,
the term "Material Agreement" shall mean any Contract to which York or any of
its Subsidiaries is a party or by which York or any its Subsidiaries or any of
York's or any of its Subsidiaries' properties or assets (real, personal or
mixed, tangible or intangible) is bound, which:
(i) obligates any party thereto after the date hereof to make aggregate
payments of more than $100,000;
(ii) has an unexpired term as of the date hereof in excess of twelve (12)
months;
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(iii) is a Real Property Lease obligating York or a Subsidiary thereof to
make aggregate future payments in excess of $100,000;
(iv) is a management service, consulting, commission or any other similar
type contract;
(v) is a license of Intellectual Property to York or its Subsidiaries other
than click-wrap, shrink-wrap and commercial off-the-shelf software purchased by
or licensed to York or any of its Subsidiaries;
(vi) contains any provision restricting the transfer of any asset (other
than restrictions on the assignment of contracts) or creating any other
Encumbrance other than Permitted Liens on any such asset;
(vii) provides for the extension of credit, other than the extension of
credit to customers in the form of invoicing for shipped products or services in
the ordinary course of business, or is otherwise a source of financing for the
operation of the business or indebtedness of York or any of its Subsidiaries;
(viii) provides for a guaranty or indemnity by York or any of its
Subsidiaries (other than standard customary form warranties and indemnifications
contained in York's and its Subsidiaries' license agreements and standard
customary form warranties and indemnifications provided in connection with
York's and its Subsidiaries' products and services);
(ix) grants a power of attorney, agency or similar authority to another
Person that will be outstanding as of the Closing Date;
(x) contains a right of first refusal;
(xi) contains a right or obligation of or to any stockholder or any
director, officer, Affiliate or Associate of York or its Subsidiaries;
(xii) constitutes an employment agreement or a collective bargaining
agreement or provides for severance or other similar benefits to any officer,
director or employee;
(xiii) involves (A) a customer or group of related customers, or a supplier
or group of related suppliers, whose business accounts for more than $250,000 of
York's collective revenues or expenses, respectively, for the fiscal year ended
December 31, 2004, or (B) AIG;
(xiv) represents a Contract the loss or termination of which could
reasonably be expected to have a Material Adverse Effect on York;
(xv) contains any provision pursuant to which York or any of its
Subsidiaries (or any successor) will be obligated to make any payment or provide
any benefit or service to any Person as a result of the consummation of the
transactions
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contemplated hereby (either alone, upon
the occurrence of an act or event, the lapse of time or any combination
thereof);
(xvi) is a reseller, distributor, agency or similar type agreement
involving at least $50,000 in payments during a calendar year; or
(xvii) was not made in the ordinary course of business and has a value
(alone and not together with all other such Contracts of York and its
Subsidiaries) in excess of $200,000.
(b) Except as set forth on Section 3.11(b) of the Seller Disclosure
Schedule, no breach or default, alleged breach or default, or event which would
(with the passage of time, notice or both) constitute a breach or default under
any Material Agreement by York or its Subsidiaries or, to the Knowledge of York,
any other party or obligor with respect thereto, has occurred or, as a result of
this Agreement, performance hereof or consummation of the transactions
contemplated hereby or otherwise, will occur. Except as set forth on Section
3.11(b) of the Seller Disclosure Schedule, consummation of the transactions
contemplated by this Agreement will not (and will not give any Person a right
to) terminate or modify any rights of, or accelerate or augment any obligation
of, York and its Subsidiaries under any Material Agreement or result in the
creation of any Encumbrances thereunder. Each Material Agreement is valid and
binding in accordance with its terms. There are no agreements or options to sell
or lease any of the properties or assets (real, personal or mixed, tangible or
intangible) of York and its Subsidiaries except for sales of obsolete equipment
in the ordinary course of business. York has made available to Buyer Parties
true and complete copies of each Material Agreement, including all amendments
and supplements thereto. Except as set forth on Section 3.11(b) of the Seller
Disclosure Schedule, none of the Material Agreements obligates York or its
Subsidiaries to provide any Person with contractual terms as favorable as or
more favorable than terms offered to any other Person.
(c) Except as set forth in Section 3.11(c) of the Seller Disclosure
Schedule, York is not subject to or bound by any charter, by-law, Encumbrance,
Permit, Contract, Order, or any other restriction of any kind or nature which
contains a covenant not to compete binding on York or any of its Subsidiaries
with respect to its current businesses or would otherwise restrict or limit
(including as to manner or place) the ability of York or any of its Subsidiaries
to conduct its business or the ability of Buyer Parties to operate the business
after the Closing.
3.12 Principal Customer Accounts and Suppliers. Section 3.12 of the Seller
Disclosure Schedule lists the twenty-five largest accounts with customers and
ten largest suppliers of York and its Subsidiaries, based upon dollar volume of
business with York and its Subsidiaries during the fiscal year ended December
31, 2004 and the volume of business with each such customer account or supplier.
Between December 31, 2004 and the date hereof, no such customer (including,
without limitation, AIG) or supplier has suspended, terminated or materially
reduced its business with York and its Subsidiaries, or indicated its intent to
suspend, terminate or materially reduce its business with York and its
Subsidiaries. Since the date hereof, (i) no such customer (other than AIG) or
supplier shall have suspended, terminated or reduced its business with York and
its Subsidiaries, or indicated its intent to suspend, terminate or reduce its
business with York and its Subsidiaries which would have a Material Adverse
Effect on York
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and (ii) AIG shall not have suspended, terminated or materially
reduced its business with York and its Subsidiaries, or indicated its intent to
suspend, terminate or materially reduce its business with York and its
Subsidiaries. To the Knowledge of York, no such action is being considered, and
no facts or circumstances exist that might reasonably cause such action to be
considered, by any such customer (including, without limitation, AIG) or
supplier.
3.13 Litigation. Except as set forth in Section 3.13 of the Seller
Disclosure Schedule, there is no Order or Action pending or, to the Knowledge of
York, threatened (a) against York, its Subsidiaries or their respective
directors or officers as such or affecting any of York's or its Subsidiaries'
properties or assets (real, personal or mixed, tangible or intangible), which
would have a material adverse effect on York and its Subsidiaries, (b) against
Seller in its capacity as a stockholder of York, (c) which seeks to prohibit,
restrict or delay consummation of the transactions contemplated by this
Agreement or any of the conditions to consummation of such transactions or (d)
in which York or its Subsidiaries is a plaintiff and is material to York and its
Subsidiaries taken as a whole. Neither York nor any of its Subsidiaries is in
Default with respect to or subject to any Order, and there are no material
unsatisfied judgments against York or any of its Subsidiaries.
3.14 Employee Benefit Plans.
(a) York has made available to Buyer Parties copies of each material
"employee benefit plan", as defined in Section 3(3) of ERISA, each material
employment, severance or similar contract, plan arrangement or policy and each
other material written plan or arrangement providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by York or any
ERISA Affiliate and covers any current or former employee, director or
consultant (or any dependent or beneficiary thereof) or any current or former
director or independent contractor of York or any of its Subsidiaries (and, if
applicable, related trust or funding agreements or insurance policies) and all
amendments thereto and written interpretations thereof have been made available
to Buyer Parties together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) and Form 990, if applicable,
prepared in connection with any such plan or trust. Such plans are referred to
collectively herein as the "Plans." Section 3.14(a) of the Seller Disclosure
Schedule contains a correct and complete list identifying each Plan.
(b) None of York, any ERISA Affiliate or any predecessor thereof sponsors,
maintains or contributes to, or has in the past sponsored, maintained or
contributed to, any Plan subject to Title IV of ERISA.
(c) None of York, any ERISA Affiliate or any predecessor thereof
contributes to, or has in the past contributed to, any multiemployer plan, as
defined in Section 3(37) of ERISA.
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(d) Each Plan that is intended to be qualified under Section 401(a) of the
Code is so qualified and, to the Knowledge of York, no fact or circumstance
exists giving rise to a material likelihood that such Plan would not be treated
as so qualified by the IRS. Each Plan has been maintained in all material
respects in compliance with its terms and with the requirements prescribed by
all applicable Laws (including but not limited to ERISA and the Code).
(e) Neither York nor any of its Subsidiaries has any current or projected
liability in respect of post-employment or post-retirement health or medical or
life insurance benefits with respect to current or former employees, directors
or consultants, except as required to avoid excise tax under Section 4980B of
the Code.
(f) Except as set forth on Section 3.14(f) of the Seller Disclosure
Schedule, no current or former employee, director or consultant of York or any
of its Subsidiaries will become entitled to any bonus, retirement, severance,
job security or similar benefit or any accelerated or enhanced payment or
benefit as a result of the transactions contemplated by this Agreement. (g)
There is no contract, plan or arrangement (written or otherwise) covering any
current or former employee or director of York or any of its Subsidiaries that,
individually or collectively, would reasonably be expected to give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
(h) There have been no prohibited transactions (within the meaning of
Section 406 of ERISA or 4975 of the Code) with respect to any Plan. No fiduciary
(within the meaning of Section 3(21) of ERISA) has any material liability for
breach of fiduciary duty or for any other failure to act or comply in connection
with the administration or investment of the assets of any such Plan. There have
been no acts or omissions by any person with respect to any Plan that have given
rise to, or could reasonably be expected to give rise, to any material liability
under Section 502 of ERISA.
(i) Neither York nor any of its Subsidiaries maintains or otherwise has any
liability with respect to any deferred compensation, excess benefit or other
non-qualified supplemental retirement plan, program or arrangements, except
under the EAR Plan. No "leased employee" (within the meaning of Section 414(n)
of the Code), performs any material services for York or any of its
Subsidiaries. Neither York nor any of its Subsidiaries has any material
liability, whether absolute or contingent, including any obligations under any
Plan, with respect to any misclassification of a Person performing services for
York or any of its Subsidiaries as an independent contractor rather than as an
employee.
(j) Section 3.14(j) of the Seller Disclosure Schedule contains a true and
complete list of all EARs outstanding as of the date hereof.
3.15 Insurance. York has, and at all times since the Acquisition Date, has
had, insurance policies in full force and effect with reputable insurers,
providing for coverage as may be required by applicable Law and which is
reasonable and customary (for Persons in similar businesses as York) for the
operation of York and its Subsidiaries businesses as to both amount and scope.
Section 3.15 of the Seller Disclosure Schedule contains a complete and accurate
list of all policies or binders of York's and its Subsidiaries' current
insurance coverage,
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including bonds. No such policies are subject to retroactive
premium adjustments except as expressly noted in such policies. Neither York nor
any of its Subsidiaries is in Default under any such policy. York and its
Subsidiaries have timely filed claims with their insurers with respect to all
material matters and occurrences for which it believes it has coverage. There
are no outstanding unpaid premiums except in the ordinary course of business and
within the two (2) years prior to the date hereof, except as set forth in
Section 3.15 of the Seller Disclosure Schedule, neither York nor its
Subsidiaries has received any notice from any insurer or agent of any intent to
cancel or not so renew any insurance policy maintained by York or its
Subsidiaries and there are no outstanding performance bonds covering or issued
for the benefit of York and its Subsidiaries.
3.16 Intellectual Property.
(a) Set forth on Section 3.16(a) of the Seller Disclosure Schedule is a
list of all (i) issued patents and pending patent applications, (ii) trademark
and service ▇▇▇▇ registrations and applications for registration thereof, (iii)
copyright registrations and applications for registration thereof and (iv)
internet domain name registrations, in each case that are owned by York or any
of its Subsidiaries (the "Registered Intellectual Property"). Neither York nor
any of its Subsidiaries has received written notice of any pending or threatened
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand that challenges the legality, validity, enforceability, registration, use
or ownership of any item of Registered Intellectual Property.
(b) York and its Subsidiaries own, free and clear of all Encumbrances, or
have valid licenses to use, all Intellectual Property necessary for the
operation of the business of York as it is currently conducted.
(c) To the Knowledge of York, no other Person is infringing upon,
misappropriating or otherwise violating any Intellectual Property of York or any
of its Subsidiaries. To the Knowledge of York, its current business practices
and use of Intellectual Property do not infringe, violate or constitute an
unauthorized use or misappropriation of any patent, copyright, trademark, trade
secret or other similar right of any Person. Neither York nor its Subsidiaries
has received any written charge, complaint, claim, demand, or notice alleging
that York's or its Subsidiaries' current business practices are infringing upon,
violating or misappropriating any such rights, and to the Knowledge of York,
there is no basis for any such claim.
(d) No present or former employee or subcontractor of York or its
Subsidiaries has any right, title, or interest, directly or indirectly, in whole
or in part, in any Intellectual Property owned or used by York or its
Subsidiaries.
(e) All Intellectual Property owned by York or any of its Subsidiaries that
is material to the operation of York and for which confidentiality is required
has been maintained in confidence in accordance with procedures that are
reasonably adequate for their protection, and in accordance with procedures
customarily used in the industry to protect rights of like importance.
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3.17 Books and Records. York and its Subsidiaries have made and kept (and
given Buyer Parties access to) Books and Records and accounts, which, in
reasonable detail, accurately and fairly reflect in all material respects the
activities, transactions and dispositions of assets of York and its
Subsidiaries. The minute books of York and its Subsidiaries accurately reflect
all material actions and proceedings taken to date by the board of directors (or
the Person or Persons performing similar functions), stockholders, members and
committees (other than the compensation committee of York's board of directors,
which does not keep minutes of its meetings) of York and its Subsidiaries, as
applicable, and such minute books contain true and complete copies of the
charter, by-laws and other charter documents of York and its Subsidiaries and
all related amendments. The Equity Security record books of York reflect
accurately all transactions in its capital stock or other Equity Security of all
classes. Neither York nor any of its Subsidiaries has engaged in any material
transaction, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained Books and Records of York and its Subsidiaries.
3.18 Environmental Matters.
(a) Except as set forth in Section 3.18(a) of the Seller Disclosure
Schedule, (i) neither York nor any of its Subsidiaries has generated, used,
transported, treated, stored, released or disposed of, and has not knowingly
suffered or permitted any other Person to generate, use, transport, treat,
store, release or dispose of any Hazardous Substance in violation of any Laws,
(ii) there has not been any generation, use, transportation, treatment, storage,
release or disposal of any Hazardous Substance by York or any of its
Subsidiaries in connection with the operation of its business or the use of any
property or facility which has created or might reasonably be expected to create
any material liability under any Laws or which would require reporting to or
notification of any Governmental Entity, (iii) to the Knowledge of York, there
has not been any generation, use, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the operation of any
former property or facility of York and its Subsidiaries or any nearby or
adjacent properties or facilities, which has created or might reasonably be
expected to create any material liability under any Laws or which would require
reporting to or notification of any Governmental Entity, (iv) to the Knowledge
of York, no asbestos or polychlorinated biphenyl or underground storage tank is
contained in or located at any property or facility of York and its Subsidiaries
and (v) to the Knowledge of York, any Hazardous Substance handled or dealt with
in any way in connection with York and its Subsidiaries has been and is being
handled or dealt with in all respects in material compliance with applicable
Laws.
(b) Neither York nor its Subsidiaries has (i) received notice that it is a
potentially responsible party for a federal or state environmental cleanup site
or for corrective action under CERCLA or any other applicable Law, (ii)
submitted or been required to submit any notice pursuant to Section 103(c) of
CERCLA, (iii) received any written request for information in connection with
any federal or state environmental cleanup site, or (iv) been required to
undertake any prospective or remedial action or clean-up action of any kind at
the request of any Governmental Entity, or at the request of any other Person
relating to any applicable environmental Law.
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(c) The businesses of York and its Subsidiaries have been and are being
conducted in material compliance with all applicable federal, state and local
environmental Laws.
3.19 Certain Interests.
(a) No Affiliate of York, no officer, director or employee of York or its
Subsidiaries, and no Associate of any thereof, has any material interest in any
property or assets used by York or any of its Subsidiaries for their respective
businesses; no such Person except as set forth in Schedule 3.19(a) of the Seller
Disclosure Schedule is indebted or otherwise obligated to York or any of its
Subsidiaries; neither York nor any of its Subsidiaries is indebted or otherwise
obligated to any such Person, except for amounts due under normal compensation
arrangements applicable to all employees generally as to salary or reimbursement
of ordinary business expenses not unusual in amount or significance. Except as
set forth in Schedule 3.19(a) of the Seller Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not (either
alone, or upon the occurrence of any act or event, or with the lapse of time, or
both) result in any benefit or payment (severance or other) arising or becoming
due from York and its Subsidiaries or any of their Affiliates or their
successors or assigns (including Buyer Parties or any of their respective
Affiliates) of any thereof to any Person (including York, its Subsidiaries, any
Affiliate of York or any Associate of any thereof).
(b) No officer, director, employee, Associate or Affiliate of York either
(i) is, (ii) directly or indirectly, has a financial interest in or (iii) is a
director, officer or employee of, any Person which is a client of, supplier to,
customer of or competitor of York and its Subsidiaries.
3.20 Related Party Transactions.
(a) Neither York nor any of its Subsidiaries has or will have engaged
during the three (3) years prior to the Closing Date in any transaction with any
Affiliate or any Associate thereof other than York or any of its Subsidiaries.
Other than to York or any of its Subsidiaries, York and its Subsidiaries do not
have any liabilities or obligations to any Affiliate or any Associate thereof
and none of such Affiliates or any Associate thereof has any obligations to York
or any of its Subsidiaries.
(b) None of York, Seller or any of their Affiliates, directors or officers
owns any material direct or indirect interest of any kind in (other than passive
investments in mutual funds or other institutional investment vehicles), or
controls, or is a director or officer of, or has the right to participate
materially in the profits of (other than passive investments in mutual funds or
other institutional investment vehicles), any Person that is (A) a competitor,
supplier, customer, landlord, tenant, creditor or debtor of York and its
Subsidiaries or (B) engaged in a business substantially related to the business
of York and its Subsidiaries.
3.21 Prohibited Payments. To the Knowledge of York, neither York nor any of
its Subsidiaries has, directly or indirectly, (a) made, requested or demanded
any bribes, kickbacks or other payments, directly or indirectly, to or from any
Person or any Representative thereof, to obtain favorable treatment in securing
business or otherwise to obtain special
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concessions for York or any of its Subsidiaries, (b) made any bribes,
kickbacks or other payments, directly or indirectly, to or for the benefit of
any Governmental Entity or political party or any official, employee or agent
thereof, for the purpose of affecting his or her action or the action of the
Governmental Entity or political party that he or she represents to obtain
favorable treatment in securing business or to obtain special concessions for
York or any of its Subsidiaries, (c) established or maintained any unrecorded
fund or asset for any purpose or knowingly made any false entries on the Books
and Records of York or any of its Subsidiaries for any reason, (d) paid or
delivered any fee, commission or any other sum of money or item of property,
however characterized, to any finder, agent, government official or other party,
in the United States or any other country, which in any manner relates to the
assets, businesses or operations of York or any of its Subsidiaries that York or
any of its Subsidiaries, as applicable, knows or has reason to believe to have
been illegal under any federal, state or local Laws (or any rules or regulations
thereunder) of the United States or any other country having jurisdiction or (e)
otherwise used funds of York or any of its Subsidiaries for any illegal purpose,
including, without limitation, any violation of the Foreign Corrupt Practices
Act of the United States.
3.22 No Brokers or Finders. Except as set forth in Section 3.22 of the
Seller Disclosure Schedule, no agent, broker, finder or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of York or its
Subsidiaries or Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or finder's or similar fees or
other commissions as a result of this Agreement or such transactions.
3.23 Accuracy of Information. None of the information supplied or to be
supplied by or on behalf of York or its Subsidiaries by an authorized
representative of Seller, York or its Subsidiaries (a) to any Person for
inclusion in any document or application filed with any Governmental Entity
having jurisdiction over or in connection with the transactions contemplated by
this Agreement or (b) to Buyer Parties or their Representatives in connection
with this Agreement, the transactions contemplated by this Agreement or the
negotiations leading up to this Agreement, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If any of such material information at any time subsequent to
delivery and prior to the Closing Date becomes untrue or misleading in any
material respect, York will promptly notify Buyer Parties in writing of such
fact and the reason for such change, but such notification shall not constitute
by itself an admission of the inaccuracy of any representation and warranty or
breach of any covenant hereunder. All documents required to be filed by York and
its Subsidiaries with any Governmental Entity in connection with this Agreement
or the transactions contemplated by this Agreement comply in all material
respects with the provisions of applicable Law.
3.24 Accounting Internal Controls. York and its Subsidiaries have records
that reflect their material transactions since their dates of formation, and
since the Acquisition Date have maintained internal accounting controls
sufficient to provide reasonable assurance that in all material respects (a)
transactions are executed in accordance with managements' general or specific
authorizations, (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP, and to maintain accountability
for assets,
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(c) access to assets is permitted only in accordance with York's or its
Subsidiaries' managements' general or specific authorizations and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and reasonably appropriate action is taken with respect to
any differences. Such records, to the extent they contain important information
that is not easily and readily available elsewhere, have been duplicated and, to
the Knowledge of York, such duplicates are stored safely and securely pursuant
to reasonable procedures and techniques utilized by companies of comparable size
in similar lines of business.
3.25 Banking Relationships. Section 3.25 of the Seller Disclosure Schedule
sets forth a complete and accurate description of all arrangements that York and
its Subsidiaries have with any banks, savings and loan associations or other
financial institutions providing for checking accounts, safe deposit boxes,
borrowing arrangements, and certificates of deposit or otherwise, indicating in
each case account numbers, if applicable, and the Person or Persons authorized
to act or sign on behalf of York and its Subsidiaries in respect of any of the
foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
Seller hereby represents and warrants to Buyer Parties as of the date
hereof and as of the Closing Date, except as to any representation or warranty
that specifically relates to another date or another period, in which case such
representation or warranty shall relate to such other date or other period, and
except as set forth in the Seller Disclosure Schedule, as follows:
4.1 Authorization. Seller has all requisite power, authority and legal
capacity to execute and deliver this Agreement, the Ancillary Agreements and
each other agreement, document, instrument or certificate contemplated hereby or
thereby to be executed by him in connection with the consummation of the
transactions contemplated by the Agreement and the Ancillary Agreements, and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary Agreements by
Seller and the consummation by Seller of the transactions contemplated hereby
and thereby are duly and validly authorized by Seller. This Agreement has been,
and each of the Ancillary Agreements to which he is a party shall be, duly
executed and delivered by Seller and constitutes or will constitute the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar Laws and equitable
principles relating to or limiting creditors' rights generally.
4.2 No Conflicts. Except as set forth in Section 4.2 of the Seller
Disclosure Schedule, the execution and delivery of this Agreement and each of
the Ancillary Agreements to which Seller is a party, the consummation of the
transactions contemplated hereby and thereby or compliance by Seller with any of
the provisions hereof or thereof will not violate the provisions of, or
constitute a breach or default whether upon lapse of time and/or the occurrence
of any act or event or otherwise, or result in the creation or vesting of any
payment or other right of any Person, under (a) any Law or Order of any
Governmental Entity applicable to Seller or by which any of the properties or
assets of Seller are bound or (b) any material Contract or Permit to which
Seller is a party or by which any of the properties or assets of Seller are
bound.
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4.3 Ownership and Transfer of Shares. Seller is the record and beneficial
owner of 500 Shares, free and clear of any and all Encumbrances, except those
Encumbrances arising under the Existing Stockholders Agreement. Seller has the
power and authority to sell, transfer, assign and deliver such Shares as
provided in this Agreement, and such delivery will convey to Buyer Parties good
and marketable title to such Shares, free and clear of any and all Encumbrances.
Other than the Existing Stockholders Agreement, Seller is not a party to any
Contract with respect to any Equity Securities of York or its Subsidiaries,
including, but not limited to, any Contract that could require Seller to sell,
transfer, or otherwise dispose of any of his Shares other than pursuant to this
Agreement.
4.4 Consents, etc. Except as set forth on Section 4.4 of the Seller
Disclosure Schedule, there are no Permits, Orders or Approvals of any
Governmental Entity or any other Person required to be obtained by Seller in
order to execute and deliver this Agreement and consummate the transactions
contemplated hereunder. Except as set forth on Section 4.4 of the Seller
Disclosure Schedule, Seller has obtained all such Permits, Orders and Approvals
necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, except for filings and registrations
pursuant to the HSR Act.
4.5 Litigation. There is no Order or Action pending or, to the Knowledge of
Seller, threatened that seeks to prohibit or restrain the ability of Seller to
enter into this Agreement or consummate the transactions contemplated hereby.
4.6 No Brokers or Finders. Except for ▇▇▇▇▇▇▇ Associates, the fees and
expenses of which are the responsibility of Seller, no Person has acted,
directly or indirectly, as a broker, finder or financial advisor for Seller in
connection with the transactions contemplated by this Agreement and no Person is
entitled to any fee or commission or like payment in respect thereof.
ARTICLE V
COVENANTS AND AGREEMENTS OF THE PARTIES
5.1 Expenses.
(a) Subject to the provisions of Article VIII hereof and Section 1.3,
Seller shall pay all of his Expenses (other than the Company Transaction
Expenses). In addition, Seller shall pay one quarter of the aggregate of any HSR
Act filing fees paid with respect to the transactions contemplated hereby and by
the Bexil Purchase Agreement.
(b) Subject to the provisions of Article VIII hereof and Section 1.3, Buyer
Parties shall pay all of the Expenses incurred by Buyer Parties and their
respective Affiliates. In addition, Buyer Parties shall pay one half of the
aggregate of any HSR Act filing fees paid with respect to the transactions
contemplated hereby and by the Bexil Purchase Agreement.
5.2 Publicity.
(a) No party hereto shall issue any press release or other public
statement, with respect to the existence of this Agreement or the transactions
contemplated hereby, except
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as may be required by Law (if so required, such press release or public
statement shall be made only after consultation among the parties hereto), or as
consented to by the parties.
(b) Each party hereto agrees that the terms of this Agreement shall not be
disclosed or otherwise made available to the public and that copies of this
Agreement shall not be publicly filed or otherwise made available to the public,
except where such disclosure, availability or filing is required by applicable
Law and only to the extent required by such Law.
5.3 Additional Agreements; Approvals; Consents. Upon the terms and subject
to the conditions set forth in this Agreement, each party hereto agrees, both
before and after the Closing, to use commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to confirm and further the effectiveness of, in the most expeditious
manner practicable, the transactions contemplated by this Agreement. The actions
contemplated by this Section 5.3 shall include, but are not limited to: (a) the
procurement of any Approvals from all Governmental Entities and the making of
any necessary registrations or filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an Approval from, or to avoid an action or proceeding by, any Governmental
Entity; (b) giving all notices to, and making all registrations and filings with
third parties, including without limitation submissions of information requested
by Governmental Entities; provided, however, that neither Seller nor any of
Buyer Parties shall be required to make any payments, commence litigation or
agree to modifications of the terms thereof in order to obtain any such waivers
or Approvals; (c) obtaining all necessary Permits required to be obtained under
applicable Laws; (d) the defense of any Actions, whether judicial or
administrative, challenging this Agreement and the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; (e) the execution and delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated by
this Agreement; and (f) the fulfillment of all conditions to this Agreement for
which the party is responsible. Nothing in this Section 5.3 shall be considered
a waiver by a party of any condition to the other parties' obligation to
consummate the transactions contemplated hereby, including, without limitation,
obligations under any section of this Agreement to have obtained all necessary
Approvals of any Governmental Entities or third parties prior to or on the
Closing Date and each party hereby expressly reserves all remedies as provided
herein relating to any breach by the other parties of any representation or
warranty or covenant in respect hereof.
5.4 Books and Records. From and after the Closing Date, to the extent
reasonably requested by any party hereto, each party hereto shall, and shall
cause their respective Affiliates to, cooperate with and make available to the
other party, during normal business hours, all Books and Records, information
and employees (without substantial disruption of employment), as well as access
to, and the cooperation of, the auditors of such party, retained and remaining
in existence after the Closing which are necessary or useful in connection with
any Tax inquiry, audit, investigation or dispute, any litigation or
investigation or any other matter requiring any such Books and Records,
information or employees, or access to such auditors, for any reasonable
business purpose. The party requesting any such Books and Records, information
or employees, or access to such auditors, shall bear all of the out-of-pocket
costs and expenses (including, without limitation, attorneys' fees, but
excluding any reimbursement
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for salaries or benefits) reasonably incurred in connection with providing
such Books and Records, information or employees, or access to such auditors.
5.5 Notification of Certain Matters. A party shall give prompt notice to
the other party after becoming aware of (a) the occurrence, or failure to occur,
of any event that would be likely to cause (x) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
or (y) a material adverse effect on a party's ability to consummate the
transactions contemplated by this Agreement; and (b) any failure of any party to
comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement. No such
notification shall affect, or be deemed to cure any breach of, the
representations, warranties, covenants and agreements of the parties or the
conditions to their respective obligations hereunder. Seller shall also give
prompt notice to Buyer Parties of (a) any Default, or (b) any claim made by, or
Action threatened or commenced against, York or any of its Subsidiaries, in
either case, of which Seller has Knowledge, occurring prior to the Closing Date
in an amount in excess of $50,000, individually. The notification obligations of
each party set forth in this Section 5.5 shall expire on the Closing Date.
5.6 Investigation by Buyer Parties. Subject to the Confidentiality
Agreement, from the date hereof through the Closing Date, Seller shall cause
York to, and shall cause York's Representatives to, afford the Representatives
of Buyer Parties and their respective Affiliates reasonable access during normal
business hours upon prior written notice to the business for the purpose of
inspecting the same, and to the officers, employees, agents, attorneys,
accountants, properties, Books and Records and Contracts of York and its
Subsidiaries, and shall cause York to furnish Buyer Parties and their
Representatives with all financial, operating and other data and information as
Buyer Parties or their Affiliates, through their respective Representatives, may
reasonably request, including (i) all information reasonably necessary for Buyer
Parties to monitor and confirm the amounts of the Stockholder Distributions,
Funded Debt and Cash and (ii) an unaudited balance sheet and the related
statements of income, stockholders equity and cash flow for each month from the
date hereof through the Closing Date within 15 business days after the end of
each month, which financial statements shall in all material respects (a) be
true, correct and complete, (b) be in accordance with the Books and Records of
York and its Subsidiaries and (c) accurately set forth the assets, liabilities
and financial condition, results of operations and other information purported
to be set forth therein in accordance with GAAP consistently applied (except
that no financial statement footnotes will be provided nor will typical year end
audit adjustments be made).
5.7 Conduct of Business. From the date hereof through the Closing, Seller
shall cause York and each of its Subsidiaries to, except as contemplated by this
Agreement, or as consented to by Buyer Parties in writing, which shall not be
unreasonably withheld or delayed, operate its business in the ordinary course of
business and in accordance with past practice and to not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Seller shall cause York to
not, and to not permit any of its Subsidiaries to, except as specifically
contemplated by this Agreement or as consented to by Buyer Parties in writing,
which shall not be unreasonably withheld or delayed:
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(a) Change or amend the charter, by-laws or any other charter documents of
York or its Subsidiaries (including, but not limited to, any certificate of
designation or similar document), except as contemplated by this Agreement;
(b) Change its accounting methods, principles or practices affecting assets
or liabilities (other than changes required by GAAP or applicable Law after the
date of this Agreement);
(c) Settle or compromise any matter with Tax authorities or make, revoke or
change any material Tax election which could affect any of Buyer Parties, York
or York's Subsidiaries after the Closing;
(d) Materially revalue any assets, including, without limitation, writing
down the value of goodwill or inventory or writing off notes or accounts
receivable (other than as required by GAAP or applicable Law after the date of
this Agreement or consistent with past practices);
(e) Cancel any Funded Debt (except under the Wachovia Agreement) or waive,
compromise or release any material right or claim relating to York's activities,
properties or other assets;
(f) Other than the Stockholder Distributions made in compliance with
applicable Law and set forth on the Closing Purchase Price Certificate, declare,
set aside, make or pay any dividend or other distribution in respect of York's
Equity Securities;
(g) Issue, repurchase or redeem or commit to issue, repurchase or redeem,
any shares of York's Equity Securities, any options or other rights to acquire
such shares of Equity Securities or any securities convertible into or
exchangeable for such shares of Equity Securities;
(h) Amend, cancel or terminate any Material Agreement, or material Permit
relating to York or its Subsidiaries or enter into any Material Agreement, or
material Permit which is not in the ordinary course of business, including,
without limitation, any employment or consulting agreements except as
contemplated hereunder;
(i) Acquire any assets, execute any lease (other than renewals or
extensions of existing leases in the ordinary course of business or any other
lease with (i) aggregate payments to be made by York and its Subsidiaries
thereunder not in excess of $300,000, individually and (ii) an unexpired term
not in excess of 10 years after the date hereof) or sell, assign, transfer,
convey, lease, license, mortgage, pledge, abandon, permit to lapse, or otherwise
dispose of or encumber any material assets of York or its Subsidiaries, or any
interests therein, except in the ordinary course of business;
(j) Acquire by merger or consolidation with, or merge or consolidate with,
or purchase substantially all of the assets of, or otherwise acquire any
material assets or business of, any corporation, partnership, association or
other business organization or division thereof;
(k) Incur any liability or obligation for interest bearing indebtedness
(other than borrowings under the Wachovia Agreement to be used for the sole
purposes of funding
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Stockholder Distributions or for general operating purposes), or guarantee
the liabilities or obligations of others, indemnify others or incur any other
material liability or obligation, other than indemnification obligations made to
York's customers and vendors in the ordinary course of business with respect to
commercial arrangements with such customers and vendors; (l) Take any action
with respect to the grant of any bonus, severance or termination pay (otherwise
than pursuant to policies or agreements of York or its Subsidiaries in effect on
the date hereof that are described in Section 3.14(a) of the Seller Disclosure
Schedule or pursuant to Year-End Compensation Arrangements) or with respect to
any increase of benefits payable under its severance or termination pay policies
or agreements in effect on the date hereof or increase in any manner the
compensation or fringe benefits of any director, officer, employee, consultant,
Representative of York and its Subsidiaries (otherwise than as required by
policies or agreements of York or its Subsidiaries in effect on the date hereof
that are described in Section 3.14(a) of the Seller Disclosure Schedule), or pay
any benefit not required by any existing Plan or policy;
(m) Adopt, enter into or amend any Plan, agreement (including, without
limitation, any collective bargaining or employment agreement), trust, fund or
other arrangement for the benefit or welfare of any employee, except for any
such amendment as may be required to comply with applicable Laws, or fail to
maintain all Plans in accordance with applicable Laws in all material respects;
(n) Make any change in the key management personnel of York or its
Subsidiaries listed in Section 5.7(n) of the Seller Disclosure Schedule;
(o) Hire any additional officers, except as may be consistent with prior
practices and as may be commercially reasonable, provided that the annual salary
of any such additional officer does not exceed $100,000, individually;
(p) Enter into, materially modify or materially revise any agreement or
transaction with any Principal or any of its Affiliates;
(q) Willingly allow or permit to be done, any act by which any of York's or
its Subsidiaries' insurance policies may be suspended, impaired or canceled
unless an amount of comparable insurance coverage would be effective at the
Closing for any such suspended, impaired or cancelled insurance policies,
provided that such comparable insurance would not be materially less favorable
to York and its Subsidiaries than any such suspended, impaired or cancelled
insurance policies;
(r) Fail to expend funds for budgeted capital expenditures or commitments;
(s) Fail to pay after the expiration of any applicable grace periods its
accounts payable and any indebtedness owed or obligations due, or pay or
discharge when due any liabilities or obligations, in the ordinary course of
business, other than if disputed in good faith;
(t) Fail to attempt to collect its accounts receivable in the ordinary
course of business consistent with past practices;
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(u) Fail to maintain the assets of the business in a commercially
reasonable manner, but no less than substantially their current state of repair,
excepting normal wear and tear, or fail to replace consistent with York's past
practice inoperable, worn-out or obsolete or destroyed assets that are necessary
for the operation of York;
(v) Fail to comply in any material respect with all Laws applicable to it;
(w) Intentionally do any other act which could cause any representation or
warranty of York in this Agreement to be or become untrue in any material
respect;
(x) Fail to use its commercially reasonable efforts to (i) retain York's
and its Subsidiaries' employees so that such employees will remain available to
York on and after the Closing Date, (ii) maintain York's and its Subsidiaries'
businesses so that such employees will remain available to York on and after the
Closing Date, (iii) maintain existing relationships with material suppliers,
customers and others having business dealings with York or any of its
Subsidiaries and (iv) otherwise preserve the goodwill of York's and its
Subsidiaries' businesses so that such relationships and goodwill will be
preserved on and after the Closing Date;
(y) Enter into any agreement, or otherwise become obligated, to do any
action prohibited hereunder; or
(z) Issue any additional EARs.
5.8 No Solicitation of Other Proposals. Notwithstanding anything in the
Existing Stockholders Agreement to the contrary, prior to the earlier of the
Closing or the termination of this Agreement pursuant to Section 9.1, Seller
shall not and shall cause York not to, directly or indirectly, take (and Seller
shall not authorize or permit any of his or York's Representatives or, to the
extent within Seller's control, other Affiliates to take) any action to (i)
encourage (including by way of furnishing non-public information), solicit,
initiate or facilitate any Takeover Proposal, (ii) enter into any agreement with
respect to any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring York or Seller to abandon, terminate or fail to
consummate the Transactions or any other transaction contemplated by this
Agreement, or (iii) participate in any way in discussions or negotiations with,
or furnish any information to, any Person in connection with, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any Takeover Proposal.
Seller hereby represents that it is not now engaged in discussions or
negotiations with any Person other than Buyer Parties with respect to any
Takeover Proposal.
5.9 Closing Purchase Price Certificate; Transaction Expense Statement At
least two business days prior to the Closing Date, Seller shall cause York to
provide to Buyer Parties: (i) a true and complete written report substantially
in the form attached hereto as Annex I (which shall be certified by the chief
financial officer of York and acceptable to Buyer Parties in their reasonable
discretion) (the "Closing Purchase Price Certificate") of the calculation of the
Stockholder Distributions as of the Closing Date, estimated Cash as of the
Closing Date, estimated Funded Debt as of the Closing Date, Aggregate Funded
Debt Borrowings (if any), Aggregate Funded Debt Repayments (if any) and the
estimated Cash Deficiency (if any) as of the Closing Date, together with all
supporting calculations of the foregoing and (ii)
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a true and complete written report substantially in the form attached
hereto as Annex II (which shall be certified by the chief financial officer of
York and acceptable to Buyer Parties in their reasonable discretion) setting
forth an itemized list of any and all Company Transaction Expenses incurred in
connection with the consummation of the transactions contemplated hereby,
together with invoices or other evidence reasonably satisfactory to Buyer
Parties from Persons to whom such Company Transaction Expenses are owed or have
been paid, with respect to all Company Transaction Expenses owed or paid to such
Persons (the "Transaction Expense Statement"). Seller shall cause York to
provide to Buyer Parties reasonable access to all Books and Records of York
relevant to the calculations included in the Closing Purchase Price Certificate
and the Transaction Expense Statement and to all personnel of York that
participated in the preparation of the Closing Purchase Price Certificate and
the Transaction Expense Statement.
5.10 Assistance with Financing. Seller, at Buyer Parties' sole expense,
shall use his commercially reasonable efforts to, and to cause York and its
Subsidiaries to, cooperate with Buyer Parties and the arrangers, lenders and
advisors to any Buyer Party, in each case in connection with the arrangement of
any financing, the proceeds of which are to be used to consummate, or otherwise
to be consummated contemporaneous with or at or after the Closing in respect of
the transactions contemplated by this Agreement, including, without limitation,
participation in meetings during normal business hours and with reasonable prior
notice (including direct contact between York's senior management and
prospective lenders and investors), due diligence sessions during normal
business hours and with reasonable prior notice, road shows and rating agency
presentations during normal business hours and with reasonable prior notice; the
preparation of confidential information memoranda, offering memoranda, private
placement memoranda, registration statements, prospectuses and similar
documents, provided that Seller shall not be required to agree to become
personally responsible or liable to the distributees thereof for the information
set forth therein; participation in the negotiation of any commitment letters,
underwriting or placement agreements, indentures, supplemental indentures, loan
agreements, escrow and security agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a certificate of the chief financial officer of York and its
Subsidiaries with respect to solvency matters. Seller will use his commercially
reasonable efforts to cause York's independent auditors, at Buyer Parties' sole
expense, to (i) cooperate in connection with any such financing and (ii)
cooperate in due diligence and drafting sessions with arrangers and/or placement
agents in connection with any such financing. Seller will use his commercially
reasonable efforts to assist Buyer Parties, at Buyer Parties' sole expense, in
satisfying all of the conditions to the financing contemplated by the Commitment
Letters.
5.11 Invention Assignment Agreements. From and after the date hereof,
Seller shall use commercially reasonable efforts to cause York to obtain, on or
prior to the Closing Date, from all employees, agents, consultants, contractors
or other Persons who are, or have been, involved in the development of
Intellectual Property for or on behalf of York or any Subsidiary to execute
appropriate instruments of assignment in favor of York or any of its
Subsidiaries as assignee to convey to York or any of its Subsidiaries ownership
of Intellectual Property developed by such employees, agents, consultants,
contractors or other Persons on behalf of York or any of its Subsidiaries.
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5.12 EAR Plan. Prior to the Closing Date, Seller shall cause York to take
all actions necessary or appropriate to provide that all EARs granted and vested
under the EAR Plan, which on or prior to the Closing Date have become vested and
exercisable in accordance with their terms and which are listed on Schedule 5.12
(the "Vested EARs"), shall be cancelled by York and shall no longer be
outstanding thereafter. In consideration for such cancellation, York shall pay
to the holder of each such Vested EAR a cash amount equal to the excess (if any)
of (a) the Vested EAR unit value as of the Closing Date over (b) the Vested EAR
unit value as of the date of grant (the aggregate amount of such payment shall
be referred to herein as the "EAR Cash Out Amount"). For the avoidance of doubt,
(x) no accelerated vesting or exercisability shall occur with respect to any
EARs in connection with the transactions contemplated by this Agreement; and (y)
York shall not pay any EAR Cash Out Amount with respect to any EARs other than
the Vested EARs.
5.13 Existing Stockholders Agreement. Seller hereby waives in accordance
with Section 18 of the Existing Stockholders Agreement any and all rights that
Seller may have pursuant to the Existing Stockholders Agreement (including,
without limitation, those set forth in Sections 2, 5 and 11 thereof) with
respect to the execution and delivery by Bexil of the Bexil Purchase Agreement
and the consummation of the transactions contemplated by the Bexil Purchase
Agreement (including, without limitation, the Bexil Sale), provided, however,
that this waiver shall terminate and shall be null and void, and of no further
force or effect, upon a termination of this Agreement in accordance with its
terms. In addition, other than with respect to Stockholder Distributions, Seller
hereby agrees, solely in his capacity as a stockholder of York, that he will not
approve any of the transactions described in Section 1(e) of the Existing
Stockholders Agreement without the prior written consent of Buyer Parties.
5.14 Consideration for Bexil Sale. Buyer Parties agree not to increase the
aggregate consideration for the Bexil Shares to be sold to Buyer Parties in the
Bexil Sale from that set forth in the Bexil Purchase Agreement delivered to
Seller on the date of this Agreement unless Buyer Parties shall agree to
increase the Purchase Price payable hereunder proportionately with any such
increase in the aggregate consideration for the Bexil Shares.
5.15 Merger of Buyer and York. As promptly as practicable following the
Closing, Buyer Parties shall cause Buyer to be merged with and into York (the
"Merger"), whereby the separate corporate existence of Buyer shall cease and
York shall continue as the surviving corporation. Upon the effectiveness of the
Merger (the "Effective Time"), (i) all of the property, rights, privileges,
powers and franchises of Buyer and York shall vest in York, as the surviving
corporation, and all debts, liabilities and duties of Buyer and York shall
become the debts, liabilities and duties of York, as the surviving corporation,
(ii) each of the Shares outstanding immediately prior to the Effective Time will
be cancelled and extinguished and (iii) each share of common stock of Buyer
issued and outstanding immediately prior to the Effective Time shall be canceled
and extinguished and automatically converted into the right to receive one or
more newly-issued Shares.
5.16 Stock Option Plan. On or prior to the Closing, Parent shall have
adopted the Stock Option Plan with the terms and conditions described on Exhibit
F-1 attached hereto and pursuant to which the individuals listed on Exhibit F-2
attached hereto will be granted
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options to purchase such number of shares of Parent Common Stock as set
forth on Exhibit F-2 attached hereto.
ARTICLE VI
TAX INDEMNITIES, FILING REQUIREMENTS AND OTHER POST-CLOSING MATTERS
6.1 Seller Indemnity. Except for the matters described on Schedule 6.1,
Seller shall indemnify and hold harmless Parent, Taxpayers, and each of their
respective Affiliates, successors, and assigns, from and against all Taxes (i)
with respect to all periods beginning on or after the Acquisition Date and
ending on or prior to the Closing Date, (ii) with respect to any period
beginning on or after the Acquisition Date but before the Closing Date and
ending after the Closing Date, but only with respect to the portion of such
period up to and including the Closing Date (such portion, a "Pre-Closing
Partial Period") or (iii) payable as a result of a breach of any representation
or warranty set forth in Section 3.9. The post-Closing Date portion of any
period ending after the Closing Date and beginning before the Closing Date is
hereinafter called a "Post-Closing Partial Period".
6.2 Allocation Between Partial Periods. Any Taxes for a period, including a
Pre-Closing Partial Period and a Post-Closing Partial Period, shall be
apportioned between such Pre-Closing Partial Period and such Post-Closing
Partial Period, based, in the case of real and personal property Taxes, on a per
diem basis and, in the case of other Taxes, on the actual activities, taxable
income or taxable loss of the applicable entity during such Pre-Closing Partial
Period and such Post-Closing Partial Period.
6.3 Post-Closing Audits and Other Proceedings. Seller and Parent agree to
give prompt notice to each other of any proposed adjustment to Taxes for periods
ending on or prior to the Closing Date or any Pre-Closing Partial Period. Seller
and Parent shall cooperate with each other in the conduct of any audit or other
proceedings involving any Taxpayer for such periods and each may participate at
its own expense, provided that Seller shall have the right to control the
conduct of any such audit or proceeding only if Seller agrees that any resulting
Tax is covered by the indemnity provided in Section 6.1. Notwithstanding the
foregoing, Seller may not settle or otherwise resolve any such claim, suit or
proceeding materially affecting the Taxpayers for a Post-Closing Partial Period
or any other period subsequent to the Closing without the consent of Parent,
such consent not to be unreasonably withheld or delayed.
6.4 Cooperation. Seller and Parent agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance (including access to books and records) relating to
the Taxpayers as is reasonably necessary for the preparation of any return for
Taxes, claim for refund or audit, and the prosecution or defense of any claim,
suit or proceeding relating to any proposed adjustment.
6.5 Miscellaneous. To the extent that any provision contained in this
Article VI conflicts with any other provision contained in Article VIII (other
than Section 8.4(b)), this Article VI shall govern.
ARTICLE VII
CONDITIONS TO THE CLOSING
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7.1 Conditions to the Closing Relating to Buyer Parties. Buyer Parties'
obligation to consummate the transactions contemplated hereby is subject to the
fulfillment or written waiver, prior to or at the Closing Date, of each of the
following conditions:
(a) Representations, Warranties and Covenants. All representations and
warranties of Seller contained in this Agreement and qualified by the words
"material," "material adverse effect" and similar phrases shall be true and
correct in all respects, and all representations and warranties of Seller
contained in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case, at and as of the date of this Agreement
and at and as of the Closing Date, except for those representations and
warranties that speak as of a particular date, which will continue to be true
and correct as of such date, and Seller shall have performed and satisfied in
all material respects all agreements and covenants required hereby to be
performed by him prior to or on the Closing Date.
(b) Regulatory Consents, Authorizations, etc. All consents, authorizations,
Orders and Approvals of, and filings and registrations with any Governmental
Entity (including pursuant to the HSR Act) or any other Person which are
required for or in connection with the execution and delivery of this Agreement
and the consummation by each party hereto of the transactions contemplated
hereby, shall have been obtained or made. The applicable waiting period,
including all extensions thereof, under the HSR Act shall have expired or been
terminated.
(c) Litigation; Other Events. No Law or Order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Entity, nor shall
any Action be pending or threatened, which questions the validity or legality
of, or prohibits or restricts or, if successful, would prohibit or restrict, the
transactions contemplated by this Agreement or would not permit York or its
Subsidiaries as presently operated to continue unimpaired in all material
respects following the Closing Date or which would have any material adverse
effect on the right or ability of Buyer Parties to own, operate, possess or
transfer York and its Subsidiaries after the Closing.
(d) Deliveries. The deliveries referred to in Section 1.5(a) shall have
been made.
(e) Certificates. Seller shall have furnished Buyer Parties with such
certificates to evidence compliance with the conditions set forth in this
Section 7.1 as may be reasonably requested by them.
(f) Material Adverse Effect. Since the Reference Balance Sheet Date, there
shall not have been any Material Adverse Effect on York.
(g) Consummation of the Bexil Sale. The Bexil Sale and the other
transactions contemplated by the Bexil Purchase Agreement shall have been
consummated.
(h) Financing. Buyer Parties (or their Affiliates) shall have obtained the
debt financing on the terms and for the purposes set forth in the term sheets
included in each of the Commitment Letters.
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(i) Additional Management Investment. Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇ (collectively, the "Executives") shall have (i) invested in Parent an
aggregate of at least $650,000 and $425,000, respectively, to acquire shares of
Parent Common Stock at the same purchase price and on the same terms and
conditions as the investment that is made by affiliates of Odyssey Investment
Partners, LLC in Parent and (ii) executed and delivered the Executive
Stockholders Agreement.
(j) Other Agreements. Each of the Ancillary Agreements shall have been
executed and delivered by the parties thereto.
(k) Resignations. Buyer Parties shall have received the resignations of
each of the directors of York and its Subsidiaries.
(l) Legal Opinion. Buyer Parties shall have received the legal opinion of
Wilson, Elser, ▇▇▇▇▇▇▇▇▇, Edelman & Dicker LLP, counsel to Seller, substantially
in the form of Exhibit B hereto.
7.2 Conditions to the Closing Related to Seller. Seller's obligation to
consummate the transactions contemplated hereby is subject to the fulfillment or
waiver, prior to or at the Closing Date, of each of the following conditions:
(a) Representations, Warranties and Covenants. All representations and
warranties of Buyer Parties contained in this Agreement and qualified by the
words "material," "material adverse effect" and similar phrases shall be true
and correct in all respects, and all representations and warranties of Buyer
Parties contained in this Agreement that are not so qualified shall be true and
correct in all material respects, in each case, at and as of the date of this
Agreement and at and as of the Closing Date, except for those representations
and warranties that speak as of a particular date, which will continue to be
true and correct as of such date, and Buyer Parties shall have performed and
satisfied in all material respects all agreements and covenants required hereby
to be performed by them prior to or on the Closing Date.
(b) Regulatory Consents, Authorizations, etc. All consents, authorizations,
Orders and Approvals of, and filings and registrations with any Governmental
Entity (including pursuant to the HSR Act) which are required for or in
connection with the execution and delivery of this Agreement and the
consummation by each party hereto of the transactions contemplated hereby, shall
have been obtained or made. The applicable waiting period, including all
extensions thereof, under the HSR Act shall have expired or been terminated.
(c) Litigation; Other Events. No Law or Order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Entity, nor shall
any Action be pending or threatened, which questions the validity or legality
of, or prohibits or restricts or, if successful, would prohibit or restrict, the
transactions contemplated by this Agreement.
(d) Deliveries. The deliveries referred to in Section 1.5(b) shall have
been made.
(e) Purchase Price. Seller shall have received the payment required by
Section 1.2(a).
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(f) Certificates. Buyer Parties shall have furnished Seller with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Section 7.2 as may be reasonably requested by
Seller.
(g) Other Agreements. Each Buyer Party shall have executed and delivered
the Ancillary Agreements to which such Buyer Party is a party.
(h) Legal Opinion. Seller shall have received the legal opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel to Buyer Parties, substantially in the form of Exhibit G
hereto.
ARTICLE VIII
INDEMNITY
8.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of Seller contained in Articles III and IV shall
survive the Closing until twelve (12) months after the Closing Date, without
regard to any investigation made by Buyer Parties (whether prior to, on or after
the Closing), unless Parent notifies Seller in writing prior to such date of any
specific claim or claims for alleged breach of any such representation or
warranty, in which case such representation or warranty shall survive with
respect to such claim until the final resolution by settlement, arbitration,
litigation or otherwise of any such claim; provided that the representations and
warranties contained in Sections 3.1, 3.2, 3.6, 4.1 and 4.3 (collectively, the
"Seller Title Representations") shall survive indefinitely; and provided
further, that the representations and warranties contained in Section 3.9 shall
survive through the applicable statutes of limitations, including all extensions
thereof plus sixty (60) days. No investigation made by any of the parties hereto
(whether prior to, on or after the Closing) shall in any way limit the
representations and warranties of the parties. All representations and
warranties of Buyer Parties contained in Article II shall survive until twelve
(12) months after the Closing Date, provided that the representations and
warranties contained in Sections 2.1, 2.2, 2.9 and 2.10 shall survive
indefinitely (collectively, the "Buyer Title Representations"). The covenants
and agreements of the parties contained herein shall survive the Closing in
accordance with their respective terms, provided that the covenants contained in
Article VIII or otherwise in the event no term is specified in such covenant,
shall survive indefinitely. The Tax indemnities provided by Article VI shall
survive through the applicable statutes of limitations, including all extensions
thereof, plus sixty (60) days.
8.2 Indemnification by Seller. Seller shall indemnify and hold harmless
Parent, its Affiliates (including York and its Subsidiaries) and their
respective directors, officers, employees and Affiliates ("Buyer Indemnified
Parties") from and against any and all Losses that may be sustained, suffered or
incurred by Parent, its Affiliates or any other Buyer Indemnified Party arising
out of or relating to (i) any inaccuracy in or breach of any of Seller's
representations and warranties contained in this Agreement or (ii) any breach or
nonperformance of any covenants or agreements made by Seller in or pursuant to
this Agreement.
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8.3 Indemnification by Parent. Parent shall indemnify Seller and his
Affiliates (including York and its Subsidiaries) and their respective directors,
officers, employees and Affiliates ("Seller Indemnified Parties") from and
against any and all Losses that may be sustained, suffered or incurred by
Seller, its Affiliates or any other Seller Indemnified Party arising out of or
relating to (i) any inaccuracy in or breach of Buyer Parties' representations
and warranties contained in this Agreement or (ii) any breach or nonperformance
of any covenants or agreements made by Buyer Parties in or pursuant to this
Agreement.
8.4 Limitations on Indemnity.
(a) General. The indemnification obligations of Seller and Buyer Parties
pursuant to Section 8.2 or 8.3, respectively, shall be limited to claims for
Losses made prior to the last date of the respective survival periods thereof
referred to in Section 8.1.
(b) Maximum Liability.
(i) Seller's Cap. Subject to subsection (c) of this Section 8.4 and
except as otherwise provided in the immediately following sentence, the
maximum aggregate amount of Losses for which Seller shall be liable for
claims made pursuant to Section 8.2 and Article VI hereof, other than with
respect to the Seller Title Representations, shall be an amount equal to
$4,500,000. All claims made pursuant to Section 8.2 with respect to the
Seller Title Representations shall be fully reimbursable and shall not be
subject to any limitation or cap.
(ii) Buyer Parties' Cap. Subject to subsection (c) of this Section
8.4. and except as otherwise provided in the immediately following
sentence, the maximum aggregate amount of Losses for which Parent shall be
liable for claims made pursuant to Section 8.3 hereof, other than with
respect to the Buyer Title Representations, shall be an amount equal to
$4,500,000. All claims made pursuant to Section 8.3 with respect to the
Buyer Title Representations shall be fully reimbursable and shall not be
subject to any limitation or cap.
(c) Thresholds.
(i) Seller's Threshold. Except as otherwise provided in the
immediately following sentence no Buyer Indemnified Party shall seek, or be
entitled to, indemnification from Seller pursuant to Section 8.2 until the
aggregate amount of Losses incurred or suffered by all Buyer Indemnified
Parties under such section exceeds $1,250,000 (the "Seller's Indemnity
Threshold"), and once the Buyer Indemnified Parties have incurred or
suffered aggregate Losses exceeding the Seller's Indemnity Threshold, the
Buyer Indemnified Parties shall be entitled to the full amount of all
Losses that exceed the Seller's Indemnity Threshold. All claims made
pursuant to Section 8.2 hereof with respect to the Seller Title
Representations shall in each case be fully reimbursable and are not
subject to the Seller's Indemnity Threshold.
(ii) Parent's Threshold. Except as otherwise provided in the
immediately following sentence, no Seller Indemnified Party shall seek, or
be entitled to,
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indemnification from Parent pursuant to Section 8.3 until the
aggregate amount of Losses incurred or suffered by all Seller Indemnified
Parties under such section exceeds $1,250,000 (the "Parent's Indemnity
Threshold"), and once the Seller Indemnified Parties have incurred or
suffered aggregate Losses exceeding the Parent's Indemnity Threshold, the
Seller Indemnified Parties shall be entitled to the full amount of all
Seller Claims that exceed the Parent's Indemnity Threshold. All claims made
pursuant to Section 8.3 hereof with respect to the Buyer Title
Representations shall in each case be fully reimbursable and are not
subject to the Parent's Indemnity Threshold.
8.5 Procedure.
(a) If any party shall seek indemnification with respect to any Loss
or potential Loss arising from a claim asserted by a third party (including
a notice of Tax audit or request to waive or extend a statute of
limitations applicable to any Tax) for which such party seeking
indemnification (the "Indemnified Party") is entitled to indemnification
under this Article VIII, then the Indemnified Party shall promptly notify
the other party (the "Indemnifying Party") in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party (except to the extent notice is not delivered prior to
the expiration of the applicable expiration provision contained in Section
8.1) shall relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party is
prejudiced thereby.
(b) An Indemnifying Party will have the right to defend the Indemnified
Party against the claim with counsel of its choice, reasonably satisfactory to
the Indemnified Party, so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing, within ten (10) days after the Indemnified Party
has given notice of the claim, that the Indemnifying Party will satisfy its
indemnification obligations to the extent required under this Article VIII, (ii)
the Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the claim and to fulfill its
indemnification obligations hereunder, (iii) the claim involves only money
damages and does not seek injunctive or other equitable relief, (iv) settlement
of, or an adverse judgment with respect to, the claim is not, in the reasonable
and good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice or result in an outcome that is materially
adverse to the continuing business interests of the Indemnified Party and (v)
the Indemnifying Party conducts the defense of the claim actively, diligently
and completely. So long as the Indemnifying Party is conducting the defense of
the claim in accordance with this Section 8.5(b), (x) the Indemnified Party may
participate in the defense of the claim through separate co-counsel, but the
retention of any such separate counsel shall be at the sole cost and expense of
the Indemnified Party; provided, however, if the named Persons to a lawsuit or
other legal action include both the Indemnifying Party and the Indemnified Party
and the Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party, the
Indemnified Party shall be entitled, at the Indemnifying Party's cost, risk and
expense, to separate counsel of its own choosing, (y) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed and (z) the
Indemnifying Party will not consent to the entry of
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any judgment or enter into any settlement with respect to the claim without
the prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed.
(c) In the event any of the conditions of Section 8.5(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the claim in any manner it may deem appropriate (and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (ii) subject to Section 8.4, the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the claim (including attorneys' fees and expenses reasonably
incurred), and (iii) the Indemnifying Party will remain responsible to indemnify
the Indemnified Party to the extent required under this Article VIII.
(d) The parties to this Agreement shall execute such powers of attorney as
may be necessary or appropriate to permit participation of counsel selected by
any party hereto and, as may be reasonably related to any such claim, shall
provide access to the counsel, accountants, and other Representatives of each
party during normal business hours and with prior notice to all properties,
personnel, books, tax records, Contracts, commitments and all other business
records of such other party and will furnish to such other party at such other
party's sole expense copies of all documents as may reasonably be requested
(certified if requested).
8.6 Exclusive Remedy. Except for actions grounded in fraud or deceit and
except with respect to covenants requiring performance in whole or in part after
the Closing, the parties hereto acknowledge and agree that from and after the
Closing, the indemnification provisions in this Article VIII shall be the
exclusive remedy of Buyer Parties, Seller, Buyer Indemnified Parties and Seller
Indemnified Parties with respect to the transactions contemplated by this
Agreement and by the Ancillary Agreements. With respect to actions grounded in
fraud or deceit and with respect to covenants requiring performance in whole or
in part after the Closing, (A) the right of a party to be indemnified and held
harmless pursuant to this Article VIII (including the limitations set forth in
Section 8.4) shall be in addition to and cumulative of any other remedy of such
party at law or in equity and (B) no such party shall, by exercising any remedy
available to it under this Article VIII, be deemed to have elected such remedy
exclusively or to have waived any other remedy, whether at Law or in equity,
available to it.
8.7 No Right of Contribution. Seller acknowledges and agrees that, upon and
after the Closing, York and its Subsidiaries shall not have any liability or
obligation to indemnify, save or hold harmless or otherwise pay, reimburse or
make any Buyer Indemnified Party or Seller Indemnified Party whole for or on
account of any untruth, inaccuracy or incorrectness of, or other breach of, any
representation or warranty or the nonfulfillment, nonperformance, nonobservance
or other breach or violation of, or default under, any covenant or agreement of
Seller, and Seller shall have no right of contribution against York and its
Subsidiaries.
8.8 Insurance Proceeds. Seller and Buyer Parties agree for themselves and
on behalf of their respective Affiliates that, with respect to the
indemnification provisions contained in this Agreement, all Losses shall be net
of any third-party insurance proceeds received by or for the benefit of the
Indemnified Party from its own or its Affiliates' insurance policies
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in connection with the facts giving rise to the right of indemnification
(after deducting reasonable costs and expenses incurred in connection with
recovery of such proceeds, including deductibles and premium increases).
8.9 Right to Seek Payment. For so long as any portion of the Escrow Amount
remains outstanding and subject to the Escrow Agreement, Seller and Buyer
Parties acknowledge and agree that a Buyer Indemnified Party entitled to
indemnification under Articles VIII or VI shall seek payment for Losses, subject
to the limitations set forth in Sections 8.4, in the following order (i) first,
against the Escrow Amount, and (ii) second, if the Escrow Amount is insufficient
for Losses with respect to Seller Title Representations, directly against
Seller; provided, however, that the Buyer Indemnified Parties shall not, with
respect to any Loss, be entitled to recover more than the amount of such Loss
from all such sources in the aggregate.
ARTICLE IX
MISCELLANEOUS
9.1 Termination.
(a) This Agreement may be terminated at any time prior to Closing:
(i) by Seller and by action of the board of directors of Buyer
Parties;
(ii) by Buyer Parties, on the one hand, or Seller, on the other hand,
if the Closing shall not have occurred on or before June 30, 2006 (the
"Outside Date"); provided, however, that the right to terminate this
Agreement under this Section 9.1(a)(ii) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Transactions to occur on or
before such date;
(iii) by Buyer Parties, on the one hand, or Seller, on the other
hand,, if any Governmental Entity shall have issued an Order or taken any
other action (including the failure to take action) permanently
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement, and such Order shall have become final and
non-appealable;
(iv) by Buyer Parties if there is a material breach of any
representation or warranty set forth in Articles III or IV hereof or any
covenant or agreement to be complied with or performed by Seller pursuant
to the terms of this Agreement or the failure of a condition set forth in
Section 7.1 to be satisfied (and such condition is not waived in writing by
Buyer Parties) on or prior to the Closing Date, or the occurrence of any
event which results or would result in the failure of a condition set forth
in Section 7.1 to be satisfied on or prior to the Closing Date; provided
that Buyer Parties may not terminate this Agreement prior to the 30th day
following the occurrence of such failure if such failure is capable of
being cured and Seller is using reasonable best efforts to cure such
failure;
(v) by Seller if there is a material breach of any representation or
warranty set forth in Article II hereof or of any covenant or agreement to
be complied
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with or performed by any Buyer Party pursuant to the terms of this
Agreement or the failure of a condition set forth in Section 7.2 to be
satisfied (and such condition is not waived in writing by Seller) on or
prior to the Closing Date, or the occurrence of any event which results or
would result in the failure of a condition set forth in Section 7.2 to be
satisfied on or prior to the Closing Date; provided that Seller may not
terminate this Agreement prior to the 30th day following the occurrence of
such failure if such failure is capable of being cured and Buyer is using
reasonable best efforts to cure such failure;
(vi) by Buyer Parties, if since the date of this Agreement, there
shall have been any event, development or change of circumstance that
constitutes, has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on York or a material
adverse effect on Seller's ability to consummate the transactions
contemplated by this Agreement; or
(vii) by Buyer Parties, on the one hand, or Seller, on the other hand,
if the Bexil Purchase Agreement shall have been terminated prior to the
consummation of the Bexil Sale and the other transactions contemplated
thereby.
(b) In the Event of Termination. In the event of termination of this
Agreement:
(i) each party will redeliver all documents, work papers and
other material of the other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same;
(ii) the provisions of the Confidentiality Agreement shall
continue in full force and effect; and
(iii) neither party hereto shall have any Liability to the other
party to this Agreement, except:
(A) with respect to any Losses incurred or suffered by any party
as a result of the breach by the other party hereto of any of their
representations, warranties, covenants or other agreements set forth
in this Agreement;
(B) if (i) this Agreement is terminated pursuant to Section
9.1(a)(iv) (other than as a result of the failure of a condition set
forth in Sections 7.1(b), 7.1(c), 7.1(g), 7.1(h) or 7.1(l)) or (vi),
then Seller shall be obligated to pay to Buyer Parties an amount equal
to the sum of the Buyer Parties' Expenses up to $1,750,000; provided,
however, that Seller shall not be obligated to pay the Buyer Parties'
Expenses if this Agreement is terminated pursuant to Sections
9.1(a)(i), 9.1(a)(ii), 9.1(a)(iii), 9.1(a)(v) or 9.1(a)(vii); and
provided, further, that for the avoidance of doubt, in the event that
Buyer Parties receive any reimbursement for their Expenses pursuant to
the Bexil Agreement such reimbursed Expenses shall be deducted from
any reimbursement pursuant to this Section 9.1(a)(iii)(B);
(C) Upon termination of the Agreement pursuant to Section
9.1(a)(iv) (other than as a result of the failure of a condition set
forth in Section 7.1(h)) or (vii), Seller shall not, for a period of
fifteen (15) months following such date of termination
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(the "Lock-Up Period"), without the prior written consent of
Parent, directly or indirectly, (1) Transfer, or enter into any
agreement, option or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of any Equity Securities of
York held by Seller as of such date of termination and thereafter
acquired by Seller during the Lock-Up Period (such Equity Securities
held by Seller and thereafter acquired by Seller during the Lock-Up
Period, the "Subject Shares") to any Person (other than a Permitted
Transferee who agrees in writing, in form and substance reasonably
satisfactory to Parent, to be bound by the provisions of this Section
9.1(b)(iii)(C)), (2) grant any proxies, deposit any Subject Shares
into any voting trust or enter into any voting arrangement, whether by
proxy, voting agreement or otherwise, with respect to the Subject
Shares, (3) at any duly called meeting of the stockholders of York, or
in any action by written consent of the stockholders of York, vote or
consent (or cause to be voted or consented), in favor of any Takeover
Proposal, or (4) commit or agree to take any of the foregoing actions
described in clauses (1), (2) and (3) above, except as specifically
contemplated by this Section 9.1(b)(iii)(C). For the avoidance of
doubt, Seller shall be required to pay the Lock-up Termination Fee as
provided in this Section 9.1(b)(iii)(C) if York, during the Lock-up
Period, enters into any agreement with respect to any Takeover
Proposal that, if consummated, would result in the direct or indirect
Transfer (by merger, operation of Law or otherwise) of any of the
Subject Shares to any Person. Seller is entering into the agreements
set forth in this Section 9.1(b)(iii)(C) solely in his capacity as the
record and beneficial holder of all of the Subject Shares, and nothing
in this Section 9.1(b)(iii)(C) shall limit or affect any actions taken
by Seller in his capacity as a director or officer of York to the
extent permitted by this Agreement or following termination of this
Agreement. The provisions of this Section 9.1(b)(iii)(C) shall
automatically be waived by Parent (subject to Section 9.1(b)(iii)(D))
in connection with the execution by York or Seller of a definitive
agreement with respect to a Takeover Proposal upon the payment by
Seller to Parent of a 50% installment of the fee of $4,000,000 (such
$4,000,000 fee, the "Lock-Up Termination Fee"). The Lock-Up
Termination Fee is payable as follows: 50% of the Lock-Up Termination
Fee in immediately available funds upon the execution of a definitive
agreement with respect to such Takeover Proposal (a "Takeover
Agreement"); provided that the entire Lock-Up Termination Fee shall be
payable upon execution of a Takeover Agreement unless Seller enters
into an agreement with Parent in accordance with the provisions of
this Section 9.1(b)(iii)(C) and reasonably satisfactory to Parent
whereby Seller shall agree to pay the remaining 50% of the Lock-Up
Termination Fee to Parent immediately upon consummation of such
Takeover Proposal pursuant to such Takeover Agreement (regardless of
whether such transaction is consummated during or after the Lock-Up
Period). Upon consummation of such Takeover Proposal and the payment
of 50% of the Lock-Up Termination Fee described above at such
consummation, the provisions of this Section 9.1(b)(iii)(C) shall
automatically terminate.
(D) In the event that a Takeover Agreement is executed during the
Lock-Up Period, and the related Takeover Proposal is terminated prior
to its consummation in accordance with the Takeover Agreement or
otherwise, (i) Seller shall not consummate for a period of six months
after the end of the Lock-Up Period any Takeover Proposal with the
purchaser or purchasers (or any of such purchasers' Affiliates) party
to such Takeover Agreement without the payment to Parent of the 50%
balance of the Lock-Up Termination Fee, at which ▇▇▇▇ ▇▇▇▇▇▇'▇
obligations under Section 9.1(b)(iii)(C) shall automatically
terminate, (ii) Seller may enter into a separate Takeover Agreement
during the Lock-Up Period upon the
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execution of an agreement by Seller to Parent in accordance with
the provisions of Section 9.1(b)(iii)(C) and reasonably satisfactory
to Parent, whereby Seller shall agree to pay the 50% balance of the
Lock-Up Termination Fee to Parent immediately upon consummation of the
new Takeover Proposal pursuant to such new Takeover Agreement
(regardless of whether such transaction is consummated during or after
the Lock-Up Period), and upon payment of such balance, Seller's
obligations under Section 9.1(b)(iii)(C) shall automatically
terminate, and (iii) the Lock-Up Period shall continue in full force
and effect in accordance with Section 9.1(b)(iii)(C). Nothing in
Section 9.1(b)(iii)(C) or Section 9.1(b)(iii)(D) shall extend the term
of the Lock-Up Period.
(c) Payments. Payment of Expenses pursuant to Section
9.1(b)(iii)(B) shall be made not later than three business days after
delivery to Seller of notice of demand for payment and a documented
itemization setting forth in reasonable detail all Expenses of Buyer
Parties (which itemization may be supplemented and updated from time
to time by Buyer Parties until the 90th day after such party delivers
such notice of demand for payment without postponing the time for
payment of previously submitted Expenses). All payments under Section
9.1 shall be made by wire transfer of immediately available funds to
an account designated by Buyer Parties. Seller and Buyer Parties
acknowledge that the agreements contained in this Section 9.1 are an
integral part of the transactions contemplated by this Agreement and
that, without these agreements, Buyer Parties would not enter into
this Agreement. Accordingly, if Seller fails promptly to pay any
amount due to Buyer Parties pursuant to this Section 9.1 and, in order
to obtain such payment, Buyer Parties commence a suit which results in
a judgment against Seller for the fees and expenses set forth in this
Section 9.1, Seller shall pay to the Buyer Parties their costs and
expenses (including reasonable attorney's fees and expenses) incurred
in connection with such suit, together with interest on the aggregate
amount of the fees and expenses at a rate equal to the prime rate
reported in the Wall Street Journal on the date such payment was
required to be made pursuant to Section 9.1 plus two (2) percent.
9.2 Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given
when delivered personally or when sent by telex, telecopy or other
electronic or digital transmission method (including, but not limited
to, in portable document format by electronic mail) or three (3)
business days after being mailed by registered or certified mail,
return receipt requested, postage prepaid, to the party to whom it is
directed or one (1) business day after being sent via a nationally
recognized courier service for next business day delivery, to the
party to whom it is directed:
If to any Buyer Party, to:
c/o Odyssey Investment Partners, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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With copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇.▇▇▇
If to Seller, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇-▇▇▇▇▇▇.▇▇▇
With copies to:
Wilson, Elser, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Black, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
or for any party, at such other address as such party shall have specified
in writing to each of the others in accordance with this Section 9.2.
9.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but such counterparts
together shall constitute one and the same instrument.
9.4 Section Headings. The section headings of this Agreement are for
convenience of reference only and shall not be deemed to limit or affect any of
the provisions hereof.
9.5 Amendments; No Waivers.
(a) Any provision of this Agreement may be waived or amended if, and only
if, such amendment or waiver is in writing and signed by each of the parties
hereto.
(b) No failure by any party hereto to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement, or to exercise any
right or remedy consequent upon a breach hereof, shall constitute a waiver of
any such breach or any other covenant, duty, agreement or condition hereof.
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9.6 Entire Agreement; No Assignment. This Agreement (including the Exhibits
hereto, the Seller Disclosure Schedule and any amendments hereto), the Ancillary
Agreements and the Confidentiality Agreement (a) constitute the entire agreement
and understandings of the parties hereto and supersedes all prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof, including, without limitation, the letter of intent
dated September 27, 2005 and (b) are not intended to confer upon any other
Person any rights or remedies hereunder, and this Agreement shall not be
assigned, by operation of Law or otherwise prior to the Closing; provided that
Buyer Parties may assign their rights under this Agreement to any of its
Affiliates and to any lender(s) (or any agent on their behalf) providing
financing for the transactions contemplated hereby upon prior notice to Seller;
provided further, that no such assignment shall relieve Buyer Parties of their
obligations hereunder.
9.7 Governing Law. This Agreement and all claims arising out of or relating
to it shall be governed by and construed in accordance with the Laws of the
State of New York, without consideration to the principles of conflicts of law
thereof that would result in the application of any Law other than the Law of
the State of New York.
9.8 Severability. If it is determined by a court of competent jurisdiction
that any provision of this Agreement is invalid under applicable law, such
provision shall be ineffective only to the extent of such invalidity, without
invalidating the remainder of this Agreement.
9.9 Cumulative Remedies. All rights and remedies of either party hereto are
cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
9.10 Jurisdiction. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS FOR
ITSELF AND ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF AND SERVICE OF PROCESS PURSUANT TO THE LAWS AND RULES OF THE
STATE OF NEW YORK AND THE UNITED STATES OF AMERICA AND THE RULES ▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ AND THE FEDERAL COURTS IN THE SOUTHERN DISTRICT OF NEW
YORK, WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY ARISING UNDER OR OUT OF, IN RESPECT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT OR OBLIGATION. EACH PARTY
FURTHER IRREVOCABLY DESIGNATES AND APPOINTS THE INDIVIDUAL IDENTIFIED IN OR
PURSUANT TO SECTION 9.2 HEREOF TO RECEIVE NOTICES ON ITS BEHALF, AS ITS AGENT TO
RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH ACTION BEFORE ANY BODY,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO EACH PARTY AT ITS ADDRESS PROVIDED IN SECTION 9.2. IF ANY
AGENT SO APPOINTED REFUSES TO ACCEPT SERVICE, THE DESIGNATING PARTY HEREBY
AGREES THAT SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY
ACTION
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AGAINST IT IN THE APPLICABLE JURISDICTION MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS PROVIDED IN SECTION
9.2. EACH PARTY HEREBY ACKNOWLEDGES THAT SUCH SERVICE SHALL BE EFFECTIVE AND
BINDING IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY PARTY TO
BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY IN ANY OTHER
JURISDICTION.
9.11 Attorneys' Fees. In the event of any proceeding arising out of or
related to this Agreement, the prevailing party shall be entitled to recover
from the losing party all of its costs and expenses incurred in connection with
such proceeding, including court costs and reasonable attorneys' fees, whether
or not such proceeding is prosecuted to judgment.
ARTICLE X
DEFINITIONS
10.1 General. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires,
(a) The terms defined in this Article X include the plural as well as the
singular,
(b) All accounting terms not otherwise defined herein have the meanings
assigned under GAAP,
(c) All references in this Agreement to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of the body of this Agreement,
(d) Pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms, and
(e) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
10.2 Definitions. As used in this Agreement and the Exhibits and Schedules
delivered pursuant to this Agreement, the following definitions shall apply:
"Acquisition Date" means January 18, 2002.
"Action" means any action, complaint, petition, investigation, suit or
other proceeding, whether civil or criminal, in Law or in equity, or before any
arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.
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"Aggregate Funded Debt Borrowings" means the net increase of Funded Debt
(if any) (other than Capitalized Leases) from May 31, 2005 until the Closing
Date.
"Aggregate Funded Debt Repayments" means the net reduction of Funded Debt
(if any) (other than Capitalized Leases) from May 31, 2005 until the Closing
Date.
"Agreement" means this Agreement by and among Buyer, Parent and Seller, as
amended or supplemented, together with all Exhibits and Schedules attached or
incorporated by reference.
"AIG" means, together with its Affiliates and Subsidiaries, American
International Group, Inc.
"Ancillary Agreements" means the Stockholders Agreement, Executive
Stockholders Agreement, the Management Services Agreement, the Employment
Agreement and the Escrow Agreement.
"Approval" means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or which is material in the case of any
other Person.
"Associate" of a Person means (a) a corporation or organization (other than
York or a party to this Agreement) of which such Person or any Associate is an
officer, director or partner or is, directly or indirectly, the beneficial owner
of ten percent (10%) or more of any class of Equity Securities, (b) any trust or
other estate in which such Person or any Associate has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar capacity
and (c) any relative or spouse of such Person or any relative of such spouse who
has the same home as such Person.
"Audited Financial Statements" has the meaning set forth in Section 3.7(a)
hereof.
"Bexil" has the meaning set forth in the third recital to this Agreement.
"Bexil Sale" has the meaning set forth in the third recital of this
Agreement
"Bexil Shares" has the meaning set forth in the third recital of this
Agreement.
"Books and Records" shall mean (a) all records and lists of York and its
Subsidiaries pertaining to their respective assets, (b) all records and lists
pertaining to the business, customers, suppliers or personnel of York and its
Subsidiaries, (c) all product, business and marketing plans of York and its
Subsidiaries and (d) all books, ledgers, files, reports, plans, drawings and
operating records of every kind maintained by York and its Subsidiaries.
"Buyer" has the meaning set forth in the preamble to this Agreement.
"Buyer Indemnified Parties" has the meaning set forth in Section 8.2
hereof.
"Buyer Parties" has the meaning set forth in the preamble to this
Agreement.
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"Buyer Title Representations" has the meaning set forth in Section 8.1.
"Capitalized Leases" means leases required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Cash" means cash and cash equivalents (including marketable securities) of
York and its Subsidiaries as would be reflected on a consolidated balance sheet
of York and its Subsidiaries prepared in accordance with GAAP.
"Cash Amount" means $110,000,000 less the sum of (a) the Purchase Price (as
defined in the Bexil Purchase Agreement) paid for the Bexil Shares pursuant to
the Bexil Purchase Agreement, (b) 50% of the aggregate amount of Funded Debt as
of May 31, 2005 (other than Capitalized Leases), (c) the greater of: (x) the sum
of the Stockholder Distributions and Aggregate Funded Debt Repayments and (y)
the sum of the Aggregate Funded Debt Borrowings and the Cash Deficiency Amount;
provided, however, for the avoidance of doubt, if the amounts obtained from the
calculations in items (x) and (y) of this clause (c) are identical, then this
clause (c) shall equal the amount obtained from the calculation set forth in
item (x), and (d) the Company Transaction Expenses.
"Cash Consideration Per Share" means the Cash Amount divided by the
MacArthur Shares.
"Cash Deficiency Amount" means the amount (if positive) by which (a)
$7,800,000 exceeds (b) Cash as of the Closing Date. "CERCLA" means the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Sections 9601, et seq., and the regulations promulgated
thereunder.
"Closing" means the consummation of the Transactions and the other
transactions contemplated by this Agreement.
"Closing Date" has the meaning set forth in Section 1.4 hereof.
"Closing Purchase Price Certificate" has the meaning set forth in Section
5.9 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the applicable regulations thereunder.
"Commitment Letters" has the meaning set forth in Section 2.7 hereof.
"Company Transaction Expenses" means (i) any prepayment, redemption or
defeasance premiums or penalties or LIBOR breakage fees incurred by York or its
Subsidiaries in connection with the repayment, redemption or defeasance of
Funded Debt (including, without limitation, any Funded Debt outstanding pursuant
to the Wachovia Agreement or the Loan and Security Agreement) at or prior to
Closing in connection with the transactions contemplated by this Agreement, (ii)
fees and expenses of counsel, accountants, investment bankers, financial
advisors, experts and consultants to York or any of its Subsidiaries incurred in
connection with this Agreement and the transactions contemplated hereby, (iii)
the EAR Cash Amount, (iv) any payment or promises for payment made by York or
its Subsidiaries to management, executives or other employees as a result of the
transactions contemplated by this Agreement, (v) cash fees paid to third parties
that are parties to Contracts with York or any of its Subsidiaries in order to
obtain the consent of such third parties to this Agreement and the transactions
contemplated hereby or due to the vesting of any payment right as a result of
such transactions and (vi) the costs and expenses incurred by York (not
otherwise reimbursed by Seller and Bexil) in connection with
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the Stockholder Distributions (including, without limitation, the costs and
expenses of entering into the Wachovia Agreement).
"Confidentiality Agreement" means that certain Confidentiality Agreement
between Odyssey Investment Partners, LLC and ▇▇▇▇▇▇▇ Associates dated as of
March 18, 2005.
"Contract" means any agreement, arrangement, bond, insurance policy,
commitment, franchise, indemnity, indenture, instrument, lease, license,
insurance policy or understanding, whether or not in writing.
"Contribution Amount" means $10,000,000.
"Default" shall mean (a) a breach of or default under any Contract, License
or Permit, (b) the occurrence of an event that with the passage of time or the
giving of notice or both would constitute a breach of or default under any
Contract, License or Permit, or (c) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give rise to a
right of termination, renegotiation or acceleration under any Contract, License
or Permit.
"EAR Cash Out Amount" has the meaning set forth in Section 5.12 hereof.
"EAR Plan" means that Key Contributor Recognition and Long-Term Incentive
Compensation Plan adopted by York on April 4, 2003 and becoming effective on
January 1, 2003, granting EARs to selected executives and other key
contributors.
"EARs" mean those stock appreciation rights, referred to as Enterprise
Appreciation Rights in the EAR Plan, granted to selected executives and other
key contributors under the EAR Plan.
"Effective Time" has the meaning set forth in Section 5.15 hereof.
"Employment Agreement" means that certain employment agreement, dated as of
the date hereof, by and between Parent and Seller, attached hereto as Exhibit I.
"Encumbrance" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, mortgage, lien, option, pledge, rights of others,
restriction (whether on voting, sale, transfer, disposition or otherwise), or
other encumbrance whatsoever, whether imposed by agreement, understanding, law,
equity or otherwise, except for any restrictions on transfer generally arising
under any applicable federal or state securities Law.
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"Equity Securities" means any capital stock or other equity interest or any
securities convertible into or exchangeable for capital stock or any other
rights, warrants or options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations and published interpretations.
"ERISA Affiliate" means any entity which is considered one employer with
York or any of its Subsidiaries under Section 4001 of ERISA or Section 414 of
the Code.
"Escrow Agreement" has the meaning set forth in Section 1.2(c) hereof.
"Escrow Amount" means $4,500,000.
"Escrow Amount Per Share" means the Escrow Amount divided by the MacArthur
Shares (other than the MacArthur Contribution Shares).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Stockholders Agreement" has the meaning set forth in Section
2.10 hereof.
"Existing Stockholders Agreement" has the meaning set forth in Section
1.5(a)(iii) hereof.
"Executives" has the meaning set forth in Section 7.1(i) hereof.
"Expenses" includes all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, lenders, financing sources, experts and consultants to a party hereto
and its Affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Bexil Purchase Agreement and the
transactions contemplated hereby and thereby.
"Financial Statements" has the meaning set forth in Section 3.7(a) hereof.
"Funded Debt" means, without duplication, the sum of (a) all principal and
accrued (but unpaid) interest owing by York or any of its Subsidiaries for debt
for borrowed money owed or evidenced by letters of credit, notes, bonds or
similar instruments, (b) all obligations of York or any of its Subsidiaries as
lessee or lessees under Capitalized Leases, (c) indebtedness of any Person other
than York or any of its Subsidiaries guaranteed in any manner by York or any of
its Subsidiaries (whether as a guarantor or a surety), and (d) ▇▇▇▇-to-market
losses on hedging arrangements as would be reflected on a consolidated balance
sheet of York prepared in accordance with GAAP; provided that notwithstanding
the foregoing, in no event shall "Funded Debt" include liabilities or
obligations of York or any of its Subsidiaries incurred or arranged by Buyer
Parties or their respective Affiliates in connection with the transactions
contemplated hereby.
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"GAAP" means accounting principles generally accepted in the United States
of America, including generally accepted accounting principles as interpreted by
the SEC.
"Governmental Entity" means any governmental or regulatory body, agency,
bureau, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Hazardous Substance" shall mean: (a) any "Hazardous Substance" as defined
in CERCLA and (b) any substances that are defined or listed in, or otherwise
classified or regulated pursuant to, any other applicable Laws as "hazardous
substances," "hazardous materials," "hazardous wastes" or "toxic substances," or
for which exposure to or use of is prohibited, limited or regulated by reason of
deleterious properties such as ignitibility, corrosivity, reactivity,
radioactivity, carcinogenicity, reproductive toxicity or "EP toxicity."
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.5(a) hereof.
"Indemnifying Party" has the meaning set forth in Section 8.5(a) hereof.
"Intellectual Property" means (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
provisionals, reissuances, continuations, continuations-in-part, divisions,
revisions, extensions, and reexaminations thereof, (ii) all trademarks, service
marks, trade dress, logos, brand names, trade names, domain names and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof, and all applications, registrations, and renewals in
connection therewith, (iii) all copyrightable works, all copyrights, any and all
website content, and all applications, registrations, and renewals in connection
therewith, (iv) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, research records, records of inventions, test
information, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), and (v) all source code and object
code versions of computer software (including data and related documentation).
"Interim Balance Sheet" shall mean the unaudited consolidated balance sheet
of York and its Subsidiaries, dated as of November 30, 2005 included in the
Interim Financial Statements.
"Interim Financial Statements" has the meaning set forth in Section 3.7(a)
hereof.
"IRS" means the Internal Revenue Service or any successor.
"Knowledge" or "to its best knowledge" and like terms shall mean, with
respect to (i) York, the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; (ii) Buyer
Parties, the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and (iii)
Seller, the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; provided that, in each
case, knowledge of a particular fact or other matter
B-52
shall also be deemed to exist if any individual could reasonably be
expected to be aware of such fact or other matter after a reasonable inquiry
concerning the existence of such fact or other matter.
"Law" means any constitutional provision, laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
interpretations, principles of law and Orders of any Governmental Entity,
including without limitation environmental laws, energy, motor vehicle safety,
public utility, zoning, building and health codes, occupational safety and
health and laws respecting employment practices, employee documentation, terms
and conditions of employment and wages and hours.
"Leased Property" has the meaning set forth in Section 3.10(b) hereof.
"License" means any consent, certificate of authority, authorization,
Approval or any written waiver of the foregoing, required to be issued by any
state insurance department.
"Loan and Security Agreement" means that certain Loan and Security
Agreement between Merchants New York Commercial Corp. and York, York Claims
Service, Inc., York STB, Inc., York SCI, Inc. and York Claims Service of Nevada,
Inc., dated as of January 18, 2002.
"Lock-Up Period" has the meaning set forth in Section 9.1(b)(iii)(C)
hereof.
"Lock-Up Termination Fee" has the meaning set forth in Section
9.1(b)(iii)(C) hereof.
"Loss" means any action, cost, damage, disbursement, expense, liability,
loss, deficiency, diminution in value, obligation, penalty or settlement of any
kind or nature, whether foreseeable or unforeseeable, including, without
limitation, interest or other carrying costs, penalties, legal, accounting and
other professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified Person.
"MacArthur Contribution" has the meaning set forth in the first recital of
this Agreement.
"MacArthur Contribution Amount" means the amount obtained (rounded to the
nearest whole share) by dividing the Contribution Amount by the Cash
Consideration Per Share.
"MacArthur Contribution Shares" has the meaning set forth in the first
recital of this Agreement.
"MacArthur Sale" has the meaning set forth in the first recital of this
Agreement.
"MacArthur Sale Amount" means the MacArthur Shares less the MacArthur
Contribution Amount.
"MacArthur Shares" has the meaning set forth in the first recital of this
Agreement.
"MacArthur Transactions" has the meaning set forth in the first recital of
this Agreement.
B-53
"Management Services Agreements" means that certain management services
agreement to be entered into on or prior to the Closing Date by and between
Parent and Odyssey Investment Partners, LLC, substantially in the form of
Exhibit H hereto, as such agreement may be modified at the request of Parent's
financing sources in a manner not adverse to the interests of Seller.
"Material Adverse Effect" means, with respect to any Person, any adverse
change in the condition (financial or otherwise), business or results of
operations of such Person or any of its Subsidiaries which is material to such
Person and its Subsidiaries, taken as a whole, other than any change or effect
resulting from or arising out of (A) changes or conditions generally affecting
the industries or segments in which such Person operates or (B) changes in
local, regional or national general economic, market or political conditions
which, in the case of (A) or (B), is not specifically related to, or does not
have a materially disproportionate effect (relative to other industry
participants) on, such Person.
"Material Agreement" has the meaning set forth in Section 3.11(a) hereof.
"Merger" has the meaning set forth in Section 5.15 hereof.
"Net Consideration Per Share" means the Cash Consideration Per Share less
the Escrow Amount Per Share.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ of any Governmental Entity.
"Other Stockholders Agreement" has the meaning set forth in Section 2.10
hereof.
"Outside Date" has the meaning set forth in Section 9.1(a)(ii) hereof.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent Capitalization" means the aggregate amount of the equity
contributions made to, and aggregate purchase price of capital stock purchases
from, Parent by any Persons, other than Seller, in connection with the Closing.
"Parent Capitalization Shares" means the aggregate number of issued and
outstanding shares of Parent Common Stock upon the Closing (other than Rollover
Shares).
"Parent Common Stock" has the meaning set forth in Section 2.10 hereof.
"Parent's Indemnity Threshold" has the meaning set forth in Section
8.4(c)(ii) hereof.
"Permit" means any franchise, Order or Approval or any waiver of the
foregoing, required to be issued by any Governmental Entity.
"Permitted Liens" means (a) statutory Encumbrances of landlords, carriers,
warehousemen, mechanics and materialmen and other Encumbrances imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, (b) Encumbrances incurred or deposits made in the
ordinary course in connection with workers'
B-54
compensation, unemployment insurance and similar obligations, (c) interests
in equipment under Capitalized Leases or equipment leases, entered into in the
ordinary course of business and not exceeding a total of $1.0 million, (d)
liens, claims or charges for taxes, assessments or governmental charges or
claims the payment of which is not yet due, or which are being disputed in good
faith and for which adequate reserve has been made, (e) Encumbrances incurred or
deposits made in the ordinary course of business to landlords, utilities and
other service providers, and (f) Encumbrances to which the interest of a lessee
or sublessee may be subject under a superior lease; provided that none of the
foregoing (a) through (f) shall be material to the business of York and its
Subsidiaries either individually or in the aggregate.
"Permitted Transferee" means (i) any member of Seller's immediate family or
lineal descendants of Seller (the "Permitted Family Members"), (ii) trusts for
the benefit of Permitted Family Members, and (iii) upon Seller's death, Seller's
executors, administrators, testamentary trustees, legatees and beneficiaries;
provided that, in the case of subclause (i) and (ii), Seller retains the sole
and exclusive right to vote or dispose of any Subject Shares transferred to the
Permitted Family Member or trust.
"Person" means an association, a corporation, an individual, a partnership,
a trust, a firm or any other entity, group or organization, including a
Governmental Entity.
"Plans" has the meaning set forth in Section 3.14(a) hereof.
"Post-Closing Partial Period" has the meaning set forth in Section 6.1
hereof.
"Pre-Closing Partial Period" has the meaning set forth in Section 6.1
hereof.
"Purchase Price" has the meaning set forth in Section 1.2 hereof.
"Real Property Leases" has the meaning set forth in Section 3.10(b) hereof.
"Reference Balance Sheet Date" means May 31, 2005.
"Reference Financial Statements" has the meaning set forth in Section
3.7(a) hereof.
"Registered Intellectual Property" has the meaning set forth in Section
3.16(a) hereof.
"Representative" shall mean any officer, director, principal, attorney,
advisor, agent, employee or other representative.
"Rollover Ratio" means the amount obtained (rounded to four decimal places)
by dividing (a) the Parent Capitalization by (b) the sum of the Parent
Capitalization and the Contribution Amount.
"Rollover Shares" means the number of shares of common stock of Parent
(rounded to the nearest whole share) equal to (a) the quotient obtained by
dividing the (i) Parent Capitalization Shares by (ii) Rollover Ratio minus (b)
the Parent Capitalization Shares.
"SEC" means the United States Securities and Exchange Commission.
B-55
"Securities Act" has the meaning set forth in Section 2.8(a) hereof.
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Disclosure Schedule" means the Seller Disclosure Schedule dated the
date hereof and delivered by York to Buyer Parties and annexed hereto. The
Sections of the Seller Disclosure Schedule shall be numbered to correspond to
the applicable Section of this Agreement. Any information disclosed on any
Seller Disclosure Schedule shall be deemed to be disclosed to Buyer Parties for
purposes of any representation or warranty in this Agreement the relevance of
which is apparent on the face of such disclosure.
"Seller's Indemnity Threshold" has the meaning set forth in Section
8.4(c)(i) hereof.
"Seller Indemnified Parties" has the meaning set forth in Section 8.3
hereof.
"Seller Title Representations" has the meaning set forth in Section 8.1
hereof.
"Shares" means the common shares of York.
"Stock Option Plan" has the meaning set forth in Section 2.10 hereof.
"Stockholder Distributions" means the aggregate amount of cash payments
made by York to Seller or Bexil (including, without limitation, with respect to
any management or consulting fees) since the Reference Balance Sheet Date;
provided, however, with respect to Seller, any payments by York to Seller in his
capacity as a director, officer or employee of York shall not be deemed to be
Stockholder Distributions.
"Stockholders Agreement" means that certain stockholders agreement, dated
as of the date hereof, by and among Parent, Seller and Odyssey Investment
Partners Fund III, LP, a Delaware limited partnership, attached hereto as
Exhibit J.
"Subject Shares" has the meaning set forth in Section 9.1(b)(iii)(C)
hereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, of which such Person or any other subsidiary of
such Person beneficially owns a majority of the voting or equity securities,
provided, however, that, with respect to York the term "Subsidiary" shall
include Underground Tank Storage Management, a Florida general partnership.
"Takeover Agreement" has the meaning set forth in Section 9.1(b)(iii)(C)
hereof.
"Takeover Proposal" means any proposal or offer from any Person (other than
Buyer Parties and its Affiliates) providing for any: (a) acquisition (whether in
a single transaction or a series of related transactions) of assets of York
having a fair market value equal to 10% or more of York's consolidated assets,
(b) direct or indirect acquisition (whether in a single transaction or a series
of related transactions) of 10% or more of the voting power of York, (c) direct
or indirect acquisition (whether in a single transaction or a series of related
transactions) of any of the MacArthur Shares, (d) tender offer or exchange offer
that if consummated would result in any
B-56
Person beneficially owning 10% or more of the voting power of York, or (e)
merger, consolidation, share exchange, business combination, recapitalization or
similar transaction involving York in each case, other than the Transactions.
"Tax" or "Taxes" means (i) taxes of any kind, levies or other like
assessments, imposts, charges or fees, including, without limitation, income,
gross receipts, ad valorem, value added, excise, real or personal property,
asset, sales, use, license, payroll, transaction, capital, net worth and
franchise taxes, escheat liability or other similar property rights asserted by
any Governmental Entity or governmental authority, estimated taxes, withholding,
employment, social security, workers compensation, utility, severance
production, unemployment compensation, occupation, premium, windfall profits,
transfer and gains taxes or other governmental taxes imposed or payable to the
United States, or any state, county, local or foreign government or subdivision
or agency thereof, and in each instance such term shall include any interest,
penalties or additions to tax attributable to any such Tax and (ii) any
liability for Taxes of another Person as a transferee, successor, by operation
of Law, contract or otherwise.
"Taxpayer" or "Taxpayers" means York and/or its Subsidiaries.
"Tax Return" means any report, return, statement, estimate, extension
request, declaration, notice, form or other information required to be supplied
to a taxing authority in connection with Taxes.
"Transaction Expense Statement" has the meaning set forth in Section 5.9
hereof.
"Transactions" has the meaning set forth in the third recital of this
Agreement.
"Transfer" means a transfer, sale, assignment, pledge, hypothecation or
other disposition, exchange or encumbrance of or a grant of a participation
interest in (whether by merger, operation of Law, contract or otherwise),
including any Transfer of a voting or economic interest in, Equity Securities or
other property.
"Vested EARs" has the meaning set forth in Section 5.12 hereof.
"Wachovia Agreement" means that certain loan agreement, dated December 14,
2005, by and between Wachovia, as lender, and York, as borrower.
"Wachovia Bank" means Wachovia Bank, National Association.
"Year-End Compensation Arrangements" means salary adjustments, bonus
payments and other compensation payments made at the end of or for calendar year
2005 to directors, officers, employees, consultants or agents of York or its
Subsidiaries which are consistent in all material respects with prior years'
practices relating thereto and amounts thereof. The Year-End Compensation
Arrangements for ten key management personnel and for each department of York
(on an aggregate basis) are set forth on Schedule 5.2(n) of the Seller
Disclosure Schedule.
"York" has the meaning set forth in the first recital to this Agreement.
B-57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
YORK INSURANCE HOLDINGS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO and President
YORK INSURANCE ACQUISITION, INC., a Delaware corporation
By: : /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO and President