Exhibit 2.1
AGREEMENT AND PLAN OF SPLIT-OFF AND MERGER
This Agreement And Plan Of Split-Off And Merger (this "Agreement") dated as
of September 27, 2002, among Zenex International, Inc., a Colorado corporation
("Parent"), AR Acquisition Corp., an Oklahoma corporation and a wholly owned
subsidiary of Parent ("Sub"), Xxxxxxxx Roofing & Sheet Metal, Inc., an Oklahoma
corporation (the "Company"), and Xxx Xxxxxxxx, an Oklahoma resident and the sole
shareholder of the Company ("Shareholder").
Whereas Parent and Company wish to effect Parent's acquisition of the
Roofing Business of the Company through a merger of the Company with Sub (the
"Merger") on the terms and conditions set forth herein;
Whereas the Board of Directors of the Company has approved a Restructuring
Agreement in the form of Annex A attached hereto with such changes as may be
permitted under Section 6.13 (the "Restructuring Agreement"), which will be
entered into before the Effective Time (as defined in Section 1.03), pursuant to
which, before the Effective Time, (a) all the assets of the Company primarily
related to the Ranching Operations (as defined in the Restructuring Agreement)
will be transferred to Xxxxxxxx Holdings, Inc., a newly-formed and wholly owned
subsidiary of the Company ("Newco") and (b) Newco will assume the Assumed
Liabilities (as defined in the Restructuring Agreement);
Whereas, upon the Split-Off (as defined below), it is intended that the
Company will own only the Roofing Business;
Whereas, upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, the holder of shares of common stock, par
value $1.00 per share, of the Company ("Company Common Stock") will receive a
distribution of all the shares of common stock, par value $.001 per share, of
Newco ("Newco Common Stock") in consideration for the redemption of a portion of
their shares of Company Common Stock (the "Split-Off");
Whereas, upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Sub will merge with and into the Company and
each issued and outstanding share of Company Common Stock, other than Company
Common Stock owned by Parent, Sub or the Company, will be converted into the
right to receive (a) shares of common stock, par value $.001 per share, of
Parent ("Parent Common Stock"), (b) options to acquire shares of Parent Common
Stock, and (c) shares of Newco Common Stock;
Whereas, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable this Agreement and the transactions
contemplated hereby, and the sole shareholder of Sub has approved this Agreement
and the transactions contemplated hereby;
Whereas, simultaneously with the execution and delivery of this Agreement
and as a condition and inducement to Parent's willingness to enter into this
Agreement, certain Company executives have entered into separate employment and
non-competition agreements with Parent (collectively, the "Non-Competition
Agreements");
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Whereas, for Federal income tax purposes, it is intended (a) by the Company
that the distribution of Newco Common Stock in connection with the transactions
contemplated by this Agreement shall qualify, as to the shareholders of the
Company, as a transaction described in Section 355 of the Internal Revenue Code
of 1986, as amended (the "Code") (it being understood and agreed that such
qualification shall not be a condition to the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements and that
Parent shall have no obligation to cause such distribution to so qualify) and
(b) by the parties that (i) the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Code, as amended (the "Code") and
(ii) this Agreement constitutes a plan of reorganization; and
Whereas Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Split-Off and the Merger.
Now, Therefore, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE SPLIT-OFF AND THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Act of
the State of Oklahoma (the "OGCA"), Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the OGCA.
Section 1.02. Closing. The closing of the Split-Off and the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Article VIII (other than those
conditions that by their terms are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions), at the offices of Xxxxxxx &
Xxxxxx, LLP, Bank One Center, 20th Floor, 000 X. Xxxxxxxx Xxx., Xxxxxxxx Xxxx,
Xxxxxxxx 00000, unless another time, date or place is agreed to in writing by
the parties hereto. The date on which the Closing occurs is referred to in this
Agreement as the "Effective Time".
Section 1.03. Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on the Effective Time, the parties shall file a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the OGCA and, as soon as practicable on or after the
Effective Time, shall make all other filings or recordings required under the
OGCA. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Oklahoma, or at
such other time, if any, as Parent and the Company shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
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Section 1.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 1081 of the OGCA.
Section 1.05. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of the Sub, as in effect immediately
before the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law, except that the first sentence of paragraph 1 thereof shall
be amended to read in its entirety as follows: "The name of the Corporation is
Xxxxxxxx Roofing & Sheet Metal, Inc." Notwithstanding any provisions herein to
the contrary, Parent may cause the Certificate of Incorporation of Sub to be
amended to increase the number of shares of authorized capital stock.
(b) The Bylaws of Sub, as in effect immediately before the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
Section 1.06. Directors. The directors of the Company immediately before
the Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.07. Officers. The officers of the Company immediately before the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE SPLIT-OFF AND THE MERGER
ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock, par value $.001 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company as treasury stock, or by
Parent or Sub, shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
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(c) Conversion of Company Common Stock. Subject to Section 2.02(e), (i) 50
shares of the issued and outstanding Company Common Stock (excluding the shares
to be canceled in accordance with Section 2.01(b)) shall be converted into the
right to receive from the Company, 1,000 validly issued, fully paid and
nonassessable shares of Newco Common Stock (the "Split-Off Consideration"), and
(ii) 250 shares of the issued and outstanding Company Common Stock (excluding
the shares to be canceled in accordance with Section 2.01(b)) shall be converted
into the right to receive from Parent, (x) 10,000,000 validly issued, fully paid
and nonassessable shares of Parent Common Stock (the "Merger Share
Consideration"), and (y) options to purchase 30,000,000 shares of Parent Common
Stock (the "Merger Option Consideration") (together, the "Merger
Consideration"). The Split-Off Consideration and the Merger Consideration are
collectively referred to as the "Closing Consideration". The Merger Option
Consideration shall be further evidenced by a stock option agreement in the form
of Annex B attached hereto (the "Option Agreement").
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate which immediately before the
Effective Time represented any such shares of Company Common Stock (each, a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive the Closing Consideration.
Section 2.02. Exchange of Certificates. As of the Effective Time (i) the
Company shall tender certificates representing 1,000 shares of Newco Common
Stock issuable pursuant to Section 2.01 in exchange for 50 outstanding shares of
Company Common Stock and (ii) Parent shall tender certificates representing
10,000,000 shares of Parent Common Stock and the Option Agreement covering
options to purchase 30,000,000 shares of Parent Common Stock issuable pursuant
to Section 2.01 in exchange for 250 outstanding shares of Company Common Stock.
Against the deliveries of the Company and Parent, the Shareholder shall deliver
the Certificates representing the issued and outstanding Company Common Stock,
duly endorsed in blank by Shareholder, or accompanied by blank stock powers.
Shareholder agrees promptly to cure any deficiencies with respect to the
endorsement of the Certificates or other documents of conveyance with respect to
the Company Common Stock or with respect to any stock powers accompanying the
Company Common Stock.
All shares of Parent Common Stock and Newco Common Stock issued upon the
surrender for exchange of Certificates in accordance with the terms of this
Article shall be deemed to have been issued (and paid) in full satisfaction of
all rights pertaining to the shares of Company Common Stock previously
represented by such Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock that were outstanding immediately before the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article.
ARTICLE III
RELATED TRANSACTIONS
Section 3.01. Reorganization Agreements. Before the Effective Time, the
Company shall (a) execute and deliver the Restructuring Agreement and the
Post-Closing Covenants Agreement in the form of Annex D attached hereto with
such changes as may be mutually agreed upon by the Company and Parent (the
"Post-Closing Covenants Agreement"), and (b) cause Newco to execute and deliver
the Restructuring Agreement and the Post-Closing Covenants Agreement. Before the
Effective Time, Parent shall execute and deliver the Post-Closing Covenants
Agreement.
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Section 3.02. Transaction Agreements. Before the Effective Time, Parent and
the Company shall, and the Company shall cause Newco to, execute and deliver
this Agreement, the Option Agreement, the Restructuring Agreement and the
Post-Closing Covenants Agreement, the "Transaction Agreements").
Section 3.03. Restructuring of Assets and Assumption of Liabilities.
Immediately before the Effective Time and pursuant to the terms of the
Restructuring Agreement, the Company shall consummate the Restructuring upon the
terms and subject to the conditions set forth in the Restructuring Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Company. Except as
disclosed or set forth on the disclosure schedule (with specific reference to
the particular subsection of this Agreement to which the information set forth
in such disclosure schedule relates) delivered by the Company to Parent before
the execution of this Agreement (the "Company Disclosure Schedule"), each of the
Company and Shareholder represent and warrant to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own, lease or otherwise hold and operate its properties and other assets and to
carry on its business as presently conducted. The Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties or other assets makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate has not had and is not reasonably be
expected to have a Material Adverse Effect. The Company has delivered to Parent
before the execution of this Agreement true and correct copies of its
Certificate of Incorporation (the "Company Certificate") and Bylaws (the
"Company Bylaws"), in each case as amended through the date hereof. The Company
has made available to Parent and its representatives true and complete copies of
the minutes of all meetings of the Shareholder and the Board of Directors of the
Company since inception.
(b) Subsidiaries. The Company has no subsidiaries (except for Newco).
Except as set forth in the disclosure schedule, the Company does not presently
own, of record or beneficially, or control, directly or indirectly, any capital
stock, securities convertible into capital stock or any other equity interest in
any corporation, association or business entity nor is the Company, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
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(c) Capital Structure. The authorized capital stock of the Company consists
of 600 shares of Company Common Stock, of which 300 shares are held by
Shareholder, and 300 shares are held by the Company as treasury stock. Except as
set forth above, no shares of capital stock or other voting securities or equity
interest of the Company are issued, reserved for issuance or outstanding. Except
as set forth above, (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities or equity
interests of the Company, (B) any securities of the Company convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or equity interests of the Company or (C) any warrants, calls,
options or other rights to acquire from the Company, or any obligation of the
Company to issue, any capital stock, voting securities, equity interests or
securities convertible into or exchangeable or exercisable for capital stock,
voting securities or equity interests of the Company and (y) there are not any
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. The Company is not a party to any voting
agreement with respect to the voting of any such securities. No person other
than the Shareholder has any beneficial interest in the Company's Common Stock.
All shares of the Company's Common Stock are free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"), and are duly authorized, validly
issued, fully paid and nonassessable.
(d) Authority; Noncontravention. The Company has the requisite power and
authority to enter into each Transaction Agreement to which it is or will be a
party and to consummate the transactions contemplated thereby. The execution and
delivery by the Company of each Transaction Agreement and the consummation by
the Company of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize such
Transaction Agreements or to consummate the transactions contemplated thereby.
The execution and delivery by Newco of the Transaction Agreements to which it is
or will be a party and the consummation by it of the transactions contemplated
thereby have been, or before the execution and delivery of the Restructuring
Agreement will be, duly authorized by all necessary action and no other
proceedings by Newco are or will be necessary to authorize the Transaction
Agreements or to consummate the transactions contemplated thereby. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by each of the other parties hereto,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. Each Transaction Agreement
(other than this Agreement) to which the Company or Newco will be a party will,
when executed and delivered by such entity, and, assuming the due authorization,
execution and delivery by Parent, constitute a legal, valid and binding
obligation of such entity, enforceable against such entity in accordance with
its terms. The Board of Directors of the Company has duly and unanimously
adopted resolutions (i) approving and declaring advisable this Agreement and
each other Transaction Agreement, the Merger and the other transactions
contemplated hereby and thereby, (ii) declaring that it is in the best interests
of the Shareholder that the Company enter into this Agreement and consummate the
Merger and the other transactions contemplated hereby on the terms and subject
to the conditions set forth in this Agreement, (iii) declaring that it is in the
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best interest of the Shareholder that the Company enter into each other
Transaction Agreement to which it is a party and consummate the transactions
contemplated thereby on the terms and subject to the conditions set forth
therein, (iv) directing that this Agreement be submitted for the written consent
of the Shareholder and (v) recommending that the Shareholder adopt this
Agreement. The execution and delivery by the Company of the Transaction
Agreements do not, and the consummation of the transactions contemplated thereby
and compliance with the provisions thereof will not, conflict with, or result in
any violation or breach of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or result in the
creation of any Lien in or upon any of the properties or assets of the Company
under, (x) the Company Certificate or Company Bylaws, (y) any loan or credit
agreement, bond, debenture, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit or license, whether oral or written (excluding any such items between the
Company, on the one hand, and Parent or any of its Affiliates, on the other
hand) (each, including all amendments thereto, a "Contract"), to which the
Company is a party or any of its properties or other assets is subject or (z)
subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or (B)
order, writ, injunction, decree, judgment or stipulation, in each case
applicable to the Company or its properties or other assets, other than, in the
case of clauses (y) and (z), any such conflicts, violations, breaches, defaults,
rights, losses or Liens that individually or in the aggregate have not had and
are not reasonably expected to have a Material Adverse Effect.
No consent, approval, order or authorization of, action by or in respect
of, or registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory agency,
commission or authority (each, a "Governmental Entity") is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement by the Company or the execution and delivery of the other Transaction
Agreements by the Company or the consummation of the transactions contemplated
hereby or thereby, except for the filing of the Certificate of Merger with the
Secretary of State of the State of Oklahoma and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made individually or in the aggregate has not had and are not reasonably
expected to have a Material Adverse Effect.
(e) Compliance With Law. The Company is in compliance with all statutes,
laws, ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to it, its properties or other assets or its
business or operations (collectively, "Legal Provisions"), except for instances
of noncompliance or possible noncompliance that individually or in the aggregate
have not had and are not reasonably expected to have a Material Adverse Effect.
The Company has in effect all material approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights of or with all
Governmental Entities, including all authorizations under Environmental Laws
(collectively, "Permits"), necessary for it to own, lease or operate its
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properties and assets and to carry on its business and operations as presently
conducted, except for failures to have in effect such Permits that individually
or in the aggregate have not had and are not reasonably expected to have a
Material Adverse Effect. There has occurred no default under, or violation of,
any such Permit, except individually or in the aggregate as has not had and are
not reasonably expected to have a Material Adverse Effect. The Merger and the
other transactions contemplated by the Transaction Agreements, in and of
themselves, will not cause the revocation or cancellation of any Permit that
individually or in the aggregate are reasonably expected to have a Material
Adverse Effect. No action, demand, requirement or investigation by any
Governmental Entity and no suit, action or proceeding by any other person, in
each case with respect to the Company or any of its properties or other assets
under any Legal Provision, is pending or, to the Knowledge of the Company and
the Shareholder, threatened, other than, in each case, those the outcome of
which individually or in the aggregate has not had and are not reasonably
expected to have a Material Adverse Effect.
(f) Litigation. Except as delivered to Parent in the disclosure schedule,
there is no suit, action or proceeding pending or, to the Knowledge of the
Company and the Shareholder, threatened against or affecting the Company or any
of its properties or assets that individually or in the aggregate has had or are
reasonably expected to have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against, or, to the Knowledge of the Company and the
Shareholder, investigation by any Governmental Entity involving, the Company
that individually or in the aggregate has had or are reasonably expected to have
a Material Adverse Effect.
(g) Company Financial Statements. The Company has delivered to Parent its
audited balance sheets, statements of operations and statements of cash flows
for the years ended December 31, 2000 and 2001, and the unaudited balance
sheets, statement of operations and statement of cash flows for the six months
ended June 30, 2002 (the "Balance Sheet Date"). Each of the balance sheets
(including any related notes and schedules) fairly presents in all material
respects the financial position of the Company as of its date, and each of the
statements of operations and statements of cash flows (including any related
notes and schedules) fairly presents in all material respects the results of
operations and cash flows, as the case may be, of the Company for the periods
set forth therein (subject in the case of unaudited statements to normal year
end adjustments) (i) in the case of the audited financial statements, in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis, and (ii) in the case of the unaudited financial statements, in
accordance with GAAP (except the required footnote disclosures). All of the
adjustments necessary to convert in all material respects the audited financial
statements into GAAP have been recorded in the appropriate periods on the books
and records of the Company, and after the application of such adjustments all
the financial statements referred to in this Section have been prepared on a
consistent basis. There has been no material change in the financial position of
the Company since the Balance Sheet Date. Except disclosed in the financial
statements or the footnotes thereto and except for liabilities or obligations
incurred in connection with this Agreement or any of the other Transaction
Agreements, the Company has no liabilities or obligations (other than to Parent
or any of its Affiliates) of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, have had or are
reasonably expected to have a Material Adverse Effect.
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(h) Taxes. The Company has timely filed all requisite Federal, state and
other Tax Returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth in disclosure schedule,
there are no examinations in progress or claims pending against the Company for
federal, state and other Taxes (including penalties and interest) for any period
or periods before and including the Balance Sheet Date and no notice of any
claim for Taxes, whether pending or threatened, has been received. All Tax,
including interest and penalties (whether or not shown on any Tax Return), due
by the Company has been paid. The amounts shown as accruals for Taxes on the
Financial Statements are sufficient for the payment of all Taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before the date of the respective Financial Statements. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the federal and
local income Tax Returns of Company for their last three fiscal years, or such
shorter period of time as any of them shall have existed, are attached hereto as
Schedule 4.01(h) or have otherwise been delivered to Parent. The Company has a
taxable year ended December 31. Except as set forth in the disclosure schedule,
the Company uses the accrual method of accounting for income tax purposes, and
the Company's methods of accounting have not changed in any material respect in
the past five years (except as required to conform to changes in GAAP).
(i) Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in the Parent Form 8-K will, at the time it is filed with the Securities and
Exchange Commission (the "SEC"), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(j) Absence of Certain Changes or Events. Except (i) for liabilities
incurred in connection with this Agreement or any of the other Transaction
Agreements, and (ii) the transactions described in the Transaction Agreements,
since the Balance Sheet Date, the Company has conducted its business only in the
ordinary course consistent with past practice, and there has not been (i) any
Material Adverse Change, (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock, (iii) any split, combination or
reclassification of any of the Company's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of such capital stock, (iv) before the date of
this Agreement (A) any granting by the Company to any current or former
director, officer, employee or consultant of any increase in compensation, bonus
or other benefits, except for increases in cash compensation in the ordinary
course of business consistent with past practice, (B) any granting by the
Company to any current or former director, officer, employee or consultant of
any increase in severance or termination pay, (C) any entry by the Company into,
or any amendment of, (1) any employment, deferred compensation, consulting,
severance, termination or indemnification agreement, arrangement or
understanding with any current or former director, officer, employee or
consultant or (2) any agreement with any current or former director, officer,
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employee or consultant the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving the
Company of a nature contemplated by this Agreement or any of the other
Transaction Agreements (all such agreements under this clause (C), collectively,
"Benefit Agreements"), or (D) any adoption of, or amendment to, a Benefit Plan,
(v) any damage, destruction or loss, whether or not covered by insurance, that
individually or in the aggregate has had or are reasonably expected to have a
Material Adverse Effect, (vi) any change in accounting methods, principles or
practices by the Company materially affecting the Company's assets, liabilities
or business, except insofar as may have been required by a change in GAAP, or
(vii) any material tax election or any settlement or compromise of any material
income tax liability.
(k) Environmental Matters. The Company has conducted its businesses in
compliance in all material respects with all applicable Environmental Laws,
including, without limitation, having all environmental permits, licenses and
other approvals and authorizations necessary for the operation of its business
as presently conducted, except where the failure to have such permit, license,
approval or authorization would not have a Material Adverse Effect, (ii) none of
the properties owned by the Company contain any Hazardous Substance as a result
of any activity of the Company in amounts exceeding the levels permitted by
applicable Environmental Laws, except where amounts in excess of such levels
would not have a Material Adverse Effect, (iii) the Company has not received any
notices, demand letters or requests for information from any Federal, state,
local or foreign governmental entity or third party indicating that the Company
may be in violation of, or liable under, any Environmental Law in connection
with the ownership or operation of its business, (iv) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the Knowledge of the Company or the
Shareholder, threatened, against the Company relating to any violation, or
alleged violation, of any Environmental Law, except where such violation would
not have a Material Adverse Effect, (v) no reports have been filed, or are
required to be filed, by the Company concerning the release of any Hazardous
Substance or the threatened or actual violation of any Environmental Law, (vi)
no Hazardous Substance has been disposed of, released or transported in
violation of any applicable Environmental Law from any properties owned by the
Company as a result of any activity of the Company during the time such
properties were owned, leased or operated by the Company, (vii) there have been
no environmental investigations, studies, audits, tests, reviews or other
analysis regarding compliance or non-compliance with any applicable
Environmental Law conducted by or which are in the possession of the Company
relating to the activities of the Company which are not listed in the disclosure
schedule attached hereto before the date hereof, (viii) to the Knowledge of the
Company and the Shareholder, (A) there are no underground storage tanks on, in
or under any properties owned by the Company and (B) no underground storage
tanks have been closed or removed from any of such properties during the time
such properties were owned, leased or operated by the Company which are not
listed in the disclosure schedule, (ix) to the Knowledge of the Company and the
Shareholder, (A) there is no asbestos or asbestos-containing material present in
any material quantity in any of the properties owned by the Company, and (B) no
asbestos has been removed from any of such properties during the time such
properties were owned, leased or operated by the Company, and (x) neither the
Company nor any of its respective properties are subject to any material
liabilities or expenditures (fixed or contingent) relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental Law.
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As used herein, "Environmental Law" means, as of the Effective Time, any
Federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction or requirement or any agreement with any
governmental entity to which the Company is a party or subject relating to (x)
the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect on the Effective Time. The term
Environmental Law includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Effective Time, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Hazardous Substance.
As used herein, "Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive, or
dangerous, or otherwise regulated, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos or
asbestos-containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
(l) Personal Property. The Company has delivered to Parent an accurate list
(which is set forth in the disclosure schedule) of (x) all personal property
material to the operations of the Company as of the Balance Sheet Date included
in "plant, property and equipment" on the balance sheet of the Company, (y) all
other items of personal property owned by the Company with an individual value
in excess of $15,000 (i) as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date and (z) all material leases and agreements in respect of
personal property, including, in the case of each of (x), (y) and (z), (1) true,
complete and correct copies of all such leases and (2) an indication as to which
assets are currently owned, or were formerly owned, by Shareholder, relatives of
11
Shareholder, or Affiliates of the Company. Except as set forth in the disclosure
schedule, (i) all personal property material to, and used by, the Company in its
business is either owned by the Company or leased by the Company pursuant to a
lease included in the disclosure schedule, (ii) all of the personal property
listed in the disclosure schedule or replacement property thereof is in working
order and condition, ordinary wear and tear excepted and (iii) all leases and
agreements included in the disclosure schedule are in full force and effect and
constitute valid and binding agreements of the Company in each case in
accordance with their respective terms.
(m) Significant Customers; Material Contracts and Commitments. The Company
has delivered to Parent a materially accurate list (which is set forth in
Schedule 4.01(m)) of all customers (persons or entities) representing 5% or more
of the Company's annual revenues for any period covered by any of the Financial
Statements. None of such customers has canceled or, to the Knowledge of the
Company and the Shareholder, are currently threatening to cancel a currently
effective contract with the Company.
The Company has listed in Schedule 4.01(m) all material contracts,
commitments and similar agreements to which the Company is a party or by which
it or any of its properties are bound (including, but not limited to, contracts
with customers listed in the disclosure schedule, joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options to purchase land), other than agreements listed in Schedule 4.01(m), (i)
in existence as of the Balance Sheet Date and (ii) entered into since the
Balance Sheet Date, and in each case has delivered or made available to Parent
true, complete and correct copies of such agreements. For purposes of the
preceding sentence, a contract, commitment or similar agreement is "material" if
it (i) has a term of more than one year (other than contracts, commitments or
agreements that are cancelable without liability or penalty within 30 days of
notice from the Company of cancellation or that can be terminated by the Company
without material penalty upon notice of 30 days or less) or (ii) requires the
payment by or to the Company of more than $100,000 during any 12-month period.
Except for expenditures in the ordinary course of business, the Company has also
indicated in the disclosure schedule a summary description of all plans or
projects involving the opening of new operations, expansion of existing
operations, or the acquisition of any personal property, business or assets
requiring, in any event, the payment of more than $50,000 by the Company during
any 12-month period.
Except as set forth in Schedule 4.01(m), the Company is not required
to provide any bonding or other financial security arrangements in any
material amount in connection with any contract listed in the
disclosure schedule.
(n) Real Property. Schedule 4.01(n) includes a list of all real property
owned or leased by the Company at the date hereof and all other real property,
if any, used by the Company in the conduct of its business. The Company has good
and insurable title to any real property owned by it that is shown in Schedule
4.01(n), and such real property is subject to no Lien, except for:
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(i) Liens reflected in the disclosure schedule or Schedule 4.01(n) as
securing specified liabilities (with respect to which no material
default by the Company exists);
(ii) Liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property; and
(iv) easements, covenants and restrictions and other exceptions to
title which do not adversely affect the current use of the
property.
Copies of all leases and agreements in respect of such real
property leased by the Company, which are true, complete and
correct in all material respects, are attached to Schedule
4.01(n). Except as set forth in the disclosure schedule, all of
such leases included in the disclosure schedule are in full force
and effect and constitute valid and binding agreements of the
Company in accordance with their respective terms.
(o) Insurance. The Company has delivered to Parent (i) an accurate list as
of the Balance Sheet Date of all insurance policies carried by the Company and
(ii) an accurate list of all insurance loss runs or workers compensation claims
received for the past three policy years (which lists are set forth in Schedule
4.01(o)). The Company has also delivered to Parent true, complete and correct
copies of all insurance policies currently in effect. Such insurance policies
evidence all of the insurance the Company is required to carry pursuant to all
of its contracts and other agreements and pursuant to all applicable laws. All
of such insurance policies are currently in full force and effect. Since January
1, 1996, no insurance carried by the Company has been canceled by the insurer
and the Company has not been denied coverage.
(p) Compensation; Employment Agreements; Labor Matters. The Company has
delivered to Parent an accurate list (which is set forth in Schedule 4.01(p))
showing all officers, directors and key employees of the Company, listing all
employment agreements with such officers, directors and key employees and the
rate of compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each of such persons as of (i) the Balance
Sheet Date and (ii) the date hereof. The Company has provided to Parent true,
complete and correct copies of any employment agreements for persons listed in
Schedule 4.01(p). Since the Balance Sheet Date, except as disclosed in Schedule
4.01(p), there have been no increases in the compensation payable or any special
bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past practices.
The Company is not bound by or subject to (and none of its respective
assets or properties is bound by or subject to) any arrangement with any labor
union, to the Knowledge of the Company and the Shareholder, no campaign to
establish such arrangement is in progress, and there is no pending or, to
Knowledge of the Company and the Shareholder, threatened labor dispute involving
the Company and any group of its employees nor has the Company experienced any
labor interruptions over the past three years. The Company believes its
relationship with employees to be generally good.
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Except as set forth in Schedule 4.01(p), (i) there are no claims,
actions or proceedings pending or, to the Knowledge of the Company and
the Shareholder, threatened between the Company and any of its
employees, (ii) the Company has complied in all material respects with
all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours,
collective bargaining, and the payment of social security and similar
taxes, and (iii) the Company has not received written notice from any
person asserting that the Company is liable in any material amount for
any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing.
(q) Employee Plans. The Company has delivered to Parent an accurate
schedule (Schedule 4.01(q)) showing all Benefit Plans of the Company, including
all employment agreements, and deferred compensation agreements, together with
true, complete and correct copies of such plans, agreements and any trusts
related thereto, and classifications of employees covered thereby as of the
Balance Sheet Date and as of the date of this Agreement (the "Benefit Plans").
Except for the Benefit Plans, if any, described in Schedule 4.01(q), the Company
does not sponsor, maintain or contribute to any plan program, fund or
arrangement that constitutes an "employee pension benefit plan", and the Company
has no obligation to contribute to or accrue or pay any benefits under any
deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term "employee pension benefit plan"
shall have the same meaning as is given that term in Section 3(2) of ERISA. The
Company has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth in Schedule 4.01(q), and, except as
described in Schedule 4.01(q), the Company is not or could not be required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees.
The Company is not now, or will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA.
All Benefit Plans listed in Schedule 4.01(q) and the administration thereof
are in compliance in all material respects with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and regulations.
All accrued contribution obligations of the Company as of the Balance
Sheet Date with respect to any plan listed in Schedule 4.01(q) have
either been fulfilled in their entirety or are fully reflected on the
balance sheet of the Company as of the Balance Sheet Date.
14
(r) Compliance With ERISA. All plans listed in Schedule 4.01(q) that are
intended to qualify (the "Qualified Plans") under Section 401 (a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service (the "IRS") to be so qualified, and copies of such determination letters
are attached to Schedule 4.01(r). Except as disclosed in Schedule 4.01(r), all
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) since January 1, 1992 have been
timely filed or distributed, and copies thereof have been made available to
Parent. Neither Shareholder, any such plan listed in Schedule 4.01(r), nor the
Company has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No such Plan listed in
Schedule 4.01(r) has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(l) of ERISA; and the Company has not
incurred any liability for excise tax or penalty due to the IRS nor any
liability to the Pension Benefit Guaranty Corporation. The Company further
represents that except as set forth in Schedule 4.01(r) hereto:
(i) there have been no terminations, partial terminations or
discontinuations of contributions to any Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and
approval by the IRS;
(ii) no plan listed in Schedule 4.01(r) subject to the provisions of Title
IV of ERISA has been terminated;
(iii)there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed in
Schedule 4.01(r);
(iv) the Company (including any subsidiaries) has not incurred liability
under Section 4062 of ERISA; and
(v) no circumstances exist pursuant to which the Company could have any
direct or indirect liability whatsoever (including, but not limited
to, any liability to any multiemployer plan or the PBGC under Title IV
of ERISA or to the IRS for any excise tax or penalty, or being subject
to any statutory Lien to secure payment of any such liability) with
respect to any plan now or heretofore maintained or contributed to by
any entity other than the Company that is, or at any time was, a
member of a "controlled group" (as defined in Section 412(n)(6)(B) of
the Code) that includes the Company.
(s) Government Contracts. Except as set forth in the disclosure schedule,
the Company is not now a party to any governmental contract subject to price
redetermination or renegotiation.
(t) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement or the other Transaction Agreements based upon arrangements made
by or on behalf of the Company.
(u) Solvency of Xxxxxxxx Roofing. To the Company's Knowledge, immediately
following the Effective Time, and after giving effect to the Restructuring and
the Merger, (i) the fair value of the assets of Xxxxxxxx Roofing will exceed its
debts and liabilities, contingent or otherwise, (ii) the present fair saleable
value of the assets of Xxxxxxxx Roofing will be greater than the amount that
will be required to pay its then existing debts and other liabilities,
contingent or otherwise, as such debts and other liabilities become absolute and
15
matured, (iii) Xxxxxxxx Roofing will be able to pay its then existing debts and
other liabilities, contingent or otherwise, as such debts and liabilities become
absolute and matured, and (iv) Xxxxxxxx Roofing will not have an unreasonably
small amount of capital with which to conduct the business in which it will be
engaged.
Section 4.02. Representations and Warranties of Parent and Sub. Except as
(i) disclosed or set forth in the documents filed with the SEC by Parent and
publicly available before the date of this Agreement or (ii) disclosed or set
forth on the disclosure schedule (with specific reference to the particular
subsection of this Agreement to which the information set forth in such
disclosure schedule relates) delivered by Parent to the Company before the
execution of this Agreement (the "Parent Disclosure Schedule"), Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has all requisite corporate
power and authority to carry on its business as now being conducted. Each of
Parent and Sub is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate has not had and is not
reasonably expected to have a Parent Material Adverse Effect. Parent has made
available to the Company complete and correct copies of its Restated Certificate
of Incorporation and Bylaws and the Certificate of Incorporation and Bylaws of
Sub, in each case as amended to the date hereof.
(b) Authority; Noncontravention. Each of Parent and Sub has the requisite
power and authority to enter into each Transaction Agreement to which it is or
will be a party and to consummate the transactions contemplated thereby. The
execution and delivery of each Transaction Agreement to which it is or will be a
party and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of Parent and Sub
and no other corporate proceedings on the part of Parent or Sub are necessary to
authorize any such Transaction Agreement or to consummate the transactions
contemplated thereby. All outstanding shares of Parent Common Stock are, and all
shares of Parent Common Stock which may be issued pursuant to this Agreement
shall when issued be, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. This Agreement has been duly
executed and delivered by Parent and Sub, and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Sub, enforceable against Parent and Sub, in accordance
with its terms. Each Transaction Agreement (other than this Agreement) to which
Parent will be a party will, when executed and delivered by Parent, and,
assuming the due authorization, execution and delivery by each of the other
parties thereto, constitute a legal, valid and binding obligation of Parent,
enforceable against such entity in accordance with its terms. The execution and
delivery by Parent of each Transaction Agreement to which it is a party does
not, and the consummation of the Merger and the other transactions contemplated
thereby and compliance with the provisions thereof will not, conflict with, or
result in any violation or breach of, or default (with or without notice or
16
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or Sub under (i) the Restated Certificate of Incorporation or Bylaws of
Parent or the Certificate of Incorporation or Bylaws of Sub, (ii) any Contract
to which Parent or Sub is a party or any of its properties or other assets is
subject or (iii) subject to the governmental filings and other matters referred
to in the following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) order, writ, injunction, decree, judgment or stipulation, in
each case applicable to Parent or Sub or their respective properties or other
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, breaches, defaults, rights, losses or Liens that individually or in
the aggregate have not had and are not reasonably expected to have a Parent
Material Adverse Effect. No consent, approval, order or authorization of, action
by or in respect of, or registration, declaration or filings with, any
Governmental Entity is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement or the other
Transaction Agreements by Parent and Sub or the consummation by Parent and Sub
of the Merger or the other transactions contemplated hereby or thereby, except
for (1) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934 (the "Exchange Act") as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (2) the filing of the Certificate of Merger with the Secretary of
State of the State of Oklahoma, and (3) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, has not had and are not
reasonably expected to have a Parent Material Adverse Effect.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Parent Form 8-K will, at the time it is filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the Parent Form 8-K.
(d) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
(e) Tax Matters. Neither Parent, Sub nor any Affiliate of Parent has taken
or agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(f) Parent Shareholder Approval. This Agreement and the transactions
contemplated hereby, including the issuance of shares of Parent Common Stock
pursuant to Article II hereof, do not require the approval of the holders of any
shares of capital stock of Parent.
17
(g) Opinions of Financial Advisor. Parent's Board of Directors has received
the opinion of Benchmark Global Capital Group, Inc. to the effect that, as of
the date thereof, the Merger Consideration is fair from a financial point of
view to the holders of shares of Parent Common Stock.
(h) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01. Conduct of Business.
(a) Conduct of Business by the Company. During the period from the date of
this Agreement to the Effective Time, except as specifically permitted or
contemplated by any other provision of this Agreement or the other Transaction
Agreements or to the extent Parent shall otherwise consent in advance in
writing, the Company shall carry on its business in the ordinary course
consistent with past practice and in compliance in all material respects with
all applicable laws and regulations and, to the extent consistent therewith, use
all commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve the relationships with its customers, suppliers, licensors,
licensees, distributors and others having business dealings with them with the
intention that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company agrees
that, except for the transactions specifically permitted or contemplated by the
Transaction Agreements, it shall not, and shall not permit Newco to, without
Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property), in respect of, any
of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock or (z) purchase, redeem or otherwise acquire any
shares of its capital stock or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject
to any Lien any shares of its capital stock, any other voting
securities or equity interests or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, voting
securities, equity interests or convertible securities;
(iii)amend or propose to amend the Company Certificate or the Company
Bylaws;
18
(iv) directly or indirectly acquire (x) by merging or consolidating with,
or by purchasing assets of, or by any other manner, any person or
division, business or equity interest of any person or (y) any assets
that, individually, have a Exercise Price in excess of $50,000 or, in
the aggregate, have a Exercise Price in excess of $250,000, except for
purchases of raw materials, components or supplies in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, mortgage, sell and leaseback or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or other assets or any interests therein (including
securitizations), except sales of inventory and used equipment in the
ordinary course of business consistent with past practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the
Company, guarantee any debt securities of another person, or (y) make
any loans, advances or capital contributions to, or investments in,
any other person;
(vii)make any new capital expenditure or expenditures which, individually,
is in excess of $50,000 or, in the aggregate, are in excess of
$250,000;
(viii) (w) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction in the ordinary course of business
consistent with past practice, (x) cancel any indebtedness for
borrowed money, (y) waive or assign any claims or rights of
substantial value or (z) waive any benefits of, or agree to modify in
any respect, any confidentiality, standstill or similar agreements to
which the Company is a party;
(ix) except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or
agreement to which the Company is a party or waive, release or assign
any material rights or claims thereunder;
(x) except as otherwise contemplated by this Agreement or as required to
comply with applicable law, (A) adopt, enter into, terminate or amend
in any material respect any collective bargaining agreement, Benefit
Plan or Benefit Agreement, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, any current or
former officer, director, employee or consultant of the Company, (C)
pay any benefit or amount not required under any Benefit Plan or
Benefit Agreement or any other benefit plan or arrangement of the
Company as in effect on the date of this Agreement, (D) increase in
any manner the severance or termination pay of any current or former
director, officer, employee or consultant of the Company, (E) make any
material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining
agreement, Benefit Plan or Benefit Agreement, (F) grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan, (G) amend or modify any Stock Option or
19
Warrant, except as specifically provided in the Restructuring
Agreement, (H) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan, (I) take any
action to accelerate the vesting or payment of any compensation or
benefit under any Benefit Plan or Benefit Agreement, or (J) change any
actuarial or other assumption used to calculate funding obligations
with respect to any Benefit Plan or change the manner in which
contributions to any Benefit Plan are made or the basis on which such
contributions are determined;
(xi) except as otherwise contemplated by this Agreement, enter into any
Contract of a nature that would be required to be filed as an exhibit
to Form 10-K under the Exchange Act, other than contracts for the sale
of the Company's products in the ordinary course of business
consistent with past practice;
(xii)revalue any assets of the Company or, except as required by GAAP,
make any change in accounting methods, principles or practices;
(xiii) except in the ordinary course of business consistent with past
practice, extend, accelerate, discount, compromise or settle any
account payable or account receivable; or
(xiv)authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Other Actions. The Company, Parent and Sub shall not take any action
that would, or that are reasonably expected to, result in (i) any of the
representations and warranties of such party set forth in any Transaction
Agreement that are qualified by materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Split-Off and the Merger
set forth in Article VIII not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall promptly
advise the other party orally and in writing of (i) any breach of its
representations or warranties that would give rise to the failure of a condition
set forth in Section 8.02(a) or 8.03(a), as the case may be, or (ii) the failure
of it (and, in the case of Parent, Sub) to comply with or satisfy in any
material respect any covenant or agreement to be complied with or satisfied by
it under this Agreement at or before the Effective Time; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement; provided, further,
however, that the failure to provide such notification shall not give rise to a
failure of a condition set forth in Section 8.02(b) or 8.03(b), if any such
breach or failure described in clauses (i) or (ii) above shall have been cured
on or before the Effective Time or no longer exists immediately before the
Effective Time. The Company and Parent shall promptly provide the other copies
of all filings made by such party or its subsidiaries with any Governmental
Entity in connection with any Transaction Agreement and the transactions
contemplated thereby, other than the portions of such filings that include
confidential information not directly related to the transactions contemplated
by the Transaction Agreements.
20
(d) Certain Tax Matters. From the date hereof until the Effective Time, (i)
the Company (including Newco) will file all material tax returns and reports
("Post-Signing Returns") required to be filed by such entity (after taking into
account any applicable extensions); (ii) the Company (including Newco) will
timely pay all material taxes due and payable with respect to the taxable
periods covered by such Post-Signing Returns that are so filed; (iii) the
Company (including Newco) will make reasonable provision for all taxes payable
by the Company (including Newco) for which no Post-Signing Return is due before
the Effective Time; (iv) the Company will promptly notify Parent of any action,
suit, proceeding, claim or audit (collectively, "Actions") pending against or
with respect to the Company (including Newco) in respect of any material tax and
will not settle or compromise any such Action without Parent's prior written
consent, which consent shall not be unreasonably withheld; and (v) the Company
will not make any material tax election without Parent's prior written consent,
which consent shall not be unreasonably withheld.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Preparation of SEC Documents; Shareholder Consent.
(a) As soon as practicable following the date of this Agreement, the
Company and Parent shall prepare and Parent shall file with the SEC a Form 8-K
disclosing the material aspects of the Split-Off, Merger and the Transaction
Agreements, as required by the form and applicable SEC rules. The Company shall
furnish all information concerning the Company (including all required financial
information), and Parent shall furnish all information concerning Parent, as may
be reasonably requested in connection with any such action and the preparation
and filing of the Form 8-K. If at any time before the Effective Time any
information relating to the Company or Parent, or any of its Affiliates,
officers or directors, should be discovered by the Company or Parent which
should be set forth in an amendment to the Form 8-K or in a new Form 8-K, so
that the publicly available information regarding the Parent would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate filing describing
such information shall be promptly made with the SEC.
(b) The Company shall, through its Board of Directors, recommend to the
Shareholder approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby (and, if required, the other Transaction
Agreements and the transactions contemplated thereby), and Shareholder shall
approve the same.
(c) Sub shall, through its Board of Directors, recommend to Parent approval
and adoption of this Agreement, the Merger and the other transactions
contemplated hereby (and, if required, the other Transaction Agreements and the
transactions contemplated thereby), and Parent shall approved the same.
21
Section 6.02. Access to Information; Confidentiality. The Company shall
afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisors and other representatives, reasonable access during normal
business hours during the period before the Effective Time to all its
properties, books, contracts, commitments, personnel and records relating to the
Roofing Business and, during such period, the Company shall furnish reasonably
promptly to Parent a copy of all of the working papers of the Company and its
independent auditors relating to the determination and calculation of the tax
basis in the Newco Assets (subject, in the case of such independent auditors, to
the execution and delivery by Parent of a reasonable and customary release and
indemnity agreement requested by such independent auditors) and (iii) all other
information relating to the Roofing Business as Parent may reasonably request.
Parent shall hold, and shall cause it officers, employees, accountants, counsel,
financial advisors and other representatives and controlled Affiliates to hold,
all information received from the Company, directly or indirectly, in
confidence. No investigation pursuant to this Section 6.02 or information
provided or received by any party hereto pursuant to this Agreement will affect
any of the representations or warranties of the parties hereto contained in this
Agreement or the conditions hereunder to the obligations of the parties hereto.
Section 6.03. Commercially Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
its 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 consummate and
make effective, in the most expeditious manner practicable, the Merger, the
Restructuring and the other transactions contemplated by this Agreement and the
other Transaction Agreements, including using commercially reasonable efforts to
accomplish the following: (i) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
and (iii) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement and the other Transaction Agreements. In addition, the
Company shall assist Parent with Parent's evaluation of the Split-Off, Merger
and Transaction Agreements (including the Restructuring Agreement).
Section 6.04. Fees and Expenses. All fees and expenses incurred in
connection with this Agreement, the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
Section 6.05. Public Announcements. Parent and the Company will consult
with each other before issuing, and give each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement and the other Transaction
Agreements, including the Merger, and shall not issue any such press release or
make any such public statement before such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
22
Section 6.06. Restructuring Agreement. The Company shall not, before the
Effective Time, amend, waive or fail to enforce any provision of the
Restructuring Agreement without the prior written consent of Parent.
ARTICLE VII
tax matters
Section 7.01. Tax Treatment.
(a) Each of Parent and the Company shall use commercially reasonable
efforts to cause the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code.
(b) Parent shall, and shall cause the Surviving Corporation to, report the
Split-Off for federal income tax purposes in a manner consistent with its
treatment for such purposes as integrated with the Merger and as a redemption of
a number of shares of Company Common Stock equal in value to the value of the
Newco Common Stock distributed in the Split-Off, with such redemption
qualifying, as to the Shareholder, as a transaction described in Section 355 of
the Code.
Section 7.02. Preparation of Pre-Distribution Period Tax Returns and
Straddle Period Tax Returns. Parent or the Company shall, with the cooperation
of Newco, prepare and file all Tax Returns with respect to the Company for any
Pre-Distribution Period or Straddle Period. Parent and the Company shall have
sole discretion as to the positions taken in any such Tax Returns except as
otherwise provided in this Agreement.
Section 7.03. Preparation and Filing of Post-Distribution Period Tax
Returns. With respect to Post-Distribution Periods, Newco shall have sole
responsibility for preparing and filing Tax Returns with respect to it, and
Parent and the Company shall have sole responsibility for preparing and filing
Tax Returns with respect to them. Neither Newco nor Parent or the Company shall
have any responsibility for the Tax Returns of the other for Post-Distribution
Periods.
Section 7.04. Obligations of the Parties. The Company shall indemnify and
hold Newco harmless from and against any liability for Taxes attributable to the
Roofing Business. Newco shall indemnify and hold Parent and the Company harmless
from and against any liability for Taxes attributable to the Newco Business. To
the extent that a party (the "Payor") is required to make an indemnification
payment to another party (the "Payee"), the Payor shall pay the Payee no later
than ten business days before the due date of the relevant Tax Return or ten
business days after the Payor receives the Payee's calculations of the Payor's
indemnification obligation hereunder, whichever occurs last, the amount of such
indemnification obligation.
Section 7.05. Straddle Periods.
(a) To the extent permitted by law or administrative practice, the taxable
year of the Company and Newco which includes the Effective Date shall be treated
as closing on (and including) the Effective Date.
23
(b) Where it is necessary pursuant to this Agreement to apportion between
Newco, on the one hand, and the Company, on the other hand, the Tax liability of
an entity for a Straddle Period which is not treated as closing on the Effective
Date, such liability shall be apportioned between the Pre-Distribution Period
and the Post-Distribution Period on the basis of an interim closing of the
books, except that Taxes (such as real property Taxes) imposed on a periodic
basis shall be allocated on a daily basis.
Section 7.06. Definitions. For purposes of this Article:
"Post-Distribution Period" shall mean any taxable period beginning after
the Effective Date and, in the case of any Straddle Period, that portion of such
Straddle Period that begins on the day immediately following the Effective Date.
"Pre-Distribution Period" shall mean any taxable period that ends on or
before the Effective Date and, in the case of any Straddle Period, that portion
of such Straddle Period ending on and including the Effective Date.
"Straddle Period" shall mean any taxable period that begins before or on
and ends after the Effective Date.
"Tax Claim" shall mean a notice of deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim with respect to
Taxes or a Tax Return.
"Taxes", as used in this Agreement, shall include all forms of taxation,
whenever created or imposed, and whether imposed by a federal, state, local or
other Governmental Entity, including all interest, penalties and additions
imposed with respect to such amounts.
"Tax Return" shall mean all federal, state, local or other returns,
declarations, statements, reports, schedules, forms and information returns
relating to Taxes and any amended return relating to Taxes.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.01. Conditions to Each Party's Obligation to Effect the Split-Off
and the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or before the Effective Time of the
following conditions:
(a) No Restraints. No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent
jurisdiction or other statute, law, rule, regulation, legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing the
consummation of the Merger or the transactions contemplated by the Transaction
Agreements; provided, however, that each of the parties shall have used its
commercially reasonable efforts to prevent the entry of any such Restraints and
to appeal as promptly as possible any such Restraints that may be entered.
(b) Pre-Merger Transactions. The transactions contemplated by Article III,
including the Restructuring and the execution and delivery of the Transaction
Agreements not executed on the date hereof, shall have been consummated in
accordance with the terms of this Agreement and the Restructuring Agreement
(including the satisfaction of all conditions to the Restructuring set forth in
the Restructuring Agreement) in all material respects.
24
Section 8.02. Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are further subject to the satisfaction
or waiver on or before the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and the Shareholder that are qualified as to materiality shall be
true and correct, and the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Effective Time as though made on the
Effective Time. Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the vice president of finance and
treasurer of the Company and by the Shareholder to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or before the Effective Time, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the vice president of finance and treasurer of the Company to such
effect.
(c) Other Agreements. The Non-competition Agreements and the other
Transaction Agreements shall be in full force and effect and none of the parties
thereto (other than Parent) shall have breached or threatened to breach any of
its material covenants thereunder.
Section 8.03. Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the satisfaction or
waiver on or before the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub contained in the Transaction Agreements that are qualified as to
materiality shall be true and correct, and the representations and warranties of
Parent and Sub that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Effective Time as though made on the Effective Time, except to the extent such
representations and warranties expressly relate to a specified date, in which
case as of such specified date. The Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or before the Effective Time, and the Company shall
have received a certificate signed on behalf of Parent by an executive officer
of Parent to such effect.
Section 8.04. Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section
8.01, 8.02 or 8.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use commercially reasonable efforts to
consummate the Merger and the other transactions contemplated by this Agreement,
as required by and subject to Section 6.03.
25
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination. This Agreement may be terminated at any time
before the Effective Time, whether before or after receipt of any Shareholder
Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company, if the Merger shall not have been
consummated on or before December 31, 2002; provided, however, that the right to
terminate this Agreement under this Section 9.01(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to be consummated on or before such date;
(c) by Parent, if (A) the Company shall have breached or failed to perform
any of its representations, warranties, covenants or agreements set forth in
this Agreement, which breach or failure to perform would give rise to the
failure of a condition set forth in Section 8.02(a), 8.02(b) or 8.02(c), and is
incapable of being cured by the Company within 30 calendar days following
receipt of written notice of such breach or failure to perform from Parent, or
(B) the condition set forth in Section 8.02(d) shall fail; or
(d) by the Company, if (A) Parent shall have breached or failed to perform
any of its representations, warranties, covenants or agreements set forth in
this Agreement, which breach or failure to perform would give rise to the
failure of a condition set forth in Section 8.03(a) or 8.03(b), and is incapable
of being cured by Parent within 30 calendar days following receipt of written
notice of such breach or failure to perform from the Company, or (B) the
condition set forth in Section 8.03(c) shall fail.
Section 9.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 9.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, except to the extent
that such termination results from the willful and material breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
Section 9.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after any Shareholder Approval with, if necessary,
the approval of its Boards of Directors and the respective shareholders, if
applicable. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9.04. Extension; Waiver. At any time before the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the proviso of Section 9.03, waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
26
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time for a period of one
year. This Section 10.01 shall not limit any covenant or agreement of the
parties, which by its terms contemplates performance after the Effective Time.
Section 10.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to Parent or Sub, to:
Zenex International, Inc.
000 Xxxxxx X. Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxx Xxxxx
with a copy to:
Xxxxxxx & Xxxxxx, LLP
Bank One Center, 20th Floor
000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxxx
if to the Company, to:
Xxxxxxxx Roofing & Sheet Metal, Inc.
00000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx, P.L.L.C.
0000 X.X. 00xx Xx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxx
Section 10.03. Definitions. For purposes of this Agreement:
27
(a) "Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Knowledge" of any person that is not an individual means, with respect
to any matter in question, the knowledge of such person's executive officers and
other employees having primary responsibility for such matter;
(c) "Material Adverse Change" or "Material Adverse Effect" means any
change, effect, event, occurrence or state of facts (or any development or
developments which, individually or in the aggregate, are reasonably expected to
result in any change or effect) that is materially adverse to the business,
properties, assets, liabilities (contingent or otherwise), financial condition
or results of operations of the Roofing Business, other than any change, effect,
event, occurrence, state of facts or development (i) relating to the economy in
general, (ii) relating to the commercial roofing industry in general, and (iii)
resulting from any action required to be taken by the Company or any other party
pursuant to the Transaction Agreements in order to effect the Restructuring and
the other transactions contemplated thereby;
(d) "Parent Material Adverse Effect" means any change, effect, event,
occurrence or state of facts (or any development or developments which,
individually or in the aggregate, could reasonably be expected to result in any
change or effect) that is materially adverse to the business, properties,
assets, liabilities (contingent or otherwise, financial condition, results of
operations or prospects of Parent or that could reasonably be expected to impair
the ability of Parent to consummate the transactions contemplated by, or satisfy
its obligations under, the Transaction Agreements, other than any change,
effect, event, occurrence, state of facts or development (i) relating to the
economy in general, or (ii) relating to the telecommunications industry in
general;
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) "subsidiary" of any person means another person, an amount of the
voting securities, other voting rights or voting partnership interests of which
is sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
Section 10.04. Interpretation.
(a) Unless the context otherwise requires, (i) any reference to the
properties or other assets of the Company, including any intellectual property
rights, shall be to the properties and other assets that are included in the
Roofing Assets (as defined in the Restructuring Agreement), and (ii) any
reference to the business or products of the Company shall be to the business or
products if and only to the extent that they are part of the Roofing Business.
In addition, (A) any reference to the "Roofing Business" means all the business
and operations of the Company other than the Newco Business (as defined in the
Restructuring Agreement), (B) any reference to "Xxxxxxxx Roofing" means the
Company, other than Newco, determined after giving effect to the Restructuring,
28
(C) any reference to "Xxxxxxxx Employees" means the directors, officers,
employees and consultants of the Company shall be to the directors, officers,
employees and consultants who will be Xxxxxxxx Employees (as defined in the
Restructuring Agreement), and (D) any reference to Newco means Newco determined
after giving effect to the Restructuring.
(b) When a reference is made in this Agreement to an Article, a Section ,
an Exhibit, an Annex or a Schedule, such reference shall be to an Article of, a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a person
are also to its permitted successors and assigns.
Section 10.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other Transaction Agreements (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this Agreement
and the other Transaction Agreements and (b) except for the provisions of
Article II, are not intended to confer upon any person other than the parties
any rights or remedies.
Section 10.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oklahoma, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 10.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
29
Section 10.09. Specific Enforcement. The parties agree that irreparable
damage would occur and that the parties would not have any adequate remedy at
law in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Oklahoma in any state court in the State of Oklahoma, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the Federal District Court for the Western District of
Oklahoma or of any state court located in the State of Oklahoma in the event any
dispute arises out of this Agreement or the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than a Federal
court located in the State of Oklahoma or a state court located in the State of
Oklahoma.
Section 10.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
[The signature page follows.]
30
In Witness Whereof, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
Zenex International, Inc.,
By: /s/ Xxx Xxxxx
----------------------------------
President and CEO
AR Acquisition Corp.,
By: /s/ Xxx Xxxxx
----------------------------------
President
Xxxxxxxx Roofing & Sheet Metal, Inc.
By: /s/ Xxx Xxxxxxxx
----------------------------------
President
/s/ Xxx Xxxxxxxx
-----------------------------------
Xxx Xxxxxxxx
31
APPENDIX TO THE MERGER AGREEMENT
Annex A Form of Restructuring Agreement
Annex B Form of Stock Option Agreement
Annex C Form of Post-Closing Covenants Agreement
LIST OF SCHEDULES
Xxxxxxxx Roofing..............................................Section 10.04
INDEX OF DEFINED TERMS
Xxxxxxxx Roofing............................................. Section 10.04
Xxxxxxxx Employee............................................ Section 10.04
Affiliate................................................. Section 10.03(a)
Agreement......................................................... Preamble
Average Closing Price.......................................Section 8.02(d)
Balance Sheet Date......................................... Section 4.01(g)
Benefit Agreements......................................... Section 4.01(j)
Benefit Plans.............................................. Section 4.01(q)
Certificate................................................... Section 2.01
Certificate of Merger......................................... Section 1.03
Closing....................................................... Section 1.02
Closing Consideration......................................... Section 2.01
Effective Time................................................ Section 1.02
Code.............................................................. Recitals
Company........................................................... Preamble
Company Bylaws............................................. Section 4.01(a)
Company Certificate........................................ Section 4.01(a)
Company Common Stock.............................................. Recitals
Company Disclosure Schedule................................... Section 4.01
OGCA.......................................................... Section 1.01
Effective Time................................................ Section 1.03
Environmental Laws......................................... Section 4.01(k)
ERISA...................................................... Section 4.01(q)
Exchange Act............................................... Section 4.01(b)
GAAP....................................................... Section 4.01(g)
Governmental Entity........................................ Section 4.01(d)
Hazardous Substance........................................ Section 4.01(k)
IRS........................................................ Section 4.01(r)
Knowledge................................................. Section 10.03(b)
Legal Provisions........................................... Section 4.01(e)
Liens...................................................... Section 4.01(c)
Material Adverse Change................................... Section 10.03(c)
32
Material Adverse Effect................................... Section 10.03(c)
Merger............................................................ Recitals
Merger Consideration....................................... Section 2.01(c)
Newco............................................................. Recitals
Newco Common Stock................................................ Recitals
Non-Competition Agreements........................................ Recitals
Parent............................................................ Recitals
Parent Common Stock............................................... Preamble
Parent Disclosure Schedule.................................... Section 4.02
Parent Material Adverse Effect............................ Section 10.03(d)
Permits.................................................... Section 4.01(k)
person.................................................... Section 10.03(e)
Post-Closing Covenants Agreement.............................. Section 3.01
Restraints................................................. Section 8.01(a)
Restructuring Agreement........................................... Recitals
Roofing Assets............................................... Section 10.04
Roofing Business............................................. Section 10.04
SEC........................................................ Section 4.01(d)
Split-Off......................................................... Recitals
Split-Off Consideration.................................... Section 2.01(c)
Shareholder....................................................... Preamble
Sub............................................................... Preamble
subsidiary................................................ Section 10.03(f)
Surviving Corporation......................................... Section 1.01
Taxes......................................................... Section 7.06
Transaction Agreements........................................ Section 3.02
33
EXHIBIT A TO THE MERGER AGREEMENT
FORM OF AFFILIATE LETTER
Dear Sirs:
The undersigned, the holder of all of the outstanding shares of common
stock, par value $1.00 per share ("Company Common Stock"), of Xxxxxxxx Roofing &
Sheet Metal, Inc., an Oklahoma corporation (the "Company"), acknowledges that he
will be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), by the Securities and Exchange Commission (the "SEC").
Pursuant to the terms of the Agreement and Plan of Merger dated as of September
27, 2002, among Zenex International, Inc., a Colorado corporation ("Parent"), AR
Acquisition Corp., an Oklahoma corporation and a wholly owned subsidiary of
Parent ("Sub"), and the Company, Sub will be merged with and into the Company
(the "Merger"), and in connection with the Merger, the undersigned is entitled
to receive common stock, par value $.001 per share ("Parent Common Stock"), of
Parent.
As an affiliate under the Securities Act, the undersigned's ability to
sell, assign or transfer the Parent Common Stock received by the undersigned in
exchange for any shares of Company Common Stock in connection with the Merger
will be restricted unless such transaction is registered under the Securities
Act or an exemption from such registration is available. The undersigned
understands that such exemptions are limited and he has obtained or will obtain
advice of counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Securities Act.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Common Stock
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations, if applicable, of Rule 145 or (iii) in a transaction which, in the
opinion of counsel to Parent or the undersigned or as described in a "no-action"
or interpretive letter from the Staff of the SEC specifically issued with
respect to a transaction to be engaged in by the undersigned, is not required to
be registered under the Securities Act.
Parent covenants that it will take all such actions as may be reasonably
available to it to permit the sale or other disposition of Parent Common Stock
by the undersigned under Rule 145 in accordance with the terms thereof.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing Parent Common Stock received by the
undersigned in connection with the Merger or held by a transferee thereof, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Parent from counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for purposes of the Securities Act.
34
There will be placed on the certificates for Parent Common Stock issued to
the undersigned in connection with the Merger, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate were issued in a transaction to
which Rule 145 promulgated under the Securities Act of 1933 applies. The
shares have not been acquired by the holder with a view to, or for resale
in connection with, any distribution thereof within the meaning of the
Securities Act of 1933. The shares may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Common
Stock and (ii) the receipt by Parent of this letter is an inducement to Parent's
obligations to consummate the Merger.
Dated: Very truly yours,
/s/ Xxx Xxxxxxxx
-----------------------
Xxx Xxxxxxxx
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ANNEX A
RESTRUCTURING AGREEMENT
This Restructuring Agreement, dated as of September 27, 2002 (the
"Restructuring Agreement"), among Xxxxxxxx Roofing & Sheet Metal, Inc., an
Oklahoma corporation (the "Company"), and Xxxxxxxx Holdings, Inc., an Oklahoma
corporation and a direct wholly owned subsidiary of the Company ("Newco").
Whereas, the Company, Zenex International, Inc., a Colorado Corporation
("Parent"), and AR Acquisition Corp., an Oklahoma corporation and a wholly owned
subsidiary of Parent ("Sub"), have entered into an Agreement and Plan of
Split-Off and Merger, dated as of September 27, 2002 (the "Merger Agreement"),
providing for the Split-Off and the Merger (each as defined in the Merger
Agreement) of Sub with and into the Company, with the Company as the surviving
corporation;
Whereas the respective Boards of Directors of the Company and Newco have
approved this Restructuring Agreement, which is being entered into before the
Effective Time (as defined in the Merger Agreement), pursuant to which the
Restructuring (as defined below) will be consummated;
Whereas the purpose of the Restructuring is to make possible the Split-Off
and the Merger by separating from the Assets and Liabilities of the Company
those Assets and Liabilities that Parent will not acquire;
Whereas in the Restructuring, all the Assets primarily related to the
Ranching Operations and such other Assets specifically identified (collectively,
the "Newco Business") will be transferred to Newco, which will thereafter
conduct such business, and Newco will assume the Assumed Liabilities (as defined
below); and
Whereas it is the intention of the parties to this Restructuring Agreement
that the transfer of Assets and Liabilities pursuant to this Restructuring
Agreement shall qualify as a transaction described in Section 351 or Section 368
of the Code.
Now, Therefore in consideration of the premises, and of the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I DEFINITIONS
1.1 Definitions. Terms used but not defined in this Restructuring Agreement
shall have the meanings set forth in the Merger Agreement. In addition, the
following terms shall have the following meanings:
"Xxxxxxxx Roofing" shall mean the Company, excluding Newco (determined
after giving effect to the transactions contemplated by Article III of this
Restructuring Agreement).
"Xxxxxxxx Employees" shall mean all current employees and consultants of
the Company listed on Schedule 1.1(b) hereto and employees and consultants hired
after the date of the Merger Agreement and before the Effective Time engaged
primarily in a business other than the Newco Business.
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"Xxxxxxxx Liabilities" shall have the meaning set forth in Section 3.3
hereof.
"Affiliate" of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person; provided, however, that for the purposes
of this Restructuring Agreement, from and after the Effective Time, Xxxxxxxx
Roofing shall not be deemed to be an Affiliate of Newco and Newco shall not be
deemed to be an affiliate of Xxxxxxxx Roofing.
"Assets" shall mean any and all assets, properties and rights, whether
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including, without limitation,
the following:
(i) real property interests (including leases), land, plants, buildings,
improvements and fixtures;
(ii) machinery, equipment, tooling, vehicles, furniture and fixtures,
leasehold improvements, repair parts, tools, plant, laboratory and
office equipment and other tangible personal property, together with
any rights or claims arising out of the breach of any express or
implied warranty by the manufacturers or sellers of any of such assets
or any component part thereof;
(iii)inventories, including raw materials, work-in-process, finished goods,
parts, accessories and supplies (including items in transit, on
consignment or in the possession of any third party);
(iv) cash, bank accounts, notes, loans and accounts receivable (whether
current or not current), interests as beneficiary under letters of
credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances, shares of stock, bonds,
debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust
certificates, reorganization certificates or subscriptions,
transferable shares, investment contracts, voting trust certificates,
puts, calls, straddles, options, swaps, collars, caps and other
securities or hedging arrangements of any kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll
and personnel records, minute books, stock ledgers, stock transfer
records and other similar property, rights and information;
(vii)patents, patent applications, trademarks, trademark applications,
registrations and other rights, trade names and trade dress, domain
names, trade name rights, service marks, service xxxx rights, service
names, copyrights and copyright applications and registrations,
commercial and technical information including engineering, production
and other designs, drawings, notebooks and other recording methods,
specifications, formulae, technology, computer and electronic data
processing programs and software, inventions, processes, trade
secrets, know-how, confidential information and other proprietary
property, rights and interests;
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(viii) agreements, leases, contracts, sale orders, purchase orders, open
bids and other commitments and all rights therein;
(ix) prepaid expenses, deposits and receipts held by third parties;
(x) claims, causes of action, choses in action, rights under insurance
policies, rights under express or implied warranties, rights of
recovery, rights of set-off, rights of subrogation and all other
rights of any kind;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Assumed Liabilities" shall have the meaning set forth in Section 3.3
hereof.
"Benefit Plan" shall have the meaning set forth in Section 6.3(a) hereof.
"Business Stationery" shall have the meaning set forth in Section 5.2
hereof.
"Company" shall have the meaning set forth in the Preamble.
"Information" of a person shall mean any and all information, technical
data or know-how, including that which relates to products, services, employees,
suppliers, customers, markets, software, know-how, developments, inventions,
processes, applications, designs, drawings, engineering, hardware configuration
information, marketing or finances, that such person or any of its
Representatives furnish or have furnished to the receiving party or any of its
Representatives whether furnished orally or in writing or by any other means or
gathered by inspection and regardless of whether the same is specifically marked
or designated as "confidential" or "proprietary", together with any and all
notes, memoranda, analyses, compilations, studies or other documents (whether in
hard copy or electronic media) prepared by the receiving person or any of its
Representatives which contain or otherwise reflect such Information, together
with any and all copies, extracts or other reproductions of any of the same;
provided, however, that for the purposes hereof all information relating to
Xxxxxxxx Roofing and the Roofing Business in the possession of Newco at the
Effective Time shall be deemed to have been furnished by Xxxxxxxx Roofing and
all information relating to Newco and its business in the possession of Xxxxxxxx
Roofing at the Effective Time shall be deemed to have been furnished by Newco;
provided, further, however, that the term "Information" does not include
information that:
(a) is or becomes generally available to the public through no wrongful act
of the receiving person or its Representatives;
(b) is or becomes available to the receiving person on a non-confidential
basis from a source other than the providing person or its Representatives,
provided that such source is not known by the receiving person to be subject to
a confidentiality agreement with the providing person; or
(c) has been independently acquired or developed by the receiving person
without violation of any of the obligations of the receiving person or its
Representatives under this Restructuring Agreement.
38
"Initial Statement" shall have the meaning set forth in Section 3.1 hereof.
"Intercompany Arrangements" shall have the meaning set forth in Section 4.6
hereof.
"Liabilities" shall mean any and all debts, liabilities, commitments and
obligations, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
or however arising and whether or not the same would be required by generally
accepted accounting principles to be reflected in financial statements or
disclosed in the notes thereto.
"Merger Agreement" shall have the meaning set forth in the Recitals.
"Net Cash" shall mean, as of the Effective Time, cash and marketable
securities less debt for borrowed money (other than debt outstanding under any
revolving line of credit) of Newco on a consolidated basis calculated in
accordance with GAAP.
"Newco" shall have the meaning set forth in the Preamble.
"Newco Assets" shall have the meaning set forth in Section 4.1 hereof.
"Newco Benefit Plan" shall have the meaning set forth in Section 6.3(a)
hereof.
"Newco Business" shall have the meaning set forth in the Recitals.
"Newco Employees" shall mean all current employees and consultants of the
Company listed on Schedule 1.1(a) hereto and employees and consultants hired
after the date of the Merger Agreement and before the Effective Time engaged
primarily in the Newco Business.
"Parent" shall have the meaning set forth in the Recitals.
"Ranching Operations" shall mean the business of the Company, at or at any
time before the Effective Time, of farming or ranching, including raising
livestock, growing crops, dealing in livestock or crops, rodeoing and all
activities related thereto.
"Representatives" of a person shall mean such person's affiliates,
directors, officers, partners, employees, agents or other representatives
(including attorneys, accountants and financial advisors).
"Restructuring" shall have the meaning set forth in Section 3.1 hereof.
"Restructuring Agreement" shall have the meaning set forth in the Preamble.
"Roofing Assets" shall have the meaning set forth in Section 4.2 hereof.
"Roofing Business" shall mean all the business of the Company and its
predecessors, at or at any time before the Effective Time, other than the Newco
Business.
"Sub" shall have the meaning set forth in the Recitals.
"Taxes" shall have the meaning set forth in the Merger Agreement.
ARTICLE II TAX MATTERS
Notwithstanding anything to the contrary in this Restructuring Agreement,
Liabilities of the parties for Taxes are subject to the terms of Article VII of
39
the Merger Agreement. All obligations of Newco under Article VII shall be
treated as Assumed Liabilities and not as Xxxxxxxx Liabilities under this
Restructuring Agreement and all obligations of the Company under Article VII
shall be treated as Xxxxxxxx Liabilities and not as Assumed Liabilities under
this Restructuring Agreement.
ARTICLE III RESTRUCTURING AND ASSUMED LIABILITIES
3.1 Restructuring. Before the Effective Time, as described below, the
Company shall contribute or cause to be contributed to Newco any of the
Company's right, title and interest in and to (i) all Assets that are used or
held for use primarily in the operation or conduct of the Newco Business (other
than those set forth on Schedule 3.2)), and (ii) all Assets that are set forth
on Schedule 3.1 (collectively, the "Newco Assets"). Such contribution shall be
referred to as the "Restructuring".
3.2 Assets Not Transferred. Notwithstanding anything to the contrary set
forth in Section 3.1, the Company hereby retains and does not contribute to
Newco any of the Company's right, title and interest in and to all Assets that
(x) are not used or held for use primarily in the operation or conduct of the
Newco Business (other than those set forth on Schedule 3.1) or (y) are set forth
on Schedule 3.2 hereto (collectively, the "Roofing Assets").
3.3 Assumed Liabilities. Notwithstanding Section 3.1, the parties agree
that, except as otherwise specifically set forth in any Transaction Agreement
(including the treatment of Tax Liabilities as set forth in Section 2.2 or
employee related Liabilities as set forth in Section 6.2), at or before the
Effective Time, (a) Newco shall unconditionally assume and undertake to pay,
satisfy and discharge (x) all Liabilities (whether arising before or after the
Restructuring) of the Company to the extent primarily related to or arising out
of the Newco Business and (y) all Liabilities set forth on Schedule 3.3(a)
hereto (clauses (x) and (y) are collectively referred to as the "Assumed
Liabilities"), in each case when such Assumed Liabilities become due in
accordance with their terms, and (b) the Company shall retain, or shall assume
and undertake to pay, satisfy and discharge (x) all Liabilities (whether arising
before or after the Restructuring) of the Company other than the Assumed
Liabilities and (y) all Liabilities set forth on Schedule 3.3(b) hereto (clauses
(x) and (y) are collectively referred to as the "Xxxxxxxx Liabilities"), in each
case when such Xxxxxxxx Liabilities become due in accordance with their terms.
3.4 Transfer and Assumption Documentation. In furtherance of the
contribution, grant, conveyance, assignment, transfer and delivery of the Assets
and the assumption of the Liabilities set forth in this Article III, (i) the
transferor shall execute and deliver, and cause its subsidiaries to execute and
deliver, such deeds, bills of sale, stock powers, certificates of title,
assignments of leases and contracts and other instruments of contribution,
grant, conveyance, assignment, transfer and delivery necessary to evidence such
contribution, grant, conveyance, assignment, transfer and delivery and (ii) the
transferee shall execute and deliver such instruments of assumption as and to
the extent necessary to evidence such assumption.
3.5 Nonassignable Contracts. Anything contained herein to the contrary
notwithstanding, this Restructuring Agreement shall not constitute an agreement
to assign any lease, license agreement, contract, agreement, sales order,
40
purchase order, open bid or other commitment if an assignment or attempted
assignment of the same without the consent of the other party or parties thereto
would constitute a breach thereof or in any way impair the rights of Newco or
Xxxxxxxx Roofing thereunder. All such items that are material are set forth on
Schedule 3.5. The Company or Newco, as the case may be, shall use its
commercially reasonable efforts (it being understood that such efforts shall not
include any requirement of Newco or Xxxxxxxx Roofing to expend money or offer or
grant any financial accommodation), to obtain all consents and waivers and to
resolve all impracticalities of assignments or transfers necessary to convey to
the other party the Assets so to be conveyed pursuant to Section 3.1. If and
when such consents and approvals are obtained, the transfer of the applicable
Asset shall be effected in accordance with the terms of this Restructuring
Agreement.
3.6 Intercompany Arrangements. All agreements, contracts, arrangements and
commitments (other than the Transaction Agreements) between Newco, on the one
hand, and Xxxxxxxx Roofing (other than Newco), on the other hand, entered into
before the Effective Time and set forth on Schedule 3.6 for the purchase or sale
of goods or services ("Intercompany Arrangements") shall terminate on the
Effective Time. All amounts under such Intercompany Arrangements that are
unbilled and have not been charged to the related contract as of the Effective
Time shall be billed and payable on the Effective Time. At or before the
Closing, the Company shall cause all intercompany indebtedness (which shall
include payables and receivables) between Newco or any operating unit of any
Newco Company, on the one hand, and Xxxxxxxx Roofing or any operating unit of
any Xxxxxxxx Company (other than Newco or any operating unit thereof), on the
other hand, including without limitation any indebtedness under the intercompany
arrangements set forth on Schedule 3.6, to be settled or otherwise eliminated.
ARTICLE IV OTHER AGREEMENTS
4.1 Books and Records. Before or as promptly as practicable after the
Effective Time, the Company shall deliver to Newco all books and records
relating to the business of Newco in the possession of Xxxxxxxx Roofing. The
Company may retain copies of all such corporate books and records. Before or as
promptly as practicable after the Effective Time, Newco shall deliver to the
Company all books and records relating to Xxxxxxxx Roofing, the Roofing Business
or the Xxxxxxxx Liabilities.
4.2 Access. From and after the Effective Time, the Company, on the one
hand, and Newco, on the other hand, shall afford to the other and to the other's
Representatives reasonable access and duplicating rights (at the requesting
person's expense), during normal business hours and upon reasonable advance
notice, to all information within the possession or control of Xxxxxxxx Roofing
or Newco, as the case may be, to the extent directly relating to the business,
Assets or Liabilities of the other as they existed before the completion of the
Restructuring or to the extent relating to or arising in connection with the
relationship between Xxxxxxxx Roofing or Newco, as the case may be, before the
Restructuring insofar as such access is reasonably required for a reasonable
purpose. Without limiting the foregoing, information may be requested under this
Section 4.2 for audit, accounting, claims, litigation and tax purposes, as well
as for purposes of fulfilling disclosure and reporting obligations.
41
4.3 Confidentiality.
(a) Each party hereto shall keep, and shall cause its Representatives to
keep, the other party's Information strictly confidential and will disclose such
Information only to such of its Representatives who need to know such
Information and who agree to be bound by this Section 4.3 and not to disclose
such Information to any other Person. Without the prior written consent of the
other party, each party and its Representatives shall not disclose the other
party's Information to any person or entity except as may be required by law or
judicial process and in accordance with this Section 4.3.
(b) In the event that any party or any of its Representatives receives a
request or is required by law or judicial process to disclose to a court or
other tribunal all or any part of the disclosing party's Information, the
receiving party or its Representatives shall promptly notify the disclosing
party of the request in writing, and consult with and assist the disclosing
party in seeking a protective order or request for other appropriate remedy. In
the event that such protective order or other remedy is not obtained or the
disclosing party waives compliance with the terms hereof, such receiving party
or its Representatives, as the case may be, shall disclose only that portion of
the Information or facts which, in the written opinion of the receiving party's
outside counsel, is legally required to be disclosed, and will exercise its
respective commercially reasonable efforts to assure that confidential treatment
will be accorded such Information or facts by the Persons or entities receiving
the same. The providing party will be given an opportunity to review the
Information or facts before disclosure.
4.4 Further Assurances. The parties agree that if, after the completion of
the Restructuring, either party holds Assets which by the terms hereof or of the
Merger Agreement were intended to be assigned and transferred to, or retained
by, the other party, such party shall, at its expense, promptly assign and
transfer or cause to be assigned and transferred such Assets to the other party,
and the parties agree that the transferring party will hold such Assets as
trustee of the transferee party and all income and risk of loss of the
transferred Assets to the completion of the Restructuring shall be for the
account of the intended owner. Each of the parties hereto, at its own cost and
expense, promptly shall execute such documents and other instruments and take
such further actions as may be reasonably required or desirable to carry out the
provisions hereof and to consummate the transactions contemplated hereby.
4.5 Cooperation. The parties shall cooperate with each other in all
reasonable respects to ensure (a) that the Restructuring and the assumption of
the Xxxxxxxx Liabilities and the Assumed Liabilities are consummated in
accordance with the terms hereof, (b) the retention by the Company of the
Roofing Business, including, without limitation, allocation of rights and
obligations under Contracts, if any, of Xxxxxxxx Roofing or Newco that relate to
the Roofing Business, (c) the transfer to Newco of all the Newco Assets,
including, without limitation, allocation of rights and obligations under
Contracts, if any, of Newco or Xxxxxxxx Roofing that relate to the Newco
Business and (d) the allocation of employee liabilities and provision of
employee benefits in accordance with the provisions of Article V.
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ARTICLE V EMPLOYEE MATTERS
5.1 Employment of Newco Employees and Xxxxxxxx Employees. Effective as of
the Effective Time, (a) Xxxxxxxx Employees shall remain or become employees of
Xxxxxxxx Roofing in the same capacities as then held by such employees (or in
such other capacities and upon such terms and conditions as the Company shall
determine in its sole discretion) and (b) Newco Employees shall remain or become
employees of Newco in the same capacities as then held by such employees (or in
such other capacities and upon such terms and conditions as Newco shall
determine in its sole discretion). Nothing contained in this Section 5.1 shall
confer on any Xxxxxxxx Employee or any Newco Employee any right to continued
employment after the Effective Time, and such employees shall continue to be
employed "at-will".
5.2 Reimbursement; Indemnification. Newco and the Company acknowledge that
the Company, on the one hand, and Newco, on the other hand, may incur costs and
expenses (including, without limitation, contributions to plans and the payment
of insurance, or other similar premiums) pursuant to employment obligations that
are, as set forth in this Restructuring Agreement, the responsibility of the
other party. Accordingly, the Company and Newco agree to reimburse each other,
as soon as practicable but in any event within 30 days of receipt from the other
party of appropriate verification, for all such costs and expenses reasonably
incurred. All Liabilities retained, assumed or indemnified by Newco pursuant to
this Article V shall in each case be deemed to be Assumed Liabilities, and all
Liabilities retained, assumed or indemnified by the Company pursuant to this
Article V shall in each case be deemed to be Xxxxxxxx Liabilities, and, in each
case, shall be subject to the indemnification provisions set forth in Article II
of the Post-Closing Covenants Agreement.
5.3 Employment, Consulting and Severance Agreements. Effective as of the
Effective Time, Newco and the Company shall take all actions necessary
(including assignments, if applicable) to ensure that with respect to any
employment, consulting, deferred compensation, indemnification, termination,
severance or any other agreements with a Newco Employee or a Xxxxxxxx Employee,
to which Xxxxxxxx Roofing or Newco Companies is a party, as the same are in
effect immediately before such time, any such agreement with a Newco Employee
shall be assumed by Newco, and that any such agreement with a Xxxxxxxx Employee
shall be assumed by the Company, and in respect of which Newco or the Company,
as the case may be, becomes solely responsible for the obligations and
Liabilities (and solely entitled to the rights) under such agreements.
5.4 No Termination. The Company and Newco shall take such actions as are
required to provide that for purposes of severance benefits, each Newco Employee
shall be deemed not to have incurred a termination of employment as a result of
the transactions contemplated by this Restructuring Agreement and the Merger
Agreement.
ARTICLE VI CONDITIONS
The obligations of the Company and Newco to consummate the Restructuring
shall be subject to the fulfillment of each of the following conditions:
6.1 Conditions to Merger Satisfied. Each condition to the closing of the
Merger set forth in Article VIII of the Merger Agreement shall have been
satisfied or waived.
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6.2 Adequate Surplus. The Board of Directors of the Company shall be
reasonably satisfied that, after giving effect to the Restructuring, Xxxxxxxx
Roofing will not be insolvent and will not have unreasonably small capital with
which to engage in its business.
ARTICLE VII RELEASES
7.1 Mutual Release. Effective as of the Effective Time and except as
otherwise specifically set forth in the Transaction Agreements, the Company, on
the one hand, and Newco, on the other hand, releases and forever discharges the
other and its affiliates, and its and their directors, officers, employees and
agents of and from all debts, demands, actions, causes of action, suits,
accounts, covenants, contracts, agreements, damages, and any and all claims,
demands and liabilities whatsoever of every name and nature, both in law and in
equity, against such other person or any of its assigns, which the releasing
person has or ever had (other than those based on fraud, gross negligence or
willful misconduct by such other person) which arise out of or relate to events,
circumstances or actions taken by such other person before the Effective Time;
provided, however, that the foregoing general release shall not apply to any
Transaction Agreement or the transactions contemplated thereby and shall not
affect either person's right to enforce any Transaction Agreement or any other
agreement contemplated thereby in accordance with its terms.
ARTICLE VIII MISCELLANEOUS AND GENERAL
8.1 Termination. In the event the Merger Agreement is terminated pursuant
to its terms before the Effective Time, this Restructuring Agreement shall
automatically and simultaneously terminate and the Restructuring and Split-Off
shall automatically and simultaneously be abandoned without the approval of
Newco or the shareholders of the Company. In the event of such termination, no
party shall have any liability to any other party pursuant to this Agreement. It
is understood that completion of the Merger shall not constitute a termination
of this Restructuring Agreement.
8.2 Modification or Amendment. The parties hereto may modify or amend this
Restructuring Agreement by written agreement executed and delivered by duly
authorized officers of the respective parties.
8.3 Extension; Waiver. At any time before the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties or (b) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Restructuring
Agreement to assert any of its rights under this Restructuring Agreement or
otherwise shall not constitute a waiver of such rights.
8.4 Counterparts. This Restructuring Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
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8.5 Governing Law. This Restructuring Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oklahoma, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
8.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to the Company (after the Effective Time), to:
Zenex International, Inc.
000 Xxxxxx X. Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxx Xxxxx
with a copy to:
Xxxxxxx & Xxxxxx, LLP
Bank One Center, 20th Floor
000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxxx
if to Newco or to the Company (before the Effective Time):
Xxxxxxxx Roofing & Sheet Metal, Inc.
00000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx, P.L.L.C.
0000 X.X. 00xx Xx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxx
8.7 Captions. All Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Restructuring
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
8.8 Assignment. Neither this Restructuring Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this
Restructuring Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
45
8.9 Third-Party Beneficiaries. Parent shall be a third-party beneficiary of
this Restructuring Agreement. Except as set forth in the immediately preceding
sentence, nothing contained in this Restructuring Agreement is intended to
confer upon any person or entity other than the parties hereto and their
respective successors and permitted assigns (other than Parent), any benefit,
right or remedy under or by reason of this Restructuring Agreement, except that
the provisions of Section 5.1 hereof shall inure to the benefit of the Persons
referred to therein.
8.10 Certain Obligations. Whenever this Restructuring Agreement requires
any of the subsidiaries of any party to take any action, this Restructuring
Agreement will be deemed to include an undertaking on the part of such party to
cause such subsidiary to take such action; provided, however, that for this
purpose, at any time after the Restructuring has been completed, Newco shall not
be considered to be subsidiaries of the Company.
8.11 Specific Enforcement; Jurisdiction. The parties agree that irreparable
damage would occur and that the parties would not have any adequate remedy at
law in the event that any of the provisions of this Restructuring Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Restructuring Agreement
and to enforce specifically the terms and provisions of this Restructuring
Agreement in any Federal court located in the State of Oklahoma in any state
court in the State of Oklahoma, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Oklahoma or of any state court located in the
State of Oklahoma in the event any dispute arises out of this Restructuring
Agreement or the transactions contemplated by this Restructuring Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Restructuring Agreement or the
transactions contemplated by this Restructuring Agreement in any court other
than a Federal court located in the State of Oklahoma or a state court located
in the State of Oklahoma.
8.12 Severability. If any term or other provision of this Restructuring
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Restructuring
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Restructuring Agreement so as to effect the original intent of the parties
as closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
8.13 Entire Agreement. The Transaction Agreements (including the documents
and the instruments referred to herein and in the Merger Agreement, the Annexes
hereto and to the Merger Agreement, the Parent Disclosure Schedule and the
Company Disclosure Schedule), and the Confidentiality Agreement (as defined in
the Merger Agreement) constitute the entire agreement, and supersede all prior
46
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof.
[Signature Page Follows]
47
In Witness Whereof, this Restructuring Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first herein above written.
Xxxxxxxx Roofing & Sheet Metal, Inc.
By: /s/ Xxx Xxxxxxxx
---------------------------------
President
Xxxxxxxx Holdings, Inc.
By: /s/ Xxx Xxxxxxxx
---------------------------------
President
48
ANNEX B
STOCK OPTION AGREEMENT
This Stock Option Agreement dated as of September 27, 2002 (this
"Agreement"), by and between Zenex International, Inc., a Colorado corporation
("Issuer"), and Xxx Xxxxxxxx, an Oklahoma resident ("Shareholder").
Recitals
A. Issuer, Sub, the Company, and Shareholder have entered into an Agreement
and Plan of Split-Off and Merger dated as of the date hereof (the "Merger
Agreement"), providing for, among other things, the merger of Sub with and into
the Company and the delivery to the Shareholder of the Merger Consideration;
B. Part of the Merger Consideration is composed of the Merger Option
Consideration; and
C. The Merger Option Consideration shall be governed by the terms and
conditions of this Agreement.
Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Shareholder agree as follows:
1. Grant of Option. Upon the Effective Time, Issuer hereby grants to
Shareholder an irrevocable option (the "Option") to purchase up to 30,000,000
shares of common stock, par value $0.001 per share, of Issuer (the "Issuer
Common Stock") (as such total number may be adjusted pursuant to Section 6, the
"Option Shares") at an exercise price of $.04 per Option Share (as such price
may be adjusted pursuant to Section 6, the "Exercise Price").
2. Exercise of Option.
(a) Subject to the provisions of Section 2(c), Shareholder may exercise the
Option, with respect to any or all of the Option Shares, at any time or times
after six months following the Effective Time; provided, however, that (i) the
Option will terminate and be of no further force and effect on the tenth
anniversary of the Effective Time.
(b) If Shareholder is entitled to and wishes to exercise the Option,
Shareholder shall send to Issuer a written notice (an "Exercise Notice"; the
date of which being herein referred to as the "Notice Date") to that effect,
which Exercise Notice shall specify the number of Option Shares, if any,
Shareholder wishes to purchase pursuant to this Section 2(b), the denominations
of the certificate or certificates evidencing the Option Shares which
Shareholder wishes to purchase, and a date (an "Option Effective Time"), which,
subject to the following sentence, shall not be earlier than three business days
nor later than ten business days from the Notice Date for the closing of such
purchase (an "Option Closing"). Any Option Closing shall be at an agreed
location and time in Oklahoma City, Oklahoma, on the applicable Option Effective
Time.
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(c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance with
applicable laws and regulations, which may prohibit the purchase of all the
Option Shares specified in the Exercise Notice without first obtaining or making
certain Regulatory Approvals. In such event, if the Option is otherwise
exercisable and Shareholder wishes to exercise the Option, the Option may be
exercised in accordance with Section 2(b) and Shareholder shall acquire the
maximum number of Option Shares specified in the Exercise Notice that
Shareholder is then permitted to acquire under the applicable laws and
regulations, and if Shareholder thereafter obtains the Regulatory Approvals to
acquire the remaining balance of the Option Shares specified in the Exercise
Notice, then Shareholder shall be entitled to acquire such remaining balance.
Issuer agrees to use its commercially reasonable efforts to assist Shareholder
in seeking the Regulatory Approvals.
3. Payment and Delivery of Certificates.
(a) At any Option Closing, Shareholder will pay to Issuer in immediately
available funds by wire transfer to a bank account designated in writing by
Issuer an amount equal to the Exercise Price multiplied by the number of Option
Shares to be purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer will deliver to Shareholder
a certificate or certificates representing the Option Shares to be purchased at
such Option Closing, which Option Shares will be free and clear of all Liens.
(c) Certificates representing the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF SEPTEMBER
27, 2002, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF ZENEX
INTERNATIONAL, INC., AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have been
registered pursuant to the Securities Act, such Option Shares have been sold in
reliance on and in accordance with Rule 144 under the Securities Act or
Shareholder has delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
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certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Shareholder as follows:
Authorized Stock. Issuer has taken all necessary corporate and other action
to authorize, reserve and issue, and, at all times from the date hereof until
the obligation to deliver Option Shares upon an exercise of the Option
terminates, shall have reserved for issuance, upon exercise of the Option,
shares of Issuer Common Stock necessary for Shareholder to exercise the Option.
The shares of Issuer Common Stock to be issued upon due exercise of the Option,
including all additional shares of Issuer Common Stock or other securities which
may be issuable upon exercise of the Option or any other securities which may be
issuable pursuant to Section 6, upon issuance pursuant hereto, will be duly and
validly issued, fully paid and nonassessable, and will be delivered free and
clear of all Liens, including without limitation any preemptive rights of any
shareholder of Issuer.
5. Representations and Warranties of Shareholder. Shareholder hereby
represents and warrants to Issuer that:
Purchase Not for Distribution. Any Option Shares or other securities
acquired by Shareholder upon exercise of the Option will be acquired for
Shareholder's own account for investment only and not with a view towards their
distribution, and will not be transferred or otherwise disposed of except in a
transaction registered, or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange of shares,
or similar transaction, the type and number of shares or securities subject to
the Option, and the Exercise Price thereof, will be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction, so
that Shareholder will receive upon exercise of the Option the number and class
of shares or other securities or property that Shareholder would have received
in respect of Issuer Common Stock if the Option had been exercised immediately
before such event or the record date therefor, as applicable. Subject to Section
1, and without limiting the parties' relative rights and obligations under the
Merger Agreement, if any additional shares of Issuer Common Stock are issued
after the date of this Agreement (other than pursuant to this Agreement or an
event described in the first sentence of this Section 6(a)) or if the number of
outstanding shares of Issuer Common Stock is reduced, the number of shares of
Issuer Common Stock subject to the Option will be adjusted so that, after such
issuance or reduction, it equals the same percentage of the aggregate number of
shares of Issuer Common Stock issued and outstanding after giving effect to such
issuance or reduction as immediately before such issuance or reduction, in each
case without giving effect to any shares subject to the Option.
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(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Shareholder or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation in
such consolidation or merger, (ii) to permit any person, other than Shareholder
or one of its subsidiaries, to merge into Issuer and Issuer will be the
continuing or surviving corporation, but in connection with such merger, the
shares of Issuer Common Stock outstanding immediately before the consummation of
such merger will be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately before the consummation of such
merger will, after such merger, represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Shareholder or
one of its subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Shareholder would have received in respect of Issuer
Common Stock if the Option had been exercised in full with respect to all Option
Shares then purchasable immediately before such consolidation, merger, sale, or
transfer, or the record date therefor, as applicable, and make any other
necessary adjustments.
7. Listing. If the Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on AMEX (or any other
national securities exchange or approved for quotation on any national
securities quotation system), Issuer, upon the request of Shareholder, shall
promptly file an application to list the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on AMEX (or any such other
national securities exchange or file an application to have approved for
quotation on any such national securities quotation system) and will use its
commercially reasonable efforts to obtain approval of such listing (or
quotation) as promptly as practicable.
8. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided in this Agreement or in the
Merger Agreement, each of the parties hereto will bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument
in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
52
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
other Transaction Agreements (including the documents and instruments attached
thereto as exhibits or schedules or delivered in connection therewith) and the
Confidentiality Agreement (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, and (ii) except as
provided in the Merger Agreement, are not intended to confer upon any person
other than the parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Oklahoma, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by Issuer or Shareholder
without the prior written consent of the other, except that Shareholder may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to any direct or indirect wholly owned
subsidiary of Shareholder, but no such assignment shall relieve Shareholder of
any of its obligations hereunder. Any assignment or delegation in violation of
the preceding sentence shall be void. Subject to the first and second sentences
of this Section 12(g), this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
(h) Further Assurances. In the event of any exercise of the Option by
Shareholder, Issuer and Shareholder shall execute and deliver all other
documents and instruments and take all other actions that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(i) Specific Enforcement; Consent to Jurisdiction. The parties agree that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Oklahoma or in any state court located in the State of Oklahoma, the
foregoing being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
Oklahoma or any state court located in the State of Oklahoma in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Oklahoma or a state court located in the
State of Oklahoma.
53
(j) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
(k) Defined Terms. All terms used but not defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
In Witness Whereof, Issuer and Shareholder have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
Zenex International, Inc.,
By: /s/ Xxx Xxxxx
------------------------
President and CEO
/s/ Xxx Xxxxxxxx
---------------------------
Xxx Xxxxxxxx
54
ANNEX C
POST-CLOSING COVENANTS AGREEMENT
This Post-Closing Covenants Agreement dated as of September 27, 2002, among
Zenex International, Inc., a Colorado corporation ("Parent"), Xxxxxxxx Roofing &
Sheet Metal, Inc., an Oklahoma corporation (the "Company"), and Xxxxxxxx
Holdings, Inc., an Oklahoma corporation ("Newco").
Whereas, Parent, AR Acquisition Corp., an Oklahoma corporation and a wholly
owned subsidiary of Parent ("Sub"), the Company and Xxx Xxxxxxxx, the sole
shareholder of the Company (the "Shareholder") have entered into an Agreement
and Plan of Split-Off and Merger dated as of September 27, 2002 (the "Merger
Agreement"), providing for the Merger (as defined in the Merger Agreement) of
Sub with and into the Company, with the Company as the surviving corporation;
Whereas, the Board of Directors of the Company has approved a Restructuring
Agreement in the form of Annex A to the Merger Agreement (the "Restructuring
Agreement"), which will be entered into before the Effective Time (as defined in
the Merger Agreement), pursuant to which before the Effective Time, among other
things (a) all the assets of the Company primarily related to the Newco Business
(as defined in the Restructuring Agreement) will be transferred to Newco and (b)
Newco will assume the Assumed Liabilities (as defined in the Restructuring
Agreement);
Whereas, the execution and delivery of this Agreement by the parties hereto
is a condition to the obligations of the parties to the Merger Agreement to
consummate the Merger; and
Whereas, the parties to this Agreement have determined that it is necessary
and desirable to set forth certain agreements that will govern certain matters
that may arise following the Effective Time.
Now, Therefore, in consideration of the foregoing, and the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto hereby agree as follows:
ARTICLE I DEFINITIONS
Section 1.01. Definitions. Terms used but not defined in this Agreement
shall have the meanings set forth in the Merger Agreement or, if not set forth
in the Merger Agreement, in the Restructuring Agreement. In addition, the
following terms shall have the following meanings:
"Affiliate" of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person; provided, however, that for the purposes
of this Agreement, from and after the Effective Time, Xxxxxxxx Roofing shall not
be deemed to be an Affiliate of Newco and Newco shall not be deemed to be an
affiliate of Xxxxxxxx Roofing.
55
"Filings" shall mean any document filed or required to be filed with the
SEC in connection with the transactions contemplated by the Transaction
Agreements, or any preliminary or final form thereof or any amendment or
supplement thereto.
"Indemnifiable Losses" shall mean, subject to Section 2.04, all losses,
liabilities, damages, deficiencies, obligations, fines, expenses, claims,
demands, actions, suits, proceedings, judgments or settlements, whether or not
resulting from Third Party Claims, including interest and penalties recovered by
a third party with respect thereto and out-of-pocket expenses and reasonable
attorneys' and accountants' fees and expenses incurred in the investigation or
defense of any of the same or in asserting, preserving or enforcing any of the
Indemnitee's rights hereunder, suffered or incurred by an Indemnitee.
"Indemnitee" shall mean any of the Parent Indemnitees or the Newco
Indemnitees, as the case may be, who or which may seek indemnification under
this Agreement.
"Newco Indemnitees" shall mean Newco, each Affiliate of Newco, each of
their respective Representatives and each of the heirs, executors, successors
and assigns of any of the foregoing.
"Newco Recourse Right" shall have the meaning set forth in Section 3.06(a)
hereto.
"Parent Indemnitees" shall mean Parent, each Affiliate of Parent, including
any of its direct or indirect subsidiaries (including, after the Effective Time,
Xxxxxxxx Roofing), each of their respective Representatives and each of the
heirs, executors, successors and assigns of any of the foregoing.
"Xxxxxxxx Recourse Right" shall have the meaning set forth in Section
3.06(b) hereto.
"Third Party Claims" shall have the meaning set forth in Section 2.04(a).
ARTICLE II INDEMNIFICATION
Section 2.01. Indemnification by Newco and the Newco Subsidiary
Indemnitors. Subject to the provisions of this Article II, Newco shall
indemnify, defend and hold harmless the Parent Indemnitees from and against, and
pay or reimburse the Parent Indemnitees for, all Indemnifiable Losses, as
incurred:
(i) relating to or arising from the Newco Business, the Newco Assets or
the Assumed Liabilities (including the failure by Newco to pay,
perform or otherwise discharge any of the Assumed Liabilities in
accordance with their terms), whether such Indemnifiable Losses relate
to or arise from events, occurrences, actions, omissions, facts or
circumstances occurring, existing or asserted before, at or after the
Effective Time; or
(ii) relating to or arising from the breach by Newco of any agreement or
covenant contained in any Transaction Agreement which is to be
performed or complied with after the Effective Time.
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Section 2.02. Indemnification by Xxxxxxxx Roofing. Subject to the
provisions of this Article II, Xxxxxxxx Roofing shall indemnify, defend and hold
harmless the Newco Indemnitees from and against, and pay or reimburse the Newco
Indemnitees for all Indemnifiable Losses, as incurred:
(i) relating to or arising from the Roofing Business, the Roofing Assets
or the Xxxxxxxx Liabilities (including the failure by Xxxxxxxx Roofing
to pay, perform or otherwise discharge any of the Xxxxxxxx Liabilities
in accordance with their terms), whether such Indemnifiable Losses
relate to or arise from events, occurrences, actions, omissions, facts
or circumstances occurring, existing or asserted before, at or after
the Effective Time; or
(ii) relating to or arising from the breach by Xxxxxxxx Roofing of any
agreement or covenant contained in any Transaction Agreement which is
to be performed or complied with after the Effective Time.
Section 2.03. Indemnification by Parent. Subject to the provisions of this
Article II, Parent shall indemnify, defend and hold harmless the Newco
Indemnitees from and against, and pay or reimburse the Newco Indemnitees for all
Indemnifiable Losses, as incurred relating to or arising from any untrue
statement or alleged untrue statement of a material fact contained in any of the
Filings, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, but only
with respect to statements made therein or incorporated by reference therein
based upon information supplied by Parent specifically for inclusion or
incorporation by reference therein.
Section 2.04. Procedures Relating to Indemnification.
(a) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim made by any Person who is not an Indemnitee against the Indemnitee (a
"Third Party Claim"), such Indemnitee must notify the party who may become
obligated to provide indemnification hereunder (the "Indemnifying Party") in
writing, and in reasonable detail, of the Third Party Claim reasonably promptly,
and in any event within 20 business days after receipt by such Indemnitee of
written notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure; provided further, however, that with
respect to any Third Party Claim for which Newco Indemnitor is the Indemnifying
Party, such Indemnifying Party shall be deemed to have received notice with
respect to such Third Party Claim by or against Xxxxxxxx Roofing for which the
Company received notice before the Effective Time. After any required
notification (if applicable), the Indemnitee shall deliver to the Indemnifying
Party, promptly after the Indemnitee's receipt thereof, copies of all notices
and documents (including court papers) received by the Indemnitee relating to
the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof (at the expense of the Indemnifying
Party) with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnitee. Should the Indemnifying Party so elect to assume
57
the defense of a Third Party Claim, the Indemnifying Party will not be liable to
the Indemnitee for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has not assumed the defense thereof
(other than during any period in which the Indemnitee shall have failed to give
notice of the Third Party Claim as provided above). Notwithstanding the
foregoing, the Indemnifying Party shall not be entitled to assume the defense of
any Third Party Claim (and shall be liable for the reasonable fees and expenses
of counsel incurred by the Indemnitee in defending such Third Party Claim) if
the Third Party Claim seeks an order, injunction or other equitable relief or
relief for other than money damages against the Indemnitee which the Indemnitee
reasonably determines, after conferring with its counsel, cannot be separated
from any related claim for money damages. The indemnification required by
Section 2.01, 2.02 or 2.03, as the case may be, shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or the Indemnifiable Loss is incurred.
If the Indemnifying Party chooses to defend or prosecute a Third Party Claim,
all the parties hereto reasonably necessary for such defense or prosecution
shall cooperate in the defense or prosecution thereof, which cooperation shall
include the retention in accordance with the Restructuring Agreement and (upon
the Indemnifying Party's request) the provision to the Indemnifying Party of
records and information which are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. If
the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the
Indemnitee will agree to any settlement, compromise or discharge of such Third
Party Claim which the Indemnifying Party may recommend and which by its terms
obligates the Indemnifying Party to pay the full amount of liability in
connection with such Third Party Claim; provided, however, that, without the
Indemnitee's consent, the Indemnifying Party shall not consent to entry of any
judgment or enter into any settlement (x) that provides for injunctive or other
non-monetary relief affecting the Indemnitee or (y) that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such claim. If the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnitee shall not admit any liability with respect to, or settle, compromise
or discharge, such Third Party Claim without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably withheld).
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not involve a
Third Party Claim, the Indemnitee shall deliver notice of such claim (in
reasonably sufficient detail to enable the Indemnifying Party to evaluate such
claim) with reasonable promptness to the Indemnifying Party. The failure by any
Indemnitee so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnitee under
58
this Agreement, except to the extent that the Indemnifying Party shall have been
actually and materially prejudiced by such failure. If the Indemnifying Party
does not notify the Indemnitee within 20 business days following its receipt of
such notice that the Indemnifying Party disputes its liability with respect to
such claim under Section 2.01, 2.02 or 2.03, as the case may be, the claim shall
be conclusively deemed a liability of the Indemnifying Party under Section 2.01,
2.02 or 2.03, as the case may be, and the Indemnifying Party shall pay the
amount of such liability to the Indemnitee on demand or, in the case of any
notice in which the amount of the claim (or any portion thereof) is estimated,
on such later date when the amount of such claim (or such portion thereof)
becomes finally determined. If the Indemnifying Party has timely disputed its
liability with respect to such claim, as provided above, the Indemnifying Party
and the Indemnitee shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
Section 2.05. Certain Limitations.
(a) The amount of any Indemnifiable Losses or other liability for which
indemnification is provided under this Agreement shall be net of any amounts
actually recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with respect to
such Indemnifiable Losses.
(b) All indemnification payments under this Agreement shall be (i)
increased to take account of any net tax cost incurred by the Indemnitee arising
from the receipt of indemnification payments hereunder (grossed up for such
increase) and (ii) reduced to take account of any net tax benefit realized by
the Indemnitee arising from the incurrence or payment of any Indemnifiable Loss.
In computing the amount of any such tax cost or tax benefit, the Indemnitee
shall be deemed to recognize all other items of income, gain, loss deduction or
credit before recognizing any item arising from the receipt of any
indemnification payment hereunder or the incurrence or payment of any
Indemnifiable Loss.
(c) No indemnification payments shall be made to an Indemnitee whose
Indemnifiable Losses resulted from his intentional, malicious or reckless acts
or omissions.
Section 2.06. Production of Witnesses; Records; Cooperation. After the
Effective Time, except (i) in the case of a dispute between Parent or Xxxxxxxx
Roofing, on the one hand, and Newco, on the other hand, and (ii) for Third Party
Claims that the Indemnifying Party participates in the defense or prosecution of
pursuant to Section 2.04(b) hereof (in which case the relevant provisions of
such Section will apply), each party hereto shall use commercially reasonable
efforts to make available to each other party, upon written request, the former,
current and future directors, officers, employees, other personnel and agents of
such party as witnesses and any books, records or other documents within its
control or which it otherwise has the ability to make available, to the extent
that any such person (giving consideration to business demands of such
directors, officers, employees, other personnel and agents) or books, records or
other documents may reasonably be required in connection with any demand,
action, suit, countersuit, arbitration, inquiry, proceeding or investigation by
or before any federal, state or local governmental authority or any arbitration
or mediation tribunal ("Action") in which the requesting party may from time to
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time be involved, regardless of whether such Action is a matter with respect to
which indemnification may be sought hereunder. The requesting party shall bear
all reasonable costs and expenses (including reasonable allocated costs of
in-house personnel) in connection therewith unless such costs and expenses are
otherwise subject to indemnification of the requesting party by the producing
party.
ARTICLE III OTHER AGREEMENTS
Section 3.01. Expenses. Notwithstanding anything to the contrary set forth
in the Merger Agreement, the Company (and not Newco) shall be responsible for
and agrees to pay all expenses (before giving effect to the Restructuring)
related to the Restructuring, the Split-Off and the Merger. Xxxxxxxx Roofing and
Newco shall each be responsible for and agrees to pay all of their respective
expenses incurred after the Effective Time.
Section 3.02. Characterization of Payments. The payments made pursuant to
this Agreement shall be treated as occurring immediately before the Effective
Time, and none of Newco, Xxxxxxxx Roofing and Parent and its subsidiaries shall
take any position inconsistent with such treatment before any Taxing Authority.
Section 3.03. Agreement Not to Compete; Agreement Not to Solicit or Hire
Employees.
(a) Newco understands that Parent shall be entitled to protect and preserve
the going concern value of the Roofing Business to the extent permitted by law
and that Parent would not have entered into the Merger Agreement absent the
provisions of this Section 3.03. Newco acknowledges and agrees that the purpose
of this Section 3.03 is to exclude it, except as expressly provided below, from
the field of commercial and residential roofing generally and specifically from
competing with the business of Xxxxxxxx Roofing for a period of ten years.
Therefore, Newco agrees that, commencing at the Effective Time and continuing
until the date that is ten years from the Effective Time, it shall not, and
shall not permit any of its Affiliates, in any manner, directly or indirectly,
alone or in association with any person, to:
(i) compete with Parent, the Company or any of their respective Affiliates
in the field of commercial and residential roofing generally (the
"Roofing Field");
(ii) engage in any activity in the Roofing Field; or
(iii)actively participate in, control, manage, own any interest in or share
in the earnings of, finance or invest in the capital stock of any
person who is engaged in any activity in the Roofing Field or consult
with any person on matters in the Roofing Field; except that Newco,
and each other Affiliate of Newco, may acquire in the aggregate:
(A) an entity which participates in the Roofing Field if and only if
at the time of the acquisition and during the ten year period
referred to above, (x) such entity's activity in the Roofing
Field is limited to the sale of roofing products (as
distinguished from the installation, maintenance and repair of
roofs) and (y) the revenues derived from the sale of such
products constitute no more than 5% of such entity's total
revenues; and
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(B) up to 5% of the equity or voting interest in an entity that is
engaged in activities in the Roofing Field so long as none of Xxx
Xxxxxxxx or Xxx Xxxxxxxx is actively involved, whether directly
or indirectly, in the management of such entity during the period
of the applicable non-competition covenants set forth in those
certain Noncompetition Agreements each dated the same date as the
Merger Agreement among Parent, the Company and such individual.
For purposes of this Section 3.03, "actively involved" includes, without
limitation, acting directly or indirectly as an officer, director, proprietor,
employee, partner, lender, or, on matters in the Roofing Field, as a consultant,
advisor, agent or representative.
(b) Newco agrees that for a period of three years from the Effective Time,
it shall not, and shall cause its Affiliates not to, in any manner, directly or
indirectly, (i) induce any person that has been an employee of any of Xxxxxxxx
Roofing at any time between January 1, 2001 and the Effective Time, to leave the
employ of Xxxxxxxx Roofing, (ii) recommend to any other person that they employ
any such employee, or (iii) hire any such employee.
(c) Newco agrees that for a period of five years from the Effective Time,
it shall not, and shall cause its Affiliates not to, in any manner, directly or
indirectly, (i) solicit by mail, by telephone, by personal meeting or by any
other means, either directly or indirectly, any customer or supplier of Parent,
the Company or any of their respective Affiliates to transact business in the
Roofing Field with a business or enterprise that competes with Parent, the
Company or any of their respective Affiliates in the Roofing Field or reduce or
refrain from doing any business with Parent, the Company or any of their
respective Affiliates in the Roofing Field, or (ii) disparage (including by
relative comparison) Parent or the Company or any of their products or
activities in the Roofing Field.
(d) Notwithstanding the termination of this Agreement for any reason, and
irrespective of the time, manner or cause of termination, Newco's obligations
under this Section 3.03 run with the business of Newco and shall survive and
remain in full force and effect for the periods therein provided, and the
provisions for equitable relief against Newco shall continue in full force and
effect.
Section 3.04. Successors. Newco shall not consolidate with or merge with or
into, or sell, convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to, any person, unless the
resulting, surviving or transferee person (the "Successor Company") shall
expressly assume, by an instrument in form and substance reasonably satisfactory
to Parent, all the obligations of such Newco Indemnitor under this Agreement.
The Successor Company shall be the successor to Newco or such Newco Indemnitor,
as applicable, and shall succeed to, and be substituted for, such Newco or Newco
Indemnitor, as applicable, under this Agreement, but, in the case of a sale,
conveyance, transfer or lease, Newco or such Newco Indemnitor, as applicable,
shall not be released from its obligations hereunder.
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Section 3.05. Third Party Rights.
(a) If after the Effective Time Newco holds any right to indemnification
other than a right to indemnification under this Agreement or any other
contractual or other right (collectively, a "Newco Recourse Right") with respect
to any Xxxxxxxx Liability or any Assumed Liability for which Xxxxxxxx Roofing is
held responsible, then (i) to the extent possible such Newco Recourse Right
shall be deemed to be held as a shared right of Newco and Xxxxxxxx Roofing to
the extent necessary to protect Xxxxxxxx Roofing against such Xxxxxxxx Liability
or such Assumed Liability, and (ii) to the extent not so possible, Newco shall
assert or otherwise make available to Xxxxxxxx Roofing the full benefit of such
Newco Recourse Right by making a claim on behalf of Xxxxxxxx Roofing or taking
other steps reasonably requested by Xxxxxxxx Roofing.
(b) In the event that after the Effective Time Xxxxxxxx Roofing holds any
right to indemnification or any other contractual or other right (collectively,
a "Xxxxxxxx Recourse Right") with respect to any Assumed Liability or any
Xxxxxxxx Liability for which Newco is held responsible, then (i) to the extent
possible such Xxxxxxxx Recourse Right shall be deemed to be held as a shared
right of Xxxxxxxx Roofing and Newco to the extent necessary to protect Newco
against such Assumed Liability or such Xxxxxxxx Liability, and (ii) to the
extent not so possible, Xxxxxxxx Roofing assert or otherwise make available to
Newco the full benefit of such Xxxxxxxx Recourse Right by making a claim on
behalf of Newco or taking other steps reasonably requested by Newco.
ARTICLE IV MISCELLANEOUS AND GENERAL
Section 4.01. Effectiveness; Modification or Amendment. The parties hereto
agree that this Agreement will become effective at the Effective Time. The
parties hereto may modify or amend this Agreement only by written agreement
executed and delivered by duly authorized officers of the respective parties.
Section 4.02. Extension; Waiver. At any time the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties or (b) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
Section 4.03. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 4.04. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oklahoma, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 4.05. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
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overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Xxxxxxxx Roofing (including, after the Effective Time,
the Company), to
Zenex International, Inc.
000 Xxxxxx X. Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxx Xxxxx
with a copy to:
Xxxxxxx & Xxxxxx, LLP
Bank One Center, 20th Floor
000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxxx
(b) if to the Company (before the Effective Time), to
Xxxxxxxx Roofing & Sheet Metal, Inc.
00000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx, P.L.L.C.
0000 X.X. 00xx Xx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxx
(c) if to Newco, to
Xxxxxxxx Holdings, Inc.
00000 X. Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: [___________]
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx, P.L.L.C.
0000 X.X. 00xx Xx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xx. Xxxx X. Xxxxxx
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Section 4.06. Captions. All the Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 4.07. Assignment. Except as provided in Section 3.06, neither this
Agreement nor any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
Section 4.08. Entire Agreement. The Transaction Agreements (including the
documents and instruments referred to therein, the Annexes thereto, the Parent
Disclosure Schedule and the Company Disclosure Schedule) and the Confidentiality
Agreement constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
Section 4.09. Certain Obligations. Whenever this Agreement requires any of
the subsidiaries of any party to take any action, this Agreement will be deemed
to include an undertaking on the part of such party to cause such subsidiary to
take such action; provided, however, that for this purpose, after the Effective
Time, Newco shall not be considered to be subsidiaries of the Company unless
specifically included.
Section 4.10. Severability. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 4.11. No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to confer upon any person or entity other than the parties
hereto and their respective successors and permitted assigns, any benefit, right
or remedies under or by reason of this Agreement, except that the provisions of
Article II hereof shall inure to the benefit of Indemnitees.
Section 4.12. Specific Enforcement; Jurisdiction. The parties agree that
irreparable damage would occur and that the parties would not have any adequate
remedy either pursuant to the indemnification provisions of Section 2.01, 2.02
or 2.03, as the case may be, or at law in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Oklahoma in any state court in the State
of Oklahoma, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Oklahoma or of any state court located in the State of
64
Oklahoma in the event any dispute arises out of this Agreement or the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court other than a Federal court located in the State of Oklahoma or a state
court located in the State of Oklahoma.
[The signature page follows.]
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In Witness Whereof, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.
Zenex International, Inc.,
By: /s/ Xxx Xxxxx
---------------------------------
President
Xxxxxxxx Roofing & Sheet Metal, Inc.
By: /s/ Xxx Xxxxxxxx
---------------------------------
President
Xxxxxxxx Holdings, Inc.
By: /s/ Xxx Xxxxxxxx
---------------------------------
President
66
