1
Exhibit 2.1
FINAL
STOCK PURCHASE AGREEMENT
relating to the sale of
M&M AEROSPACE HARDWARE, INC.
to
BE AEROSPACE, INC
dated as of August 10, 2001
2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms . 1
SECTION 1.02. Definitions 8
SECTION 1.03. Interpretation and Rules of Construction 9
ARTICLE II PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares 10
SECTION 2.02. Purchase Price 10
SECTION 2.03. Closing 10
SECTION 2.04. Closing Deliveries by the Sellers . 11
SECTION 2.05. Closing Deliveries by the Purchaser 11
SECTION 2.06. Escrow . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.01. Organization, Authority and Qualification of the Sellers 12
SECTION 3.02. Organization, Authority and Qualification of the Company 12
SECTION 3.03. Subsidiaries . 12
SECTION 3.04. Capitalization 13
SECTION 3.05. Corporate Books and Records . 14
SECTION 3.06. No Conflict 14
SECTION 3.07. Governmental Consents and Approvals 15
SECTION 3.08. Financial Information; Books and Records 15
SECTION 3.09. Absence of Undisclosed Liabilities 15
i
3
SECTION 3.10. Receivables 16
SECTION 3.11. Inventories 16
SECTION 3.12. Acquired Assets . 16
SECTION 3.13. Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions 16
SECTION 3.14. Litigation 18
SECTION 3.15. Compliance with Laws 19
SECTION 3.16. Environmental and Other Permits and Licenses; Related Matters 19
SECTION 3.17. Material Contracts . 20
SECTION 3.18. Intellectual Property . 22
SECTION 3.19. Real Property 22
SECTION 3.20. Assets . 24
SECTION 3.21. Customers . 24
SECTION 3.22. Suppliers . 24
SECTION 3.23. Employee Benefit Matters . 25
SECTION 3.24. Labor Matters 26
SECTION 3.25. Taxes 26
SECTION 3.26. Insurance . 28
SECTION 3.27. Company Products 28
SECTION 3.28. Individual Property 28
SECTION 3.29. Brokers 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser 28
SECTION 4.02. No Conflict 29
ii
4
SECTION 4.03. Governmental Consents and Approvals 29
SECTION 4.04. Information Concerning the Company 29
SECTION 4.05. Investment Purpose . 30
SECTION 4.06. Litigation 30
SECTION 4.07. SEC Documents 30
SECTION 4.08. Capitalization 30
SECTION 4.09. Authorization of Purchaser Common Stock . 31
SECTION 4.10. Financing . 31
SECTION 4.11. Brokers 31
ARTICLE V ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing 31
SECTION 5.02. Access to Information . 32
SECTION 5.03. Confidentiality . 32
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents . 33
SECTION 5.05. Notice of Developments 34
SECTION 5.06. No Solicitation or Negotiation . 34
SECTION 5.07. Non-Competition . 35
SECTION 5.08. Release of Indemnity Obligations 36
SECTION 5.09. Registration of Shares 36
SECTION 5.10. Retention Bonuses 36
SECTION 5.11. Exchange Act Reports 36
SECTION 5.12. Termination of Shareholder Agreement . 36
SECTION 5.13. Resignation of Directors and Officers 36
iii
5
SECTION 5.14. Retained Tickets 37
SECTION 5.15. Further Action 37
ARTICLE VI EMPLOYEE MATTERS
SECTION 6.01. Employee Benefits Matters 37
ARTICLE VII TAX MATTERS
SECTION 7.01. Indemnity . 38
SECTION 7.02. Tax Returns and Payments . 39
SECTION 7.03. Contests 40
SECTION 7.04. Time of Payment . 41
SECTION 7.05. Cooperation and Exchange of Information . 41
SECTION 7.06. Conveyance Taxes 41
SECTION 7.07. Section 338(h)(10) Election . 42
SECTION 7.08. Miscellaneous 42
ARTICLE VIII CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Sellers 43
SECTION 8.02. Conditions to Obligations of the Purchaser . 44
ARTICLE IX INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties . 45
SECTION 9.02. Indemnification by the Principal Sellers 45
SECTION 9.03. Indemnification by the Purchaser 47
SECTION 9.04. Limits on Indemnification 48
SECTION 9.05. Distributions from Escrow Fund . 48
SECTION 9.06. Tax Matters 49
iv
6
SECTION 9.07. Sellers' Representative; Approval of Sellers 49
SECTION 9.08. Other Indemnity Matters 50
ARTICLE X TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination . 50
SECTION 10.02. Effect of Termination 51
SECTION 10.03. Amendment 51
SECTION 10.04. Waiver 51
ARTICLE XI GENERAL PROVISIONS
SECTION 11.01. Expenses . 51
SECTION 11.02. Notices 51
SECTION 11.03. Public Announcements . 52
SECTION 11.04. Severability 52
SECTION 11.05. Entire Agreement 53
SECTION 11.06. Assignment 53
SECTION 11.07. No Third Party Beneficiaries 53
SECTION 11.08. Governing Law 53
SECTION 11.09. Waiver of Jury Trial . 53
SECTION 11.10. Headings . 54
SECTION 11.11. Counterparts 54
SECTION 11.12. Concerning the Trustees . 54
v
7
EXHIBITS
1.01A Employment Agreements
1.01B Form of Standstill and Voting Agreement
2.02(a) Allocation of Purchase Price
2.02(b) Adjustment Amount
2.02(c) Individual Property and Tickets
2.06 Form of Escrow Agreement
8.01 Form of Opinion of Purchaser's Counsel
8.02 Form of Opinion of Sellers' Counsel
8.02(d) Consents and Approvals
vi
8
DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections:
3.02 Organization, Authority and Qualification of the Company
3.03(a) Subsidiaries
3.04 Capitalization
3.06 No Conflict
3.07 Governmental Consents and Approvals
3.09 Undisclosed Liabilities
3.10 Receivables
3.11 Inventories
3.12 Acquired Assets
3.13 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions
3.14 Litigation
3.15 Compliance with Laws
3.16 Environmental and Other Permits and Licenses; Related Matters
3.17 Material Contracts
3.18 Intellectual Property
3.19 Real Property
3.20 Assets
3.21 Customers
3.22 Suppliers
3.23 Employee Benefit Matters
3.24 Labor Matters
vii
9
3.25 Taxes
5.01 Conduct of Business Prior to the Closing
viii
10
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
August 10, 2001, among ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997
6-Year GRAT, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 8-Year GRAT, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2000 8-Year GRAT,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 8-Year GRAT, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2000 8-Year GRAT and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 10-Year GRAT (collectively, the "Principal Sellers"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(collectively, the "Secondary Sellers" and, together with the Principal Sellers,
the "Sellers") and BE Aerospace, Inc., a Delaware corporation (the "Purchaser").
WHEREAS, the Sellers own all the issued and outstanding shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
of M&M Aerospace Hardware, Inc., a Florida corporation (the "Company");
WHEREAS, the Sellers desire to sell the Shares and the
Purchasers desire to purchase the Shares, in each case, on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Persons listed in Exhibit 1.01A hereto have
entered into the employment agreements set forth in Exhibit 1.01A hereto (the
"Employment Agreements").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Sellers and the
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes of this
Agreement:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Ancillary Agreements" means the Escrow Agreement and the
Standstill and Voting Agreement.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by Law to be closed in
The City of New York.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the Closing Date.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System, as updated through the Closing
Date.
11
"Claims" means any and all administrative, regulatory or
judicial actions, suits, petitions, appeals, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations, proceedings,
consent orders or consent agreements.
"Closing Date Company Debt" means the aggregate Indebtedness
of the Company and the Subsidiaries for borrowed money as of the Closing Date
including, without limitation, the Company Credit Agreement and any interest
rate swap agreement entered into in connection therewith.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Company Credit Agreement" means the $80,000,000 credit
agreement dated June 30, 2003 among the Company, First Union National Bank and
other banks party thereto.
"Company Intellectual Property" means Intellectual Property
owned by the Company or any Subsidiary.
"Company IP Agreements" means (a) licenses of Intellectual
Property by the Company or any Subsidiary to any third party, (b) licenses of
Intellectual Property by any third party to the Company or any Subsidiary, (c)
agreements between the Company or any Subsidiary and any third party relating to
the development or use of Intellectual Property, the development or transmission
of data, or the use, modification, framing, linking, advertisement, or other
practices with respect to Internet Web sites, and (d) consents, settlements,
decrees, orders, injunctions, judgments or rulings governing the use, validity
or enforceability of Company Intellectual Property.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee,
personal representative or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee, personal representative or executor,
by contract, credit arrangement or otherwise.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated as of the date hereof, delivered by the Sellers to the Purchaser
in connection with this Agreement.
"Encumbrance" means any security interest, pledge,
hypothecation, mortgage, lien (including, without limitation, environmental and
tax liens), violation, charge, lease, license, encumbrance, servient easement,
adverse claim, reversion, reverter, preferential arrangement, restrictive
covenant, condition or restriction of any kind, including, without limitation,
any restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership.
"Environment" means surface waters, groundwaters, soil,
subsurface strata and ambient air.
2
12
"Environmental Claims" means any Claims relating in any way to
any Environmental Law or any Environmental Permit, including, without
limitation, (a) any and all Claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (b) any and all Claims by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the Environment.
"Environmental Laws" means all Laws, now or hereafter in
effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety, natural resources or
Hazardous Materials, including, without limitation, CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 6901 et seq.; the Clean Water
Act, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Atomic Energy Act,
42 U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 136 et seq.; and the Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Section 301 et seq.
"Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under or
issued pursuant to any applicable Environmental Law.
"Escrow Agent" means The Bank of New York or such other escrow
agent as to which the Sellers' Representative and the Purchaser agree.
"Escrow Amount" means $25,000,000.
"Escrow Fund" means the Escrow Amount deposited with the
Escrow Agent.
"Governmental Authority" means any United States or non-United
States federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Materials" means (a) petroleum and petroleum
products, radioactive materials, asbestos-containing materials, urea
formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls and radon gas, (b) any other chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar import, under any applicable
Environmental Law, and (c) any other chemical, material or substance which is
regulated by any Environmental Law.
3
▇▇
"▇▇▇ ▇▇▇" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money, (b)
all obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
sellers or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance with U.S. GAAP,
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptances, letters of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all indebtedness of others
referred to in clauses (a) through (g) above guaranteed directly or indirectly
in any manner by such Person, and (i) all indebtedness referred to in clauses
(a) through (g) above secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any
Encumbrance on property (including, without limitation, accounts and contract
rights) owned by such Person.
"Indemnified Party" means a Purchaser Indemnified Party or a
Seller Indemnified Party, as the case may be.
"Indemnifying Party" means the Sellers pursuant to Section
9.02 and the Purchaser pursuant to Section 9.03, as the case may be.
"Intellectual Property" means (i) patents, patent
applications, and statutory invention registrations, (ii) trademarks, service
marks, domain names, trade dress, logos, trade names, corporate names, and other
identifiers of source or goodwill, including registrations and applications for
registration thereof, (iii) mask works and copyrights, including copyrights in
computer software, and registrations and applications for registration thereof,
and (iv) confidential and proprietary information, including Trade Secrets,
know-how and invention rights.
"Inventories" means all inventory, merchandise, finished
goods, and raw materials, packaging, labels, supplies and other personal
property related to the business of the Company and the Subsidiaries and
maintained, held or stored by or for the Sellers, the Company or any Subsidiary
on the Closing Date, and any prepaid deposits for any of the same.
"IRS" means the Internal Revenue Service of the United States.
"Law" means any United States or non-United States federal,
national, supranational, state, provincial, local or similar statute, law,
ordinance, regulation, rule, code, order, requirement or rule of law (including,
without limitation, common law).
4
14
"Leased Real Property" means the real property leased by the
Company or any Subsidiary, as tenant, together with, to the extent leased by the
Company or any Subsidiary, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Company or any Subsidiary
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Licensed Intellectual Property" means Intellectual Property
licensed to the Company or any Subsidiary pursuant to the Company IP Agreements.
"Material Adverse Effect" means any circumstance, change in or
effect on the Company or any Subsidiary that, individually or in the aggregate
with all other circumstances, changes in or effects on the Company or any
Subsidiary is or is reasonably likely to be materially adverse to the business,
operations, assets or liabilities (including, without limitation, contingent
liabilities), customer or supplier relationships, results of operations or the
condition (financial or otherwise) of the Company and the Subsidiaries taken as
a whole; provided, however, that "Material Adverse Effect" shall not include any
event, circumstance, change or effect arising out of or attributable to general
economic conditions or events, circumstances, changes or effects affecting the
securities markets generally.
"Owned Real Property" means (a) the real property of the
Company or any Subsidiary, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company or any
Subsidiary attached or appurtenant thereto and all easements, licenses, rights
and appurtenances relating to the foregoing, and (b) the real property owned by
the Company or any Subsidiary, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company or any
Subsidiary attached or appurtenant thereto and all easements, licenses, rights
and appurtenances relating to the foregoing.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for Taxes, assessments and governmental
charges or levies not yet due and payable; (b) Encumbrances imposed by Law, such
as materialmen's, mechanics', carriers', workmen's and repairmen's liens and
other similar liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than 30 days and (ii)
are not in excess of $5,000 in the case of a single property or $50,000 in the
aggregate at any time; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred
5
15
in connection with any Indebtedness, (ii) do not render title to the property
encumbered thereby unmarketable and (iii) do not, individually or in the
aggregate, materially adversely affect the value of or the use of such property
for its current and anticipated purposes.
"Person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Purchase Price Bank Account" means a bank account in the
United States to be designated by the Sellers in a written notice to the
Purchaser at least five Business Days before the Closing.
"Purchaser Material Adverse Effect" means any circumstance,
change in or effect on the Purchaser or any of its subsidiaries that,
individually or in the aggregate with all other circumstances, changes in or
effects on the Purchaser or its subsidiaries is or is reasonably likely to be
materially adverse to the business, operations, assets or liabilities
(including, without limitation, contingent liabilities), customer or supplier
relationships, results of operations or the condition (financial or otherwise)
of the Purchaser and its subsidiaries taken as a whole; provided, however, that
"Purchaser Material Adverse Effect" shall not include any event, circumstance,
change or effect arising out of or attributable to general economic conditions
or events, circumstances, changes or effects affecting the securities markets
generally.
"Purchaser's Accountants" means Deloitte & Touche LLP,
independent accountants of the Purchaser.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Receivables" means any and all accounts receivable, notes and
other amounts receivable from third parties, including, without limitation,
customers and employees, arising from the conduct of the business of the Company
before the Closing Date, whether or not in the ordinary course, together with
any unpaid financing charges accrued thereon.
"Reference Balance Sheet" means the audited balance sheet of
the Company dated December 31, 2000.
"Reference Balance Sheet Date" means December 31, 2000.
"Regulations" means the Treasury Regulations (including
Temporary Regulations) promulgated by the United States Department of Treasury
with respect to the Code or other federal tax statutes.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like into or upon any land or water or air or otherwise entering into the
Environment.
6
16
"Remedial Action" means all action to (a) clean up, remove,
treat or handle in any other way Hazardous Materials in the Environment; (b)
prevent the Release of Hazardous Materials so that they do not migrate, endanger
or threaten to endanger public health or the Environment; or (c) perform
remedial investigations, feasibility studies, corrective actions, closures and
post-remedial or post-closure studies, investigations, operations, maintenance
and monitoring.
"Retention Agreements" means those agreements which provide
for the payment of retention bonuses due to the employees or consultants of the
Company and the Subsidiaries, and which agreements have been entered into as of
the date hereof between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and certain employees and consultants of
the Company, copies of which have been provided to the Purchaser.
"Sellers' Accountants" means PricewaterhouseCoopers, LLP,
independent accountants of the Sellers.
"Standstill and Voting Agreement" means the stockholders
agreement substantially in the form of Exhibit 1.01B.
"Subsidiaries" means M&M Aerospace Hardware SARL, M&M
Aerospace Hardware GmbH and M&M Aerospace Hardware Ltd., and any and all
corporations, partnerships, limited liability companies, joint ventures,
associations and other entities controlled by the Company.
"Swap Agreements" means the ISDA Master Agreement, dated March
3, 1998 with First Union Bank of Florida and any other agreement entered into in
connection with swapping interest rates related to the Company Credit Agreement.
"Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
"Trade Secrets" means trade secrets, know-how and other
confidential or proprietary technical, business and other information, including
manufacturing and production processes and techniques, research and development
information, technology, drawings, specifications, designs, plans, proposals,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, customer and supplier lists and
information, and all rights in any jurisdiction to limit the use or disclosure
thereof.
"U.S. GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied consistently
throughout the periods involved.
7
17
SECTION 1.02. Definitions. The following terms have the
meanings set forth in the Sections set forth below:
Definition Location
"Agreement" Preamble
"Allocation" 7.07(b)
"Ancillary Lease Documents" 3.19(d)
"Assets" 3.20
"Average Share Price" 2.02
"Cash Amount" 2.02(a)
"Closing" 2.03
"Closing Date" 2.03
"Commission" 4.04
"Common Stock" Recitals
"Company" Recitals
"Competing Business" 5.07
"Company Products" 3.27
"Election" 7.07(a)
"Employment Agreements" Recitals
"ERISA" 3.23(a)
"Escrow Agreement" 2.06
"Exchange Act" 4.07
"Financial Statements" 3.08(a)
"Individual Property" 2.02(c)
"Interim Financial Statements" 3.08(a)
"Loss" 9.02(a)
"Material Contracts" 3.17(a)
"Options" 3.19(d)
"Plans" 3.23(a)
"Post-Closing Plans" 6.01(c)
"Preferred Stock" 4.08
"Principal Sellers" Preamble
"Prior Service" 6.01(c)
"Purchase Price" 2.02
"Purchaser" .Preamble
"Purchaser Common Stock" 2.02
"Purchaser Indemnified Party" 9.02(a)
"Purchaser Plans" 4.08
"Purchaser SEC Documents" 4.07
"Registration Statement" 4.07
"Restricted Period" 5.07(a)
"Secondary Sellers" Preamble
"Securities Act" 4.07
"Sellers" Preamble
"Seller Indemnified Party" 9.03(a)
8
18
Definition Location
"Sellers' Representative" 9.07(a)
"Settlement Date" 2.02(b)
"Shares" Recitals
"Shareholder Agreement" 5.12
"Stock Consideration" 2.02(a)
"Tax Returns" 3.25
"Third Party Claims" 9.02(b)
"Tickets" 2.02(c)
"Transferred Employees" 6.01(a)
"WARN" 3.23(f)
SECTION 1.03. Interpretation and Rules of Construction. In
this Agreement, except to the extent that the context otherwise requires:
(a) when a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference is to an Article or
Section of, or a Schedule to, this Agreement unless otherwise
indicated;
(b) the table of contents and headings for this Agreement are
for reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement;
(c) whenever the words "include", "includes" or "including"
are used in this Agreement, they are deemed to be followed by the words
"without limitation";
(d) the words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as
a whole and not to any particular provision of this Agreement;
(e) the definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms;
(f) any Law defined or referred to herein or in any agreement
or instrument that is referred to herein means such Law or statute as
from time to time amended, modified or supplemented, including by
succession of comparable successor Laws;
(g) references to a Person are also to its permitted
successors and assigns; and
(h) the use of "or" is not intended to be exclusive unless
expressly indicated otherwise.
9
19
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions of this Agreement, at the Closing, the Sellers
shall sell, assign, transfer, convey and deliver, or cause to be sold, assigned,
transferred, conveyed and delivered, to the Purchaser, the Shares, and the
Purchaser shall purchase the Shares.
SECTION 2.02. Purchase Price. (a) The purchase price (i) for
the covenants contained in Section 5.07 shall be equal to $2,000,000 and (ii)
for the Shares shall be an amount equal to (x) $150,000,000 minus the Closing
Date Company Debt (collectively, the amounts in subsections (i) and (ii)(x)
above are referred to herein as the "Cash Amount"), plus (y) the Escrow Amount
plus (z) the Adjustment Amount (as defined in Exhibit 2.02(b)) (collectively,
the "Purchase Price"). The Purchaser shall pay the Purchase Price by (i)
delivering to the Escrow Agent pursuant to the Escrow Agreement on the Closing
Date that number of shares (the "Stock Consideration") of the Purchaser's common
stock, par value $.01 per share (the "Purchaser Common Stock"), such that the
product of the Stock Consideration and the average of the per share closing
prices as reported on the NASDAQ National Market System of shares of Purchaser
Common Stock for the eight consecutive trading days ending on (and including)
the first trading day immediately preceding the Closing Date (the "Average Share
Price") is equal to $48,000,000 and (ii) delivering to the Sellers, in
accordance with Exhibit 2.02(a), $152,000,000 in cash.
(b) The Adjustment Amount shall be determined in accordance
with the procedures set forth on Exhibit 2.02(b). On the date that the
Adjustment Amount is finally determined without regard to any further adjustment
for pending construction litigation referred to in Exhibit 2.02(b) (the
"Settlement Date"), the Escrow Agent shall release from the Escrow Fund the
Adjustment Amount pursuant to the terms and conditions set forth in the Escrow
Agreement.
(c) Set forth on subsection (i) of Exhibit 2.02(c) hereto is a
list of certain personal property of the Principal Sellers which is kept at the
Company's offices (the "Individual Property") and ticket rights to sporting
events (the "Tickets"), in each case, held beneficially by the Principal
Sellers. The parties acknowledge and agree that following the Closing the
Principal Sellers shall remain the owners of the Individual Property and,
subject to Section 5.14, the Tickets, in each case, which they may remove from
the Company's facilities at any time or which they may transfer to their own
names, as applicable.
SECTION 2.03. Closing. Subject to the terms and conditions of
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A., Museum
Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. Miami time on
the fifth Business Day following the satisfaction or waiver of all conditions to
the obligations of the parties set forth in Sections 8.01(b) and Sections
8.02(b) and (d) or at such other place or at such other time or on such other
date as the Sellers' Representative and the Purchaser may
10
20
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date"). Notwithstanding the foregoing, the Purchaser and the
Sellers agree that the Purchaser intends, for financial reporting purposes, to
treat the Closing and transfer of effective control of the Company as if it had
occurred on the date hereof.
SECTION 2.04. Closing Deliveries by the Sellers. At the
Closing, the Sellers shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares duly endorsed in
blank, or accompanied by stock powers duly executed in blank, in form
satisfactory to the Purchaser and with all required stock transfer tax
stamps affixed;
(b) a receipt for the Cash Amount; and
(c) the opinions, certificates and other documents required to
be delivered pursuant to Section 8.02
SECTION 2.05. Closing Deliveries by the Purchaser. (a) At the
Closing, the Purchaser shall deliver to the Sellers:
(i) the Cash Amount by wire transfer in immediately
available funds to the Purchase Price Bank Account; and
(ii) the certificates and other documents required to be
delivered pursuant to Section 8.01.
(b) At the Closing, the Purchaser shall deliver to the Escrow
Agent, in accordance with the Escrow Agreement, stock certificates evidencing
the Stock Consideration registered in the names of the Sellers or their
respective nominees and in form satisfactory to the Purchaser and the Escrow
Agent and with all required stock transfer tax stamps affixed.
SECTION 2.06. Escrow. Prior to the Closing, the Sellers and
the Purchaser shall enter into an Escrow Agreement with the Escrow Agent
substantially in the form of Exhibit 2.06 (the "Escrow Agreement"). In
accordance with the terms of the Escrow Agreement, the Purchaser shall deposit
the Stock Consideration to be held and paid out by the Escrow Agent in
accordance with the terms of the Escrow Agreement.
11
21
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
As an inducement to the Purchaser to enter into this
Agreement, the Principal Sellers and (with respect to Section 3.01 and the
seventh and eighth sentences of Section 3.04 only) the Secondary Sellers hereby
represent and warrant to the Purchaser as follows:
SECTION 3.01. Organization, Authority and Qualification of the
Sellers. If such Seller is a trust it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation and has all
necessary power and authority to enter into this Agreement and the Ancillary
Agreements, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and thereby. If such
Seller is an individual such Seller has the capacity to enter into this
Agreement and the Ancillary Agreements, to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated by this Agreement
and thereby. The execution and delivery of this Agreement and the Ancillary
Agreements by such Seller, the performance by such Seller of his, her or its
obligations hereunder and thereunder and the consummation by such Seller of the
transactions contemplated by this Agreement and thereby have been duly
authorized by all requisite action on the part of such Seller. This Agreement
has been, and upon their execution the Ancillary Agreements shall have been,
duly executed and delivered by such Seller, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement constitutes, and upon
their execution the Ancillary Agreements shall constitute, legal, valid and
binding obligations of such Seller, enforceable against such Seller in
accordance with their respective terms.
SECTION 3.02. Organization, Authority and Qualification of the
Company. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on the business of the
Company and the Subsidiaries as it has been and is currently conducted. The
Company is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification necessary and all such
jurisdictions are set forth in Section 3.02 of the Disclosure Schedule except
for such failures as would not be reasonably likely to have a Material Adverse
Effect. All corporate actions taken by the Company have been duly authorized or
ratified by any necessary corporate action, and the Company has not taken any
action that in any respect conflicts, that constitutes a default under or
results in a violation of any provision of its Articles of Incorporation or
By-laws. True and correct copies of the Articles of Incorporation and By-laws of
the Company, each as in effect on the date hereof, have been delivered by the
Sellers to the Purchaser.
SECTION 3.03. Subsidiaries. (a) Section 3.03(a) of the
Disclosure Schedule sets forth a true and complete list of all Subsidiaries,
listing for each Subsidiary its name, type of entity, the jurisdiction and date
of its incorporation or organization, its authorized capital stock,
12
22
partnership capital or equivalent, the number and type of its issued and
outstanding shares of capital stock, partnership interests or similar ownership
interests and the current ownership of such shares, partnership interests or
similar ownership interests.
(b) Other than the Subsidiaries, there are no other
corporations, partnerships, joint ventures, associations or other entities in
which the Company or any Subsidiary owns, of record or beneficially, any direct
or indirect equity or other interest or any right (contingent or otherwise) to
acquire the same. Other than the Subsidiaries, neither the Company nor any
Subsidiary is a member of any partnership nor is the Company or any Subsidiary a
participant in any joint venture or similar arrangement.
(c) Each Subsidiary that is a corporation: (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (ii) has all necessary power and authority
to own, operate or lease the properties and assets owned, operated or leased by
such Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary except for such failures as would not be reasonably
likely to have a Material Adverse Effect. Each Subsidiary that is not a
corporation: (i) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (ii) has all necessary power and
authority to own, operate or lease the properties and assets owned, operated or
leased by such Subsidiary and to carry on its business as it has been and is
currently conducted by such Subsidiary and (iii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary except for such failures as would not be
reasonably likely to have a Material Adverse Effect.
(d) All corporate actions taken by each Subsidiary have been
duly authorized or ratified by any necessary corporate action and no Subsidiary
has taken any action that in any respect conflicts with, constitutes a default
under or results in a violation of any provision of its Certificate of
Incorporation or By-laws (or similar organizational documents). True and
complete copies of the Certificate of Incorporation and By-laws (or similar
organizational documents), in each case as in effect on the date hereof, of each
Subsidiary have been delivered by the Sellers to the Purchaser.
SECTION 3.04. Capitalization. (a) The authorized capital stock
of the Company consists of 100,000 Shares of Common Stock. As of the date
hereof, 100,000 shares of Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable. None of the issued and
outstanding Shares of Common Stock was issued in violation of any preemptive
rights. There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the Shares
or obligating either the Sellers or the Company to issue or sell any Shares, or
any other interest in, the Company. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any Shares
of Common Stock or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person. The Shares
constitute all of the issued and outstanding capital stock of the Company. Such
Seller
13
23
owns his, her or its Shares of record and beneficially free and clear of all
Encumbrances. Upon consummation of the transactions contemplated by this
Agreement and registration of such Seller's Shares in the name of the Purchaser
in the stock records of the Company, the Purchaser, assuming it shall have
purchased such Shares for value in good faith and without notice of any adverse
claim, will own such Shares free and clear of all Encumbrances. Upon
consummation of the transactions contemplated by this Agreement, the Shares will
be fully paid and nonassessable. Except as set forth on Schedule 3.04, there are
no voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Shares.
(b) The stock register of the Company accurately records: (i)
the name and address of each Person owning shares and (ii) the certificate
number of each certificate evidencing shares of capital stock issued by the
Company, the number of shares evidenced by each such certificate, the date of
issuance thereof and, in the case of cancellation, the date of cancellation.
(c) All the outstanding shares of capital stock of each
Subsidiary that is a corporation are validly issued, fully paid, nonassessable
and, except with respect to wholly owned Subsidiaries, free of preemptive rights
and are owned by the Company, whether directly or indirectly, free and clear of
all Encumbrances. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to the capital stock of any Subsidiary or obligating the Sellers, the Company or
any Subsidiary to issue or sell any shares of capital stock of, or any other
interest in, any Subsidiary. There are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any shares of capital stock of or any other interests in
any Subsidiary.
SECTION 3.05. Corporate Books and Records. The minute books of
the Company and the Subsidiaries contain accurate records of all meetings and
accurately reflect all other actions taken by the stockholders, Boards of
Directors and all committees of the Boards of Directors of the Company and the
Subsidiaries. Complete and accurate copies of all such minute books and of the
stock register of the Company and each Subsidiary have been provided by the
Sellers to the Purchaser.
SECTION 3.06. No Conflict. Assuming that all consents,
approvals, authorizations and other actions described in Section 3.07 have been
obtained and all filings and notifications listed in Section 3.07 of the
Disclosure Schedule have been made, the execution, delivery and performance of
this Agreement and the Ancillary Agreements by the Sellers do not and will not
(a) violate, conflict with or result in the breach of any provision of the
Articles of Incorporation or by-laws or the trust agreements (or similar
organizational documents) of each Seller (if applicable), the Company or any
Subsidiary, (b) conflict with or violate (or cause an event which could have a
Material Adverse Effect as a result of ) any Law or Governmental Order
applicable to the Sellers, the Company, any Subsidiary or any of their
respective assets, properties or businesses, or (c) except as set forth on
Section 3.06 of the Disclosure Schedule conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or
14
24
give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Shares pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Sellers, the Company or any Subsidiary is a party or by
which any of the Shares or any of such assets or properties is bound or
affected, in each case, as would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.07. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and each Ancillary
Agreement by the Sellers do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority except (a) as described in Section 3.07 of the Disclosure
Schedule and (b) the notification requirements of the HSR Act.
SECTION 3.08. Financial Information; Books and Records. (a)
(i) True and complete copies of (A) the audited consolidated balance sheet of
the Company for each of the three fiscal years ended as of December 31, 1998,
1999 and 2000, and the related audited consolidated statements of income,
retained earnings and cash flows of the Company, together with all related notes
and schedules thereto, accompanied by the reports thereon of the Sellers'
Accountants (collectively referred to herein as the "Financial Statements") and
(B) the unaudited consolidated balance sheet of the Company as of June 30, 2001,
and the related unaudited consolidated statements of income, retained earnings
and cash flows of the Company, together with all related notes and schedules
thereto (collectively referred to herein as the "Interim Financial Statements")
have been delivered by the Sellers to the Purchaser. (ii) The Financial
Statements and the Interim Financial Statements (A) were prepared in accordance
with the books of account and other financial records of the Company and the
Subsidiaries, (B) present fairly the consolidated financial condition and
results of operations of the Company and the Subsidiaries as of the dates
thereof or for the periods covered thereby, and (C) have been prepared in
accordance with U.S. GAAP applied on a basis consistent with the past practices
of the Company and the Subsidiaries other than the absence of footnotes with
respect to the Interim Financial Statements and (D) include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial condition of the Company and the
Subsidiaries and the results of the operations of the Company and the
Subsidiaries as of the dates thereof or for the periods covered thereby.
(b) The books of account and other financial records of the
Company and the Subsidiaries are in all material respects complete and correct
and do not contain or reflect any material inaccuracies or discrepancies.
SECTION 3.09. Absence of Undisclosed Liabilities. Except as
set forth on Section 3.09 of the Disclosure Schedule, there are no Liabilities
of the Company or any Subsidiary, other than Liabilities (a) reflected or
reserved against on the Reference Balance Sheet or in the footnotes thereto or
(b) incurred since the date of the Reference Balance Sheet in the ordinary
course of business, consistent with past practice, of the Company and the
Subsidiaries and which do not and would not reasonably be expected to have a
Material Adverse Effect.
15
25
SECTION 3.10. Receivables. Section 3.10 of the Disclosure
Schedule is an aged list of the Receivables as of June 30, 2001 showing
separately those Receivables that as of such date had been outstanding for (a)
35 days or less, (b) 36 to 60 days, (c) 61 to 90 days and (d) more than 91 days.
Except to the extent, if any, reserved for on the Reference Balance Sheet, all
Receivables arose from, and the Receivables existing on the Closing Date will
have arisen from, the sale of Inventories or services to Persons not affiliated
with the Sellers, the Company or any Subsidiary and in the ordinary course of
business consistent with past practice and, except as reserved against on the
Reference Balance Sheet, constitute or will constitute, as the case may be, only
valid, undisputed claims of the Company or a Subsidiary not subject to valid
claims of setoff or other defenses or counterclaims other than normal cash
discounts accrued in the ordinary course of business consistent with past
practice.
SECTION 3.11. Inventories. Except as set forth on Section 3.11
of the Disclosure Schedule, subject to amounts reserved therefor on the
Reference Balance Sheet, the values at which all Inventories are carried on the
Reference Balance Sheet reflect the historical inventory valuation policy of the
Company and the Subsidiaries of stating such Inventories at the lower of cost
(determined on an average cost basis) and market value and all Inventories are
valued such that the Company and the Subsidiaries, subject to periodic changes
in market conditions, are expected to generate customary gross margins. The
Company or a Subsidiary, as the case may be, has good and marketable title to
the Inventories free and clear of all Encumbrances. The Inventories do not
consist of, in any material amount, items that are obsolete or damaged. The
Inventories do not consist of any items held on consignment. Neither the Company
nor any Subsidiary is under any obligation or liability with respect to
accepting returns of items of Inventory or merchandise in the possession of
their customers other than in the ordinary course of business consistent with
past practice. No clearance or extraordinary sale of the Inventories has been
conducted since the Reference Balance Sheet Date. Except as set forth on Section
3.11 of the Disclosure Schedule, neither the Company nor any Subsidiary has
acquired or committed to acquire or manufacture Inventory for sale which is not
of a quality and quantity usable in the ordinary course of business within a
reasonable period of time and consistent with past practice, nor has the Company
or any Subsidiary changed the price of any Inventory except for (a) price
reductions to reflect any reduction in the cost thereof to the Company or such
Subsidiary, (b) reductions and increases responsive to normal competitive
conditions and consistent with the Sellers', the Company's or such Subsidiary's
past sales practices and (c) increases to reflect any increase in the cost
thereof to the Company or such Subsidiary. The Inventories are in good and
merchantable condition in all material respects, are suitable and usable for the
purposes for which they are intended and are in a condition such that they can
reasonably be expected to be sold in the ordinary course of the business
consistent with past practice.
SECTION 3.12. Acquired Assets. Except as set forth in Section
3.12 of the Disclosure Schedule, since the Reference Balance Sheet Date, all the
Assets have been acquired for consideration not less or greater than the fair
market value of such Assets at the date of such acquisition.
SECTION 3.13. Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions. Since the Reference Balance Sheet Date,
except as set forth in Section
16
26
3.13 of the Disclosure Schedule, the business of the Company and the
Subsidiaries has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, except as set
forth in Section 3.13 of the Disclosure Schedule, since the Reference Balance
Sheet Date, neither the Company nor any Subsidiary has:
(a) permitted or allowed any of the assets or properties
(whether tangible or intangible) of the Company or any Subsidiary to be
subjected to any Encumbrance, other than Permitted Encumbrances and
Encumbrances that will be released at or prior to the Closing;
(b) except in the ordinary course of business consistent with
past practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability related to
the Company or the Subsidiaries, other than current liabilities
reflected on the Reference Balance Sheet and current liabilities
incurred in the ordinary course of business consistent with past
practice since the Reference Balance Sheet Date;
(c) written down or written up (or failed to write down or
write up in accordance with U.S. GAAP consistent with past practice)
the value of any Inventories or Receivables other than in the ordinary
course of business consistent with past practice and in accordance with
U.S. GAAP;
(d) made any change in any method of accounting or accounting
practice or policy used by the Company or any Subsidiary, other than
such changes required by U.S. GAAP;
(e) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
property), other than the sale of Inventories in the ordinary course of
business consistent with past practice;
(f) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same,
of the Company or any Subsidiary;
(g) redeemed any of the capital stock or declared, made or
paid any dividends or distributions (whether in cash, securities or
other property) to the holders of capital stock of the Company or any
Subsidiary or otherwise, other than dividends, distributions and
redemptions declared, made or paid by any Subsidiary solely to the
Company;
(h) merged with, entered into a consolidation with or acquired
an interest of 5% or more in any Person or acquired a substantial
portion of the assets or business of any Person or any division or line
of business thereof, or otherwise acquired any material assets other
than in the ordinary course of business consistent with past practice;
(i) made any capital expenditure or commitment for any capital
expenditure in excess of $10,000;
17
27
(j) made, revoked or changed any express or deemed Tax
election or method of Tax accounting, or settled or compromised any
liability with respect to Taxes of the Company or any Subsidiary;
(k) incurred any Indebtedness in excess of $100,000, except
pursuant to the Company Credit Agreement;
(l) made any loan to, guaranteed any Indebtedness of or
otherwise incurred any Indebtedness on behalf of any Person;
(m) except for increases in the ordinary course of business to
employees whose annual compensation does not exceed $80,000, (i)
granted any increase, or announced any increase, in the wages,
salaries, compensation, bonuses, incentives, pension or other benefits
payable by the Company or any Subsidiary to any of its employees,
including, without limitation, any increase or change pursuant to any
Plan, or (ii) established or increased or promised to increase any
benefits under any Plan, in either case except as required by Law or
any collective bargaining agreement or involving ordinary increases
consistent with the past practices of the Company or such Subsidiary;
(n) terminated, discontinued, closed or disposed of any plant,
facility or other business operation, laid off any employees (other
than layoffs of less than 25 employees in any six-month period in the
ordinary course of business consistent with past practice), implemented
any early retirement, separation or program providing early retirement
window benefits within the meaning of Section 1.401(a)-4 of the
Treasury Regulations or announced or planned any such action or program
for the future;
(o) disclosed any secret or confidential Intellectual Property
(except by way of issuance of a patent) or permitted to lapse or become
abandoned any Intellectual Property (or any registration or grant
thereof or any application relating thereto) to which, or under which,
the Company or any Subsidiary has any right, title, interest or
license;
(p) suffered any Material Adverse Effect; or
(q) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.13, except as expressly
contemplated by this Agreement and the Ancillary Agreements.
SECTION 3.14. Litigation. Except as set forth in Section 3.14
of the Disclosure Schedule, there are no Actions by or against the Company or
any Subsidiary (or by or against the Sellers or any Affiliates thereof and
relating to the Company or any Subsidiary) pending before any Governmental
Authority (or, to the best knowledge of the Sellers after due inquiry,
threatened to be brought by or before any Governmental Authority). None of the
matters set forth in Section 3.14 of the Disclosure Schedule has or has had a
Material Adverse Effect or could affect the legality, validity or enforceability
of this Agreement, any Ancillary Agreement or the consummation of the
transactions contemplated by this Agreement or thereby.
18
28
SECTION 3.15. Compliance with Laws. (a) Except as (i) set
forth in Section 3.15(a) of the Disclosure Schedule, (ii) would not adversely
affect the ability of the Sellers to carry out their obligations under, and to
consummate the transactions contemplated by, this Agreement and the Ancillary
Agreements, (iii) would not adversely affect the ability of the Company and the
Subsidiaries to conduct their business or (iv) would not otherwise have a
Material Adverse Effect, the Company and the Subsidiaries have each conducted
and continue to conduct their business in accordance with all Laws and
Governmental Orders applicable to the Company or any Subsidiary or any of their
properties or assets, and neither the Company nor any Subsidiary is in violation
of any such Law or Governmental Order.
(b) Section 3.15(b) of the Disclosure Schedule sets forth a
brief description of each Governmental Order applicable to the Company, any
Subsidiary or any of their properties or assets, and no such Governmental Order
has or has had a Material Adverse Effect or could affect the legality, validity
or enforceability of this Agreement, any Ancillary Agreement or the consummation
of the transactions contemplated by this Agreement or thereby.
SECTION 3.16. Environmental and Other Permits and Licenses;
Related Matters. (a) Except as set forth in Section 3.16 of the Disclosure
Schedule:
(i) The Company and each Subsidiary is in material compliance
with, and for the past three years has been in material compliance
with, all applicable Environmental Laws and all Environmental Permits.
All past noncompliance with Environmental Laws or Environmental Permits
has been resolved without any pending, ongoing or future obligation,
cost or liability, and there is no requirement proposed for adoption or
implementation under any Environmental Law or Environmental Permit.
(ii) There are no underground or above ground storage tanks or
any surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed
of on any of the Real Property or, during the period of the Company's
or any Subsidiary's ownership, lease, use or occupancy thereof, on any
property formerly owned, leased, used or occupied by the Company or any
Subsidiary.
(iii) There has been no Release of any Hazardous Material in
violation of applicable Laws or the rights of third parties on any of
the Real Property or, during the period of the Company's or any
Subsidiary's ownership, lease, use or occupancy thereof, on any
property formerly owned, leased, used or occupied by the Company or any
Subsidiary.
(iv) Neither the Company nor any Subsidiary is conducting,
and none of them has undertaken or completed, any Remedial Action
relating to any Release or threatened Release of any Hazardous Material
at the Real Property or at any other site, location or operation,
either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law or Environmental
Permit.
19
29
(v) There is no asbestos or asbestos-containing material on
any of the Real Property.
(vi) None of the Real Property is listed or proposed for
listing, or adjoins any other property that is listed or proposed for
listing, on the National Priorities List or CERCLIS or on any analogous
federal, state or local list.
(vii) There are no Environmental Claims pending or threatened
against the Company, any Subsidiary or the Real Property, and there are
no circumstances that can reasonably be expected to form the basis of
any such Environmental Claim, including, without limitation, with
respect to any off-site disposal location presently or formerly used by
the Company or any Subsidiary or any of its predecessors or with
respect to previously owned or operated facilities.
(viii) There are no wetlands or any areas subject to any legal
requirement or restriction in any way related to wetlands (including,
without limitation, requirements or restrictions related to buffer or
transition areas or open waters) at or affecting the Real Property.
(b) The Sellers have provided the Purchaser with copies of (i)
any environmental assessment or audit reports or other similar studies or
analyses relating to the Real Property, the Company or any Subsidiary, and (ii)
all insurance policies issued at any time that may provide coverage to the
Company or any Subsidiary for environmental matters.
(c) Neither the execution of this Agreement or the Ancillary
Agreements nor the consummation of the transactions contemplated by this
Agreement or thereby will require any Remedial Action or notice to or consent of
Governmental Authorities or third parties pursuant to any applicable
Environmental Law or Environmental Permit.
SECTION 3.17. Material Contracts. (a) Section 3.17(a) of the
Disclosure Schedule lists each of the following contracts and agreements
(including, without limitation, oral agreements) of the Company and the
Subsidiaries (such contracts and agreements, together with all contracts,
agreements, leases and subleases concerning the use, occupancy, management or
operation of any Real Property including, without limitation, all contracts,
agreements, leases and subleases listed or otherwise set forth in Section
3.19(d) of the Disclosure Schedule, all Company IP Agreements listed or
otherwise set forth in Section 3.18(a) of the Disclosure Schedule, and all
contracts, agreements, leases and subleases relating to personal property, being
"Material Contracts"):
(i) each contract, agreement, invoice, purchase order and
other arrangement, for the purchase of Inventory, spare parts, other
materials or personal property, with any supplier or for the furnishing
of services to the Company or any Subsidiary under the terms of which
the Company or any Subsidiary (A) is likely to pay or otherwise give
consideration of more than $100,000 in the aggregate during the
calendar year ended December 31, 2001, (B) is likely to pay or
otherwise give consideration of more than $100,000 in the aggregate
over the remaining term of such contract or (C) cannot be
20
30
cancelled by the Company or such Subsidiary without penalty or further
payment and without more than 30 days' notice;
(ii) each contract, agreement, invoice, sales order and other
arrangement, for the sale of Inventory or other personal property, or
for the furnishing of services by the Company or any Subsidiary which
(A) is likely to involve consideration of more than $100,000 in the
aggregate during the calendar year ended December 31, 2001, (B) is
likely to involve consideration of more than $250,000 in the aggregate
over the remaining term of the contract or (C) cannot be cancelled by
the Company or such Subsidiary without penalty or further payment and
without more than 30 days' notice;
(iii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing, consulting and advertising contracts and agreements to which
the Company or any Subsidiary is a party;
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Company or any Subsidiary is a party and which are not cancellable
without penalty or further payment and without more than 30 days'
notice;
(v) all contracts and agreements relating to Indebtedness
of the Company or any Subsidiary;
(vi) all contracts and agreements with any Governmental
Authority to which the Company or any Subsidiary is a party;
(vii) all contracts and agreements that limit or purport to
limit the ability of the Company or any Subsidiary to compete in any
line of business or with any Person or in any geographic area or during
any period of time;
(viii) all contracts and agreements between or among the
Company or any Subsidiary, on the one hand, and the Sellers or any
Affiliate of the Sellers (other than the Company or any Subsidiary), on
the other hand;
(ix) all contracts and agreements providing for benefits under
any Plan; and
(x) all other contracts and agreements, whether or not made in
the ordinary course of business, which are material to the Company or
any Subsidiary, or the absence of which would have a Material Adverse
Effect.
For purposes of this Section 3.17 and Sections 3.19 and 3.20, the term "lease"
shall include any and all leases, subleases, sale/leaseback agreements or
similar arrangements.
(b) Except as set forth in Section 3.17(b) of the Disclosure
Schedule and as would reasonably not be expected to have a Material Adverse
Effect, each Material Contract: (i) is valid and binding on the parties thereto
and is in full force and effect and (ii) upon consummation of the transactions
contemplated by this Agreement and the Ancillary
21
31
Agreements, except to the extent that any consents set forth in Section 3.07 of
the Disclosure Schedule are not obtained, shall continue in full force and
effect without penalty or other adverse consequence. Neither the Company nor any
Subsidiary is in breach of, or default under, any Material Contract.
(c) Except as set forth in Section 3.17(c) of the Disclosure
Schedule and as would reasonably not be expected to have a Material Adverse
Effect, (i) to the knowledge of the Sellers, no other party to any Material
Contract is in breach thereof or default thereunder and (ii) neither the Company
or any Subsidiary has received any notice of termination, cancellation, breach
or default under any Material Contract.
(d) The Sellers have made available to the Purchaser true and
complete copies of all Material Contracts.
SECTION 3.18. Intellectual Property. (a) Section 3.18(a) of
the Disclosure Schedule sets forth a true and complete list of (i) all material
patents and patent applications, registered trademarks and trademark
applications, registered copyrights and copyright applications, and domain names
included in the Company Intellectual Property, (ii) all material Company IP
Agreements, other than commercially available off-the-shelf computer software
licensed pursuant to shrink-wrap or click wrap licenses that is not material to
the Company, and (iii) other Company Intellectual Property material to the
Company.
(b) The Company or a Subsidiary is the exclusive owner of the
entire right, title and interest in and to the Company Intellectual Property,
and has a valid license to use the Licensed Intellectual Property. The Company
or a Subsidiary is entitled to use all Company Intellectual Property and
Licensed Intellectual Property in their businesses without limitation, subject
only to the terms of the Company IP Agreements, as the case may be. The Company
Intellectual Property and the Licensed Intellectual Property have not been
adjudged invalid or unenforceable in whole or in part, and, to the knowledge of
the Sellers, are valid and enforceable.
(c) To the knowledge of the Sellers, the Company or any
Subsidiary, the conduct of the business of the Company and the Subsidiaries as
currently conducted does not infringe or misappropriate the Intellectual
Property of any third party, and, except as disclosed in Section 3.18(c) of the
Disclosure Schedule, no Action alleging any of the foregoing is pending, and no
unresolved, written Claim has been threatened or asserted against the Company or
any Subsidiary alleging any of the foregoing. To the knowledge of the Sellers or
the Company, no person is engaging in any activity that infringes the Company
Intellectual Property.
SECTION 3.19. Real Property. (a) Section 3.19(a) of the
Disclosure Schedule lists (i) the street address of each parcel of Owned Real
Property, (ii) the date on which each parcel of Owned Real Property was
acquired, (iii) the current owner of each parcel of Owned Real Property, and
(iv) the current use of each parcel of Owned Real Property.
(b) Section 3.19(b) of the Disclosure Schedule lists (i) the
street address of each parcel of Leased Real Property, (ii) the identity of the
lessor, lessee and current occupant (if different from lessee) of each such
parcel of Leased Real Property, (iii) the terms (referencing
22
32
applicable renewal periods) and rental payment amounts (including all
escalations) pertaining to each such parcel of Leased Real Property, and (iv)
the current use of each such parcel of Leased Real Property.
(c) Except as described in Section 3.19(c) or 3.15(a) of the
Disclosure Schedule, there is no material violation of any Law (including,
without limitation, any building, planning or zoning law) relating to any of the
Real Property. The Sellers have made available to the Purchaser true, legible
and complete copies of each deed for each parcel of Owned Real Property and, to
the extent available, for each parcel of Leased Real Property and all the title
insurance policies, title reports, surveys, certificates of occupancy,
environmental reports and audits, appraisals, permits, other Encumbrances, title
documents and other documents relating to or otherwise affecting the Real
Property, the operations of the Company or any Subsidiary thereon or any other
uses thereof. Neither the Company nor any Subsidiary has leased or subleased any
parcel or any portion of any parcel of Real Property to any other Person and no
other Person has any rights to the use, occupancy or enjoyment thereof pursuant
to any lease, sublease, license, occupancy or other agreement, nor has the
Company or any Subsidiary assigned its interest under any lease or sublease
listed in Section 3.19(b) of the Disclosure Schedule to any third party.
(d) Section 3.19(d) of the Disclosure Schedule sets forth a
true and complete list of all leases and subleases relating to the Real Property
and any and all ancillary documents (the "Ancillary Lease Documents") pertaining
thereto (including, but not limited to, all amendments, modifications,
supplements, exhibits, schedules, addenda and restatements thereto and thereof
and all consents, including, without limitation, consents for alterations,
assignments and sublets, documents recording variations, memoranda of lease,
options, rights of expansion, extension, first refusal and first offer and
evidence of commencement dates and expiration dates). With respect to each of
such leases and subleases, except as otherwise set forth in Section 3.19(b) of
the Disclosure Schedule, neither the Company nor any Subsidiary has exercised or
given any notice of exercise, nor has any lessor or landlord exercised or
received any notice of exercise by a lessor or landlord of, any option, right of
first offer or right of first refusal contained in any such lease or sublease,
including, without limitation, any such option or right pertaining to purchase,
expansion, renewal, extension or relocation (collectively, "Options").
(e) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the best knowledge of the Sellers after
due inquiry, threatened against the Real Property.
(f) All the Real Property is occupied under a valid and
current certificate of occupancy or similar permit, the transactions
contemplated by this Agreement and the Ancillary Agreements will not require the
issuance of any new or amended certificate of occupancy, and, to the best
knowledge of the Sellers after due inquiry, there are no facts that would
prevent the Real Property from being occupied by the Company or any Subsidiary,
as the case may be, after the Closing in the same manner as occupied by the
Company or such Subsidiary immediately prior to the Closing.
23
33
SECTION 3.20. Assets. (a) Except as set forth in Section 3.20
of the Disclosure Schedule, either the Company or a Subsidiary, as the case may
be, owns, leases or has the legal right to use all the properties and assets,
including, without limitation, the Company Intellectual Property, the Licensed
Intellectual Property, Company IP Agreements, the Real Property and the tangible
personal property owned, leased or used by the Company or such Subsidiary, and,
with respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used or intended to
be used by the Company or any Subsidiary (all such properties, assets and rights
being the "Assets"). Either the Company or a Subsidiary, as the case may be, has
good and marketable title to, or, in the case of leased or subleased Assets,
valid and subsisting leasehold interests in, all the Assets, free and clear of
all Encumbrances, except (i) as set forth in Section 3.19(c) or 3.20 of the
Disclosure Schedule and (ii) Permitted Encumbrances.
(b) The Assets constitute all the properties, assets and
rights forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of the business of
the Company. At all times since the Reference Balance Sheet Date, the Company
has caused the Assets to be maintained in accordance with good business
practice, and all the Assets are in good operating condition and repair and are
suitable for the purposes for which they are used and intended.
(c) Following the consummation of the transactions
contemplated by this Agreement and the execution of the instruments of transfer
contemplated by this Agreement, the Company or a Subsidiary, as the case may be,
will continue to own, with good, valid and marketable title, or lease, under
valid and subsisting leases, or otherwise retain its respective interests in the
Assets, without incurring any penalty or other adverse consequence, including,
without limitation, any increase in rentals, royalties, or license or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement.
SECTION 3.21. Customers. Listed in Section 3.21 of the
Disclosure Schedule are the names and addresses of the 20 most significant
customers (by revenue) of the Company for the twelve-month period ended July 31,
2001 and the amount for which each such customer was invoiced during such
period. Except as set forth in Section 3.21 of the Disclosure Schedule, neither
the Company nor any Subsidiary has received any notice that any such customer of
the Company has ceased, or will cease, to use the products, equipment, goods or
services of the Company or any Subsidiary, or has substantially reduced, or will
substantially reduce, the use of such products, equipment, goods or services at
any time.
SECTION 3.22. Suppliers. Listed in Section 3.22 of the
Disclosure Schedule are the names and addresses of each of the 20 most
significant suppliers of raw materials, supplies, merchandise and other goods
for the Company for the twelve-month period ended July 31, 2001 and the amount
for which each such supplier was paid by the Company and the Subsidiaries during
such period. Except as set forth in Section 3.22 of the Disclosure Schedule,
neither the Company nor any Subsidiary has received any notice or has any reason
to believe that any such supplier will not sell raw materials, supplies,
merchandise and other goods to the Company or any Subsidiary at any time after
the Closing Date on terms and conditions substantially similar to
24
34
those used in its current sales to the Company, subject only to general and
customary price increases.
SECTION 3.23. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.23(a) of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or other
contracts or agreements, which the Company or any Subsidiary is a party, with
respect to which the Company or any Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Sections 4069, 201 or 4212 of ERISA
(collectively, the "Plans"). Each Plan is in writing and the Sellers have
furnished to the Purchaser a complete and accurate copy of each Plan and a
complete and accurate copy of each material document prepared in connection with
each such Plan, including, without limitation, a copy of (i) each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed IRS Form 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the most
recently prepared actuarial report and financial statement in connection with
each such Plan. Except as set forth in Section 3.23(a) of the Disclosure
Schedule, there are no other employee benefit plans, programs, arrangements or
agreements, whether formal or informal, whether in writing or not, to which the
Company or any Subsidiary is a party, with respect to which the Company or any
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary for the benefit of any current or
former employee, officer or director of the Company or any Subsidiary.
(b) Absence of Certain Types of Plans. Except as set forth in
Section 3.23(b) of the Disclosure Schedules, none of the Plans (i) provides for
the payment of separation, severance, termination or similar-type benefits to
any Person, (ii) obligates the Company or any Subsidiary to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or, (iii) could result, separately or
in the aggregate, in the payment of any "excess parachute payment" within the
meaning of such term under section 280G of the Code. None of the Plans provides
for or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or any
Subsidiary. Each of the Plans is subject only to the laws of the United States
or a political subdivision thereof.
(c) Compliance with Applicable Law. With respect to the Plans,
no event has occurred and there exists no condition or set of circumstances in
connection with which the company or any of its Subsidiaries could be subject to
any material liability under the terms of such Plan, ERISA, the Code or any
other applicable Law. Neither the Company nor any of its Subsidiaries has any
actual or contingent liability under Title IV of ERISA. No legal action, suit or
claim is pending or threatened with respect to any Plan (other than claims for
benefits in the ordinary course) and no fact or event exists that could give
rise to any such action, suit or claim.
25
35
(d) Qualification of Certain Plans. Each Plan which is
intended to be qualified under section 401(a) of the Code or section 401(k) of
the Code has received a favorable determination letter from the IRS that it is
so qualified, and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter from
the IRS to adversely affect the qualified status of any such Plan or the exempt
status of any such trust.
(e) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan have been made
on or before their due dates. All such contributions have been fully deducted
for income tax purposes and no such deduction has been challenged or disallowed
by any Governmental Authority, and no fact or event exists which could give rise
to any such challenge or disallowance.
(f) WARN Act. The Company and the Subsidiaries are in
compliance with the requirements of the Workers Adjustment and Retraining
Notification Act ("WARN") and have no liabilities pursuant to WARN.
SECTION 3.24. Labor Matters. Except as set forth in Section
3.24 of the Disclosure Schedule, (a) Neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, and currently
there are no organizational campaigns, petitions or other unionization
activities seeking recognition of a collective bargaining unit which could
affect the Company or any Subsidiary; (b) there are no controversies, strikes,
slowdowns or work stoppages pending or, to the best knowledge of the Sellers
after due inquiry, threatened between the Company or any Subsidiary and any of
their respective employees, and neither the Company nor any Subsidiary has
experienced any such controversy, strike, slowdown or work stoppage within the
past three years; (c) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with the provisions of any collective bargaining or
union contract, and there are no grievances outstanding against the Company or
any Subsidiary under any such agreement or contract which could have a Material
Adverse Effect; (d) there are no complaints, changes, claims, actions, suits or
proceedings pending or threatened against the Company before the National Labor
Relations Board, the Equal Opportunity Commission or any other Governmental
Authority relating to employees or employment practice; and (e) the Company and
each Subsidiary are currently in compliance with all applicable Laws relating to
the employment of labor, including those related to wages, hours, collective
bargaining, worker classification, occupational safety and health and the
payment and withholding of taxes and other sums as required by the appropriate
Governmental Authority.
SECTION 3.25. Taxes. (a) (i) Except as set forth on Section
3.25 of the Disclosure Schedule, all returns and reports in respect of Taxes
("Tax Returns") required to be filed with respect to the Company and each
Subsidiary have been timely filed; (ii) all Taxes required to be shown on such
Tax Returns or otherwise due have been timely paid; (iii) all such Tax Returns
are true, correct and complete in all material respects (solely for purposes of
this subsection (iii), the term "material" shall be interpreted to mean that any
failures of such Tax Returns to be true, correct or complete result in an
adverse tax impact which, in the aggregate,
26
36
amounts to greater than $250,000); (iv) no adjustment relating to such Tax
Returns has been proposed formally or informally by any Tax authority and, to
the best knowledge of the Sellers after due inquiry, no basis exists for any
such adjustment; (v) there are no pending or, to the best knowledge of the
Sellers after due inquiry, threatened actions or proceedings for the assessment
or collection of Taxes against the Company or any Subsidiary; (vi) no consent
under section 341(f) of the Code has been filed with respect to the Company or
any Subsidiary; (vii) all sales and license transactions between the Sellers and
any Subsidiary, and between any of the Subsidiaries, have been conducted on an
arm's-length basis; (viii) there are no Tax liens on any assets of the Company
or any Subsidiary; (ix) the Company is, and has been since July 1, 1988, a valid
"Subchapter S corporation" under section 1361 of the Code and under comparable
provisions of state and local Tax law, it has fully paid all Taxes that could be
imposed under sections 1363(d), 1374 or 1375 of the Code, and under comparable
provisions of state and local Tax law, and it does not have any accumulated
earnings and profits from taxable years prior to its becoming a Subchapter S
corporation; (x) except as set forth in Section 3.25 of the Disclosure Schedule,
each of the Subsidiaries either is, and has been since its inception, a
"qualified subchapter S subsidiary" within the meaning of the Code, and under
comparable provisions of state and local Tax law, or is, and has been since its
inception, disregarded as an entity separate from the Company for U.S. federal,
state and local Tax purposes; (xi) neither the Company nor any Subsidiary has
been a member of an affiliated group (within the meaning of section 1504(a)(1)
of the Code) of corporations that files a consolidated Tax Return for U.S.
federal, state, local or foreign income Tax purposes; (xii) none of the Company
or Subsidiaries has been a United States real property holding corporation
within the meaning of section 897(c)(2) of the Code during the applicable period
specified in section 897(c)(1)(A)(ii) of the Code; (xiii) none of the Company or
Subsidiaries is doing business in or engaged in a trade or business in any
jurisdiction in which it has not filed all required income or franchise Tax
Returns; (xiv) the Company has not been at any time a member of any partnership
or joint venture or the holder of a beneficial interest in any trust for any
period for which the statute of limitations for any Tax has not expired; (xv)
neither the Company nor any Subsidiary is subject to any accumulated earnings
tax, personal holding company tax or similar tax; (xvi) the financial statements
of the Company and the Subsidiaries contain adequate reserves and balances to
satisfy all liability for Taxes for the periods covered thereby; (xvii) no
Company or Subsidiary has any income reportable for a period ending after the
Closing Date but attributable to a transaction (e.g., an installment sale)
occurring in or a change in accounting method made for a period ending on or
prior to the Closing Date that resulted in a deferred reporting of income from
such transaction or from such change in accounting method; (xviii) there are no
Tax sharing, indemnity or similar agreements in effect among or between any of
the Sellers, the Company or any Subsidiaries; and (xix) the Company and the
Subsidiaries have collected all required sales, value-added and similar Taxes,
and all payroll and other withholding Taxes, and have remitted all such Taxes to
the proper Taxing authority on a timely basis and in accordance with applicable
procedures.
(b) (i) Section 3.25 of the Disclosure Schedule lists all
income, franchise and similar Tax Returns (federal, state, local and foreign)
filed with respect to each of the Company and the Subsidiaries for the last five
taxable periods, indicates the most recent income, franchise or similar Tax
Return for each relevant jurisdiction for which an audit has been completed or
the statute of limitations has lapsed and indicates all Tax Returns that
currently are the subject of audit; and (ii) the Sellers have delivered to the
Purchaser correct and complete copies of all
27
37
federal, state and foreign income, franchise and similar Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company or any Subsidiary, in each case, relating to taxable periods
beginning on or after January 1, 1995.
SECTION 3.26. Insurance. All material assets, properties and
risks of the Company and each Subsidiary are, and for the past five years have
been, covered by valid and, except for insurance policies that have expired
under their terms in the ordinary course, currently effective insurance policies
or binders of insurance (including, without limitation, general liability
insurance, property insurance and workers' compensation insurance) issued in
favor of the Company or a Subsidiary, as the case may be, in each case with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of the Company or such
Subsidiary, as the case may be.
SECTION 3.27. Company Products. (a) All products held by the
Company or the Subsidiaries for sale, transfer, conveyance or distribution to
customers (the "Company Products") and all prior sales of products by the
Company or any Subsidiary are in all material respects in conformity with
applicable industry standards or regulations set forth (i) by Law, (ii) by
relevant Governmental Authorities or (iii) by the relevant customer contract (or
other applicable agreement, arrangement or understanding with customers) to
which such Company Products relate.
(b) The Company and the Subsidiaries have maintained complete
and accurate records regarding the Company Products in accordance with
applicable industry standards and as required by Law.
SECTION 3.28. Individual Property. The Individual Property, in
the aggregate, is not valued at greater than $100,000.
SECTION 3.29. Brokers. Except for First Union Securities Inc.,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements based upon arrangements made by or on
behalf of the Sellers, the Company and the Subsidiaries. The Sellers (and not
the Company or Subsidiary) are solely responsible for the fees and expenses of
First Union Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement,
the Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all necessary
corporate power and authority to enter into
28
38
this Agreement and the Ancillary Agreements to which it is a party, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated by this Agreement and thereby. The execution and delivery by the
Purchaser of this Agreement and the Ancillary Agreements to which it is a party,
the performance by the Purchaser of its obligations hereunder and thereunder and
the consummation by the Purchaser of the transactions contemplated by this
Agreement and thereby have been duly authorized by all requisite corporate
action on the part of the Purchaser. This Agreement has been, and upon their
execution the Ancillary Agreements to which the Purchaser is a party shall have
been, duly executed and delivered by the Purchaser, and (assuming due
authorization, execution and delivery by the Seller) this Agreement constitutes,
and upon their execution the Ancillary Agreements to which the Purchaser is a
party shall constitute, legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their respective terms.
SECTION 4.02. No Conflict. Assuming compliance with the
notification requirements of the HSR Act and the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Sellers, the execution, delivery and
performance by the Purchaser of this Agreement and the Ancillary Agreements to
which it is a party do not and will not (a) violate, conflict with or result in
the breach of any provision of the Certificate of Incorporation or By-laws of
the Purchaser, (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Purchaser is a party, which would adversely affect the
ability of the Purchaser to carry out its obligations under, and to consummate
the transactions contemplated by, this Agreement or by the Ancillary Agreements.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance by the Purchaser of this Agreement and each
Ancillary Agreement to which the Purchaser is a party do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to any Governmental Authority, except (a) as
described in a writing given to the Sellers by the Purchaser on the date of this
Agreement and (b) the notification requirements of the HSR Act.
SECTION 4.04. Information Concerning the Company. (a) The
Purchaser's Annual Report on Form 10-K for its fiscal year ended February 24,
2001 and the Purchaser's Quarterly Report on Form 10-Q for the quarter ended May
26, 2001, each as filed with the U.S. Securities and Exchange Commission (the
"Commission"), copies of which have been furnished to the Sellers, as of their
respective filing dates did not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein, under the circumstances in which they were made, not
misleading.
(b) Since May 31, 2001 there has not been, and prior to the
Closing there shall not have been, any Purchaser Material Adverse Effect.
29
39
SECTION 4.05. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.06. Litigation. No Action by or against the
Purchaser is pending or, to the best knowledge of the Purchaser after due
inquiry, threatened, which could affect the legality, validity or enforceability
of this Agreement, any Ancillary Agreement or the consummation of the
transactions contemplated by this Agreement or thereby.
SECTION 4.07. SEC Documents. The Purchaser has timely filed
with the Commission all forms, reports, schedules, statements and other
documents required to be filed by it under the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act of 1934, as amended (the
"Exchange Act") since January 1, 2001 (all such documents as amended since the
date of their filing, the "Purchaser SEC Documents"). As of their respective
dates, the Purchaser SEC Documents (including all filings incorporated by
reference therein) complied in all material respects with the requirements of
the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such Purchaser SEC Documents.
None of the Purchaser SEC Documents (including any and all financial statements
included therein and all filings incorporated by reference therein) as of their
respective dates contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Purchaser has filed a Registration Statement on Form S-4
(File No. 333-66934) (the "Registration Statement"), including a prospectus
relating to the issuance of the shares of the Purchaser Common Stock from time
to time in mergers, acquisitions and other similar transactions in accordance
with Rule 415 under the Securities Act, with the Commission. None of the
information supplied or incorporated by reference in the Registration Statement,
at the time the Registration Statement was filed with the Commission contained,
nor at the time it becomes effective under the Securities Act, or as of the
Closing, will contain, any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. The Registration Statement complies as to
form in all material respects with the provisions of the Securities Act and the
rules and regulations thereunder.
SECTION 4.08. Capitalization. The authorized capital stock of
Purchaser consists of 50,000,000 shares of Purchaser Common Stock and 1,000,000
shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"). As
of August 9, 2001, (i) 32,187,244 shares of Purchaser Common Stock were issued
and outstanding, all of which were validly issued, fully paid and nonassessable,
and no shares of Preferred Stock were issued and outstanding, (ii) no shares of
Purchaser Common Stock were held in the treasury of Purchaser or by any
Subsidiary of Purchaser and (iii) 6,759,736 shares of Purchaser Common Stock
were reserved for issuance pursuant to outstanding stock options issued under
the Purchaser's 1989, 1996, Directors and UK Stock Option Plans (the "Purchaser
Plans"). Except for the stock options granted pursuant to the Purchaser Plans
and shares of Purchaser Common Stock issuable pursuant to the Purchaser Plans,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Purchaser is a party or by which
30
40
Purchaser is bound relating to the issued or unissued capital stock of Purchaser
or obligating Purchaser to issue or sell any shares of capital stock of, or
other equity interests in, Purchaser. There are no outstanding contractual
obligations of Purchaser to repurchase, redeem or otherwise acquire any shares
of Purchaser Common Stock. The Purchaser Common Stock is listed for trading on
the NASDAQ National Market System and no proceeding which could reasonably be
expected to result in the delisting of the Purchaser Common Stock from the
NASDAQ National Market System (or its transfer to the NASDAQ Small Cap Market)
is pending or, to the knowledge of Purchaser, threatened.
SECTION 4.09. Authorization of Purchaser Common Stock. The
issuance of the shares of Purchaser Common Stock to Sellers hereunder has been,
duly authorized by all necessary corporate action on the part of the Purchaser
and, upon issuance in accordance with the terms of this Agreement, such shares
of Purchaser Common Stock will be validly issued, fully paid and nonassessable
and issued free of the pre-emptive rights of any Person.
SECTION 4.10. Financing. Prior to the Closing Date, the
Purchaser shall have obtained all financing necessary for it to consummate the
purchase of the Shares and the other transactions contemplated hereby.
SECTION 4.11. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a)
The Sellers covenant and agree that, except as described in Section 5.01(a) of
the Disclosure Schedule, between the date hereof and the time of the Closing,
neither the Company nor any Subsidiary shall conduct its business other than in
the ordinary course and consistent with the Company's and such Subsidiary's
prior practice. Without limiting the generality of the foregoing, except as
described in Section 5.01(a) of the Disclosure Schedule, the Sellers shall cause
the Company and each Subsidiary to (i) continue their pricing and purchasing
policies in accordance with past practice not to increase or decrease the prices
of Inventory, (ii) not shorten or lengthen the customary payment cycles for any
of their payables or receivables, (iii) use their reasonable best efforts to (A)
preserve intact their business organizations and the business organization of
the business, (B) keep available to the Purchaser the services of the employees
of the Company and each Subsidiary, (C) continue in full force and effect
without material modification all existing policies or binders of insurance
currently maintained in respect of the Company and each Subsidiary and (D)
preserve their current relationships with their customers, suppliers and other
persons with which they have had significant business relationships, and (iv)
not engage in any practice, take any action, fail to take any action or enter
into any transaction which could cause any representation or warranty of the
Sellers to be untrue or result in a breach of any covenant made by the Sellers
in this Agreement.
31
41
(b) Except as described in Section 5.01(b) of the Disclosure
Schedule, the Sellers covenant and agree that, between the date hereof and the
time of the Closing, without the prior written consent of the Purchaser, neither
the Company nor any Subsidiary will do any of the things enumerated in the
second sentence of Section 3.13 (including, without limitation, clauses (a)
through (o) and (q) thereof).
SECTION 5.02. Access to Information. (a) From the date hereof
until the Closing, upon reasonable notice, the Sellers shall cause the Company
and the Subsidiaries and each of the Company's and the Subsidiaries' officers,
directors, employees, agents, representatives, accountants and counsel to: (i)
afford the officers, employees, agents, accountants, counsel, financing sources
and representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, plants, other facilities, books and records
of the Company and each Subsidiary including, without limitation, access to
enter upon such properties, plants and facilities to investigate and collect
air, surface water, groundwater and soil samples or to conduct any other type of
environmental assessment and to those officers, directors, employees, agents,
accountants and counsel of the Company and of each Subsidiary who have any
knowledge relating to the Company or any Subsidiary and (ii) furnish to the
officers, employees, agents, accountants, counsel, financing sources and
representatives of the Purchaser such additional financial and operating data
and other information regarding the assets, properties, liabilities and goodwill
of the Company, and the Subsidiaries (or legible copies thereof) as the
Purchaser may from time to time reasonably request.
(b) In order to facilitate the resolution of any claims made
by or against or incurred by the Sellers prior to the Closing, or for any other
reasonable purpose, for a period of seven years after the Closing, the Purchaser
shall (i) retain the books and records relating to the Company and the
Subsidiaries for periods prior to the Closing in a manner reasonably consistent
with the prior practice of the Company and the Subsidiaries and (ii) upon
reasonable notice, afford the officers, employees, agents and representatives of
the Sellers reasonable access (including the right to make photocopies at the
expense of the Seller), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made
by or against or incurred by the Purchaser, the Company or any Subsidiary after
the Closing or for any other reasonable purpose, for a period of seven years
following the Closing, the Sellers shall (i) retain the books and records of the
Sellers relating to the Company and the Subsidiaries for periods prior to the
Closing in a manner reasonably consistent with the prior practice of the Company
and the Subsidiaries which shall not otherwise have been delivered to the
Purchaser, the Company or any Subsidiary and (ii) upon reasonable notice, afford
the officers, employees, agents and representatives of the Purchaser, the
Company or any Subsidiary reasonable access (including the right to make
photocopies, at the expense of the Purchaser, the Company or such Subsidiary),
during normal business hours, to such books and records.
SECTION 5.03. Confidentiality. The Sellers and, prior to the
Closing, the Purchaser, agree to, and shall cause their respective agents,
representatives, Affiliates, employees, officers and directors to: (a) treat and
hold as confidential (and not disclose or provide access to any Person to) all
information relating to Trade Secrets, processes, patent and
32
42
trademark applications, product development, price, customer and supplier lists,
pricing and marketing plans, policies and strategies, details of client and
consultant contracts, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and all other
confidential or proprietary information with respect to the Company and each
Subsidiary, (b) in the event that any party hereto, or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide the other parties hereto
with prompt written notice of such requirement so that the Purchaser, the
Company, any Subsidiary or the Sellers may seek a protective order or other
remedy or waive compliance with this Section 5.03, (c) in the event that such
protective order or other remedy is not obtained or any party waives compliance
with this Section 5.03, furnish only that portion of such confidential
information which is legally required to be provided and exercise its best
efforts to obtain assurances that confidential treatment will be accorded such
information. Subject to Section 5.02(c), the Sellers shall promptly furnish
(prior to, at, or as soon as practicable following, the Closing) to the
Purchaser any and all copies (in whatever form or medium) of all such
confidential information then in the possession of the Sellers or any of their
agents, representatives, Affiliates, employees, officers and directors and,
except as otherwise required by Section 5.02(c), destroy any and all additional
copies then in the possession of the Sellers or any of their respective agents,
representatives, Affiliates, employees, officers and directors of such
information and of any analyses, compilations, studies or other documents
prepared, in whole or in part, on the basis thereof; provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by the Sellers or, if applicable, the Purchaser, or any of their
respective agents, representatives, Affiliates, employees, officers or
directors; and provided further that, with respect to Intellectual Property,
specific information shall not be deemed to be within the foregoing exception
merely because it is embraced in general disclosures in the public domain.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) The Sellers and the Purchaser shall each use their reasonable best
efforts to obtain (and the Sellers shall use reasonable best efforts to cause
the Company and the Subsidiaries to obtain) all authorizations, consents, orders
and approvals of all Governmental Authorities and officials that may be or
become necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and the Ancillary Agreements and will
cooperate fully with each other in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to make
an appropriate filing, if necessary, pursuant to the HSR Act with respect to the
transactions contemplated by this Agreement within five Business Days of the
date hereof and to supply as promptly as practicable to the appropriate
Governmental Authorities any additional information and documentary material
that may be requested pursuant to the HSR Act.
(b) The Sellers shall or shall cause the Company and the
Subsidiaries to give promptly such notices to third parties and use their best
efforts to obtain such third party consents and estoppel certificates as are
necessary or desirable in connection with the transactions contemplated by this
Agreement.
33
43
(c) The Purchaser shall cooperate and use all reasonable
efforts to assist the Sellers and the Company in giving such notices and
obtaining such consents and estoppel certificates; provided, however, that the
Purchaser shall have no obligation to give any guarantee or other consideration
of any nature in connection with any such notice, consent or estoppel
certificate or to consent to any change in the terms of any agreement or
arrangement which the Purchaser reasonably may deem adverse to the interests of
the Purchaser, the Company, any Subsidiary or the business.
(d) The Purchaser and the Sellers each know of no reason why
all the consents, approvals and authorizations necessary for the consummation of
the transactions contemplated by this Agreement will not be received.
(e) The Sellers and the Purchaser agree that, in the event
that any consent, approval or authorization necessary or desirable to preserve
for the Company or any Subsidiary any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement to which the Company or
any Subsidiary is a party is not obtained prior to the Closing, the Sellers
will, subsequent to the Closing, cooperate with the Purchaser, the Company or
any such Subsidiary in attempting to obtain such consent, approval or
authorization as promptly thereafter as practicable.
SECTION 5.05. Notice of Developments. Prior to the Closing,
each party shall promptly notify the other parties in writing of (a) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which have resulted or could reasonably be expected to result in any
breach of a representation or warranty or covenant of such party in this
Agreement and (b) all other material developments affecting the assets,
Liabilities, business, financial condition, operations, results of operations of
the Company, the Subsidiaries or, to the extent such developments have already
been publicly announced by the Purchaser, the Purchaser.
SECTION 5.06. No Solicitation or Negotiation. The Sellers
agree that between the date of this Agreement and the earlier of (a) the Closing
and (b) the termination of this Agreement, none of the Sellers, the Company, the
Subsidiaries or any of their respective Affiliates, officers, directors,
representatives or agents will (i) solicit, initiate, consider, encourage or
accept any other proposals or offers from any Person (A) relating to any
acquisition or purchase of all or any portion of the capital stock of the
Company or any Subsidiary or assets of the Company or any Subsidiary (other than
Inventory to be sold in the ordinary course of business consistent with past
practice), (B) to enter into any merger, consolidation or other business
combination with the Company, any Subsidiary or (C) to enter into a
recapitalization, reorganization or any other extraordinary business transaction
involving or otherwise relating to the Company or any Subsidiary or (ii)
participate in any discussions, conversations, negotiations and other
communications regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way, assist or participate in,
facilitate or encourage any effort or attempt by any other Person to seek to do
any of the foregoing. The Sellers immediately shall cease and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any Persons conducted heretofore with respect to any of the
foregoing. The Sellers shall notify the Purchaser promptly if any such proposal
or offer, or any inquiry or other contact with any Person with respect thereto,
is made and shall, in any such notice to the
34
44
Purchaser, indicate in reasonable detail the identity of the Person making such
proposal, offer, inquiry or contact and the terms and conditions of such
proposal, offer, inquiry or other contact. The Sellers agree not to, and to
cause the Company and each Subsidiary not to, without the prior written consent
of the Purchaser, release any Person from, or waive any provision of, any
confidentiality or standstill agreement to which the Sellers, the Company or any
Subsidiary is a party.
SECTION 5.07. Non-Competition. (a) For a period of seven years
after the Closing (the "Restricted Period"), the Sellers shall not engage,
directly or indirectly, in any business anywhere in the world that supplies
products or services of the kind supplied by the Company or any Subsidiary as of
the Closing Date (a "Competing Business") or, without the prior written consent
of the Purchaser, directly or indirectly, own an interest in, manage, operate,
join, control, lend money or render financial or other assistance to or
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any Person that competes with the
Purchaser, the Company or any Subsidiary in supplying products or services of
the kind supplied by the Company or any Subsidiary as of the Closing Date;
provided, however, that, for the purposes of this Section 5.07, ownership of
securities having no more than one percent of the outstanding voting power of
any competitor which are listed on any national securities exchange or NASDAQ
shall not be deemed to be in violation of this Section 5.07 as long as the
Person owning such securities has no other connection or relationship with such
competitor.
(b) The Sellers agree with the Purchaser that, for a period of
seven years following the Closing, the Sellers will not in any way, directly or
indirectly, call upon, solicit, advise or otherwise do, or attempt to do,
business with any customers of the Company or any Subsidiary with whom the
Company, any Subsidiary or the Sellers had any dealings during the period of
time in which the Company was an Affiliate of the Sellers for the purpose
engaging in any Competing Business or take away or interfere or attempt to
interfere with any custom, trade, business or patronage of the Company or any
Subsidiary, or interfere with or attempt to interfere with any officers,
employees, representatives or agents of the Company or any Subsidiary, or induce
or attempt to induce any of them to leave the employ of the Company or any
Subsidiary or violate the terms of their contracts, or any employment
arrangements, with the Company or any Subsidiary.
(c) The Restricted Period shall be extended by the length of
any period during which any Seller is in breach of the terms of this Section
5.07.
(d) The Sellers acknowledge that the covenants of the Sellers
set forth in this Section 5.07 are an essential element of this Agreement and
that, but for the agreement of the Sellers to comply with these covenants, the
Purchaser would not have entered into this Agreement. The Sellers acknowledge
that this Section 5.07 constitutes an independent covenant and shall not be
affected by performance or non-performance of any other provision of this
Agreement by the Purchaser. The Sellers have independently consulted with their
counsel and after such consultation agree that the covenants set forth in this
Section 5.07 are reasonable and proper.
35
45
SECTION 5.08. Release of Indemnity Obligations. The Sellers
covenant and agree, on or prior to the Closing, to execute and deliver to the
Company, for the benefit of the Company and each Subsidiary, a general release
and discharge, in form and substance satisfactory to the Purchaser, releasing
and discharging the Company and Subsidiary from any and all obligations to
indemnify the Sellers or otherwise hold any of them harmless pursuant to any
agreement or other arrangement entered into prior to the Closing; provided,
however, that the Company and each Subsidiary shall not be released and
discharged from (a) obligations to provide benefits to certain individuals in
their capacities as officers or employees or (b) obligations to indemnify
certain individuals in their capacities as directors or officers of the Company
or a Subsidiary for attorneys fees and expenses incurred in connection with any
claim against such individual which such individual successfully defends on the
merits.
SECTION 5.09. Registration of Shares. (a) The shares of
Purchaser Common Stock to be issued to the Sellers upon the Closing and the
issuance of such Shares shall be registered by the Registration Statement and
Sellers shall receive such Shares thereunder.
(b) The Sellers covenant and agree to cause the Company to
provide the Purchaser with any financial statements or other information
regarding the Company necessary to complete any filings made with the Commission
which filings are required in order to (i) cause the Registration Statement to
become effective and (ii) maintain compliance with the Securities Exchange Act
of 1934, as amended; provided, that, prior to the Closing, none of such
information shall be filed with the Commission without the consent of the
Sellers' Representative.
SECTION 5.10. Retention Bonuses. The Principal Sellers shall
make all payments required under the Retention Agreements to be made by any
Principal Seller to any employee or consultant of the Company or any Subsidiary
thereunder. To the extent any amounts classified as Retention B Bonuses or
Additional Retention Bonuses are not paid by the Principal Sellers to the
applicable employees or consultants for any reason, such funds shall be paid to
the Purchaser.
SECTION 5.11. Exchange Act Reports. For a period of two years
after the Closing, the Purchaser shall timely file with the Commission all
reports required to be filed pursuant to Sections 13 or 15(d) of the Exchange
Act.
SECTION 5.12. Termination of Shareholder Agreement. As of the
Closing Date, the Shareholder Agreement dated as of October 6, 1997 among the
Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Secondary Sellers (the
"Shareholder Agreement") shall be terminated by a written agreements between
each of the Secondary Sellers and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as
applicable, pursuant to Section 5 thereof.
SECTION 5.13. Resignation of Directors and Officers. Prior to
the Closing Date, the Sellers will cause the directors and executive officers
(other than ▇▇▇▇ ▇▇▇▇▇▇▇▇▇) to submit their resignations from such directorships
or executive offices, as applicable, effective as of the Closing Date.
36
46
SECTION 5.14. Retained Tickets. The Principal Sellers shall
retain the Tickets in accordance with section 2.02(c) and, prior to the Closing
Date, the Principal Sellers shall reimburse the Company for the cost of the
Tickets.
SECTION 5.15. Further Action. Each of the parties hereto shall
use reasonable best efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and to execute and deliver such documents and other papers, as
may be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employee Benefits Matters. (a) For a period of
twelve months following the Closing, employees of the Company and each
Subsidiary who continue their employment after the Closing with the Company or
any Subsidiary (including those on vacation, leave of absence, or short-term
disability who return to active employment within six months after the Closing)
("Transferred Employees") shall be provided with compensation and benefits
(including salary and fringe benefits) which, in the aggregate, are no less
favorable than those provided to such employees immediately preceding the
Closing, and with appropriate employment positions, taking into consideration
their respective prior experience and the best interests of the Company and
Purchaser.
(b) For a period of twelve months following the Closing, the
Purchaser shall cause the Company and each Subsidiary to provide the Transferred
Employees with employee benefit plans, agreements, programs, policies and
arrangements that are no less favorable, in the aggregate, than the Plans in
effect immediately prior to the Closing. Nothing provided herein shall limit the
Purchaser or the Company from offering Transferred Employees benefits under the
Purchaser's employee benefit plans or arrangements; provided that such plans
shall provide at the Closing employee benefits that, in the aggregate, are no
less favorable than those in effect immediately prior to the Closing under the
comparable Plans.
(c) The Purchaser, the Company and the Subsidiaries shall
recognize each Transferred Employee's service with the Company or any Subsidiary
as of the Closing ("Prior Service") as service with the Purchaser for
eligibility and vesting purposes, but not for purposes of calculating benefits,
as applicable in the "employee welfare benefit plans" (as defined in Section
3(1) of ERISA), disability, fringe benefits and other employee benefit plans or
policies that cover the employees of the Purchaser at the Closing ("Post-Closing
Plans"), other than retiree medical and pension plans and employer matching
contributions under the 401(k) plan; provided that Prior Service of Transferred
Employees shall be counted for purposes of determining vacation accrual and
severance benefits under any Post-Closing Plan; and further provided that, with
respect to any Post-Closing Plan that is a welfare benefit plan, or any plan
that would be a welfare benefit plan if it were subject to ERISA, for purposes
of the Transferred Employees (their spouses and eligible dependents), the
Purchaser and the Company shall (i) cause there to be waived any pre-existing
condition, (ii) give effect, in determining any
37
47
deductible and maximum out-of-pocket limitations, to claims incurred and amounts
paid by, and amounts reimbursed to, such employees with respect to similar plans
maintained by the Company or any Subsidiary immediately prior to the Closing and
(iii) (other than under any Post-Closing Plan which is a retiree medical plan)
recognize all credited service with the Company.
(d) As soon as practicable after the execution of this
Agreement, the Company shall provide the Purchaser with all of the documentation
and information (including the applicable documentation and information
described in Section 3.23(a) of this Agreement) reasonably necessary for the
Purchaser to determine whether a merger of the Company's 401(k) plan into the
Purchaser's 401(k) plan would require amendment of the Company's 401(k) plan in
order to satisfy section 411(d)(6) of the Code and the IRS regulations and
rulings issued pursuant thereto. If the Purchaser determines that such amendment
would be required, then as soon as practicable after that determination but in
any event at least three days prior to the Closing, the Board of Directors of
the Company shall adopt resolutions terminating the Company's 401(k) plan
effective as of the date those resolutions are adopted and authorizing the
officers of the Company to take such actions as they reasonably deem necessary
or advisable to implement the termination of the plan, secure any necessary or
advisable governmental approvals, and (subject to said approvals and any other
reasonable conditions) provide for the transfer of electing participants'
account balances thereunder to the Purchaser's 401(k) plan.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Indemnity. (a) The Sellers agree, jointly and
severally, to indemnify and hold harmless the Purchaser and its Affiliates, the
Company and each Subsidiary against the following Taxes and against any loss,
damage, liability or expense, including reasonable fees for attorneys and other
outside consultants incurred in contesting or otherwise in connection with such
Taxes (except to the extent such Taxes are specifically identified as a reserve
on the Interim Financial Statements and except for Taxes, other than those
imposed on gross or net income or receipts, accrued in the ordinary course of
business consistent with past practices since June 30, 2001): (i) Taxes imposed
on the Company or any Subsidiary with respect to taxable periods or portions of
taxable periods ending on or before the Closing Date; (ii) Taxes imposed on the
Sellers, or any member of any affiliated group with which any of the Company or
the Subsidiaries file or have filed a Tax Return on a consolidated, combined or
unitary basis, for any taxable period ending on or before, or including, the
Closing Date; (iii) Taxes imposed on the Purchaser, the Company or any
Subsidiary as a result of any breach of warranty or misrepresentation under
Section 3.25; and (iv) Taxes imposed in connection with the Elections
contemplated by Section 7.07 hereof.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
38
48
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any
sale or other transfer or assignment of property (real or personal,
tangible or intangible), deemed equal to the amount which would be
payable if the taxable year ended with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or any Subsidiary or otherwise
measured by the level of any item, deemed to be the amount of such
Taxes for the entire period, multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the
Closing Date and the denominator of which is the number of calendar
days in the entire period.
SECTION 7.02. Tax Returns and Payments. (a) From the date of
this Agreement through and after the Closing Date, the Sellers shall prepare and
file or otherwise furnish in proper form to the appropriate Governmental
Authority (or cause to be prepared and filed or so furnished) in a timely manner
all Tax Returns relating to the Company and the Subsidiaries that are due on or
before or relate to any taxable period ending on or before the Closing Date (and
the Purchaser shall do the same with respect to any taxable period ending after
the Closing Date). Tax Returns of the Company and the Subsidiaries not yet filed
for any taxable period that begins before the Closing Date shall be prepared in
a manner consistent with past practices employed with respect to the Company and
the Subsidiaries (except to the extent counsel for the Sellers or the Company
render a legal opinion that there is no reasonable basis in law therefor or
determines that a Tax Return cannot be so prepared and filed without being
subject to penalties). With respect to each Tax Return relating to the Company
or any of the Subsidiaries that is required to be filed by the Sellers, the
Purchaser shall be provided by the Sellers with a copy of such completed Tax
Return (together with appropriate supporting information and schedules) at least
20 Business Days prior to the due date (including any extension thereof) for the
filing of such Tax Return, and Purchaser and its authorized representatives
shall have the right to review and comment on such Tax Return prior to its
filing. With respect to each Tax Return relating to the Company or any of the
Subsidiaries that is required to be filed by the Purchaser and as to which an
amount of Tax is allocable to the Sellers under Section 7.01 hereof, the
Purchaser shall provide the Sellers' Representative with a copy of such
completed Tax Return (together with appropriate supporting information and
schedules), and a statement setting forth the amount of Tax that is allocable to
the Sellers, at least 20 Business Days prior to the due date (including any
extension thereof) for the filing of such Tax Return, and the Sellers'
Representative and its authorized representatives shall have the right to review
and comment on such Tax Return and statement prior to the filing of such Tax
Return.
(b) The Sellers shall pay or cause to be paid when due and
payable all Taxes with respect to the Company and the Subsidiaries for any
taxable period ending on or before the Closing Date (except to the extent
specifically identified as a reserve on the Interim Financial Statements and
except for Taxes, other than those imposed on gross or net income or receipts,
accrued in the ordinary course of business consistent with past practices since
June 30, 2001) and the Purchaser shall so pay or cause to be paid Taxes for any
taxable period after the Closing Date (subject to its right of indemnification
from the Sellers by the date set forth in Section 7.04 for Taxes attributable to
the portion of any Tax period that includes the Closing Date pursuant to Section
7.01(a) and 7.01(b)).
39
49
SECTION 7.03. Contests. (a) After the Closing, the Purchaser
shall promptly notify the Sellers' Representative in writing of any written
notice of a proposed assessment or claim in an audit or administrative or
judicial proceeding of the Purchaser or any of the Company and the Subsidiaries
which, if determined adversely to the taxpayer, would be grounds for
indemnification under this Article VII; provided, however, that the failure to
give such notice will not affect the Purchaser's right to indemnification under
this Article VII except to the extent, if any, that, but for such failure, the
Sellers could have avoided all or a portion of the Tax liability in question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing Date,
provided that the Sellers acknowledge in writing their liability under this
Agreement to hold the Purchaser and its Affiliates, the Company and the
Subsidiaries harmless against the full amount of any adjustment which may be
made as a result of such audit or proceeding that relates to periods ending on
or before the Closing Date (or, in the case of any taxable year that includes
the Closing Date, against an adjustment allocable under Section 7.01(b) to the
portion of such year ending on or before the Closing Date), the Sellers'
Representative shall have the right at its expense to participate in and control
the conduct of such audit or proceeding, but only to the extent that such audit
or proceeding relates solely to a potential adjustment for which the Sellers
have acknowledged their liability; the Purchaser also may participate in any
such audit or proceeding and, if the Sellers' Representative does not assume the
defense of any such audit or proceeding, the Purchaser may defend the same in
such manner as it may deem appropriate, including, but not limited to, settling
such audit or proceeding after 20 days' prior written notice to the Sellers'
Representative setting forth the terms and conditions of settlement. In the
event that issues relating to a potential adjustment for which the Sellers have
acknowledged their liability are required to be dealt with in the same
proceeding as separate issues relating to a potential adjustment for which the
Purchaser would be liable, the Purchaser shall have the right, at its expense,
to control the audit proceeding with respect to the latter issues.
(c) With respect to issues relating to a potential adjustment
for which both the Sellers (as evidenced by their acknowledgement under this
Section 7.03) and the Purchaser or the Company or any Subsidiary could be
liable, (i) both Purchaser and the Sellers' Representative may participate in
the audit or proceedings, and (ii) the audit or proceedings shall be controlled
by that party which would bear the burden of the greater portion of the sum of
the adjustment and any corresponding adjustments that may reasonably be
anticipated for future Tax periods. The principle set forth in the immediately
preceding sentence shall govern also for purposes of deciding any issue that
must be decided jointly (including, without limitation, choice of judicial
forum) in situations in which separate issues are otherwise controlled under
this Article VII by the Purchaser and the Sellers Representative.
(d) Neither the Purchaser nor the Sellers shall enter into any
compromise or agree to settle any claim pursuant to any Tax audit or proceeding
which would adversely affect the other party for such year or a subsequent year
without the written consent of the other party (which consent, in the case of
the Sellers, shall be given by the Sellers' Representative on behalf of all the
Sellers), which consent may not be unreasonably withheld. The Purchaser and the
40
50
Sellers agree to cooperate, and the Purchaser agrees to cause the Company and
the Subsidiaries to cooperate, in the defense against or compromise of any claim
in any audit or proceeding.
SECTION 7.04. Time of Payment. Payment by the Sellers of any
amounts due under this Article VII in respect of Taxes shall be made (a) at
least three Business Days before the due date of the applicable estimated or
final Tax Return required to be filed by the Purchaser on which is required to
be reported income for a period ending after the Closing Date for which the
Sellers are responsible under Section 7.01(a) and 7.01(b) without regard to
whether the Tax Return shows overall net income or loss for such period, and (b)
within three Business Days following an agreement between the Sellers'
Representative and the Purchaser that an indemnity amount is payable, an
assessment of a Tax by a taxing authority, or a "determination" as defined in
section 1313(a) of the Code. If liability under this Article VII is in respect
of costs or expenses other than Taxes, payment by the Sellers of any amounts due
under this Article VII shall be made within five Business Days after the date
when the Sellers have been notified by the Purchaser that the Sellers have a
liability for a determinable amount under this Article VII and are provided with
calculations or other materials supporting such liability.
SECTION 7.05. Cooperation and Exchange of Information. The
Sellers and the Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other in filing any
Tax Return, amended Tax Return or claim for refund, determining a liability for
Taxes or a right to a refund of Taxes, participating in or conducting any audit
or other proceeding in respect of Taxes or making representations to or
furnishing information to parties subsequently desiring to purchase any of the
Company or the Subsidiaries from the Purchaser. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules, related work papers and documents relating
to rulings or other determinations by Tax authorities. Each of the Sellers and
the Purchaser shall retain all Tax Returns, schedules and work papers, records
and other documents in its possession relating to Tax matters of the Company and
the Subsidiaries for each taxable period first ending after the Closing Date and
for all prior taxable periods until the later of (a) the expiration of the
statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax
periods, or (b) six years following the due date (without extension) for such
Tax Returns. Any information obtained under this Section 7.05 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
SECTION 7.06. Conveyance Taxes. The Sellers and the Purchaser
shall each be liable for 50% of any real property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, and any similar Taxes
which become payable in connection with the sale of Shares pursuant to this
Agreement. The Sellers, after the review and consent by the Purchaser, shall
file such applications and documents as shall permit any such Tax to be assessed
and paid on or prior to the Closing Date in accordance with any available
pre-sale filing procedure. The Purchaser shall execute and deliver all
instruments and certificates necessary to enable the Sellers to comply with the
foregoing.
41
51
SECTION 7.07. Section 338(h)(10) Election. (a) The Sellers
agree, upon the written request of the Purchaser, to join with Purchaser in
making an election under section 338(g) and 338(h)(10) of the Code and any
similar election as may be available under applicable state or local laws (the
"Elections"), and in taking all steps necessary to effectuate the same.
(b) For purposes of making such Elections, the Purchaser shall
determine the value of the tangible and intangible assets of the affected
entities and shall timely provide the Sellers with an allocation of the
Purchaser's "adjusted grossed-up basis" in the Shares (within the meaning of the
Treasury Regulations under section 338 of the Code) to such assets (the
"Allocation"). The Allocation shall be binding upon the Purchaser and the
Sellers for purposes of allocating the "deemed selling price" (within the
meaning of the Treasury Regulations) among the assets of the affected entities;
provided, however, that, if the Sellers believe that all or a portion of the
Allocation is materially incorrect, an independent accounting firm shall be
selected by the Sellers' and the Purchaser's accounting firms, subject to the
approval of both the Sellers and the Purchaser, to determine whether the
Allocation is materially incorrect and the determination of such independent
accounting firm shall be final. If the independent accounting firm determines
that the Allocation is not materially incorrect, the Sellers and the Purchaser
shall be bound by the Allocation. If the independent accounting firm determines
that the Allocation (or any portion thereof) is materially incorrect, the
Sellers and the Purchaser shall be bound by the Allocation, as adjusted by such
independent accounting firm.
SECTION 7.08. Miscellaneous. (a) The Sellers and the Purchaser
agree that all payments made by either of them to or for the benefit of the
other (including any payments to the Company or any Subsidiary) under this
Article VII, under other indemnity provisions of this Agreement and for any
misrepresentations or breaches of warranties or covenants shall be treated as
adjustments to the Purchase Price or as capital contributions for Tax purposes
and that such treatment shall govern for purposes hereof, except to the extent
that the Laws of a particular jurisdiction provide otherwise, in which case such
payments shall be made in an amount sufficient to indemnify the relevant party
on an after-Tax basis.
(b) The portion of the Purchase Price allocable to the
covenant not to compete, set forth in Section 5.07 and the Shares shall be
agreed, prior to the Closing Date. In the event that the parties fail to so
agree, the portion so allocable shall be determined by an independent valuation
firm, the fees of which shall be shared equally. Neither the Sellers nor the
Purchaser shall file any Tax Return, or take a position with a Tax authority,
that is inconsistent with the allocation of the Purchase Price set forth herein
and calculated under Section 7.07. Each of the Sellers and the Purchaser agree
to cooperate with the other in preparing Form 8594 for filing by each and to
furnish the other with a copy of such form prepared in draft form within a
reasonable period before its filing due date.
(c) Notwithstanding any provisions in this Agreement to the
contrary, the obligations of the Sellers to indemnify and hold harmless the
Purchaser and its Affiliates, the Company and the Subsidiaries pursuant to this
Article VII, and the representations and warranties contained in Section 3.25,
shall terminate at the close of business on the 120th day following the
expiration of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or extension
thereof).
42
52
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Sellers. The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this
Agreement (i) that are not qualified by "materiality" or "Purchaser
Material Adverse Effect" shall have been true and correct in all
material respects when made and shall be true and correct in all
material respects as of the Closing Date with the same force and effect
as if made as of the Closing Date and (ii) that are qualified by
"materiality" or "Material Adverse Effect" shall have been true and
correct when made and shall be true and correct as of the Closing Date,
except the representation contained in Section 4.04(b) and except to
the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and
correct as of that date, in each case, with the same force and effect
as if made as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Purchaser on or
before the Closing Date shall have been complied with in all material
respects, and the Sellers shall have received a certificate from the
Purchaser to such effect signed by a duly authorized officer thereof;
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Shares contemplated
by this Agreement shall have expired or shall have been terminated;
(c) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against either the
Sellers or the Purchaser seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement, which
is reasonably likely to render it impossible or unlawful to consummate
such transactions or which is reasonably likely to have a Purchaser
Material Adverse Effect;
(d) Ancillary Agreements. The Purchaser shall have executed
and delivered to the Sellers each of the Ancillary Agreements to which
it is a party;
(e) Employment Agreements. The Employment Agreements shall
have been executed and delivered to the Company;
(f) Registration Statement. The Registration Statement shall
have been declared effective, and no stop order terminating the
effectiveness of the Registration Statement shall have been issued or
threatened;
(g) NASDAQ Listing. The shares of Purchaser Common Stock to be
issued to the Sellers hereunder shall have been duly listed on NASDAQ,
subject to official notice of issuance; and
43
53
(h) Opinion of Counsel. The shareholders shall have received
an opinion of Shearman & Sterling, counsel to the Purchaser, dated the
date of the Closing, in the form attached hereto as Exhibit 8.01.
SECTION 8.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver, at or prior to
the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Sellers contained in this
Agreement (i) that are not qualified by "materiality" or "Material
Adverse Effect" shall have been true and correct in all material
respects when made and shall be true and correct in all material
respects as of the Closing Date with the same force and effect as if
made as of the Closing Date and (ii) that are qualified by
"materiality" or "Material Adverse Effect" shall have been true and
correct when made and shall be true and correct as of the Closing Date,
except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall
be true and correct as of that date, in each case, with the same force
and effect as if made as of the Closing Date, and the covenants and
agreements contained in this Agreement to be complied with by the
Sellers on or before the Closing Date shall have been complied with in
all material respects, and the Purchaser shall have received a
certificate of the Sellers to such effect signed by a duly authorized
officer thereof;
(b) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Shares contemplated
by this Agreement shall have expired or shall have been terminated;
(c) No Proceeding or Litigation. No Action shall have been
commenced or threatened by or before any Governmental Authority against
either the Sellers or the Purchaser seeking to restrain or materially
and adversely alter the transactions contemplated by this Agreement,
which is reasonably likely to render it impossible or unlawful to
consummate such transactions or which is reasonably likely to have a
Material Adverse Effect;
(d) Consents and Approvals. The Purchaser and the Sellers
shall have received, each in form and substance reasonably satisfactory
to the Purchaser, all authorizations, consents, orders and approvals of
all Governmental Authorities and officials and all third party consents
and estoppel certificates listed on Exhibit 8.02(d);
(e) No Material Adverse Effect. No Material Adverse Effect
shall have occurred;
(f) Ancillary Agreements. The Sellers shall have executed and
delivered to the Purchaser each of the Ancillary Agreements to which it
is a party;
(g) Employment Agreements. The Employment Agreements shall
have been executed and delivered to the Company and the Purchaser and
no party to an Employee Agreement shall be in breach thereof;
44
54
(h) Certificate of Non-Foreign Status. Each of the Sellers
shall have provided the Purchaser with a Certificate of non-foreign
status (in a form satisfactory to the Purchaser) for purposes of
sections 897 and 1445 of the Code;
(i) Registration Statement. The Registration Statement shall
have been declared effective, and no stop order terminating the
effectiveness of the Registration Statement shall have been issued or
threatened;
(j) NASDAQ Listing. The shares of Purchaser Common Stock to be
issued to the Sellers hereunder shall have been duly listed on NASDAQ,
subject to official notice of issuance;
(k) Shareholder Agreement Termination. The Shareholder
Agreement shall have been terminated pursuant to Section 5 thereof; and
(l) Opinion of Counsel. The shareholders shall have received
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
P.A., counsel to the Sellers, dated the date of the Closing, in the
form attached hereto as Exhibit 8.02.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. (a)
The representations and warranties of the Sellers contained in this Agreement
and the Ancillary Agreements shall survive the Closing until the second
anniversary of the Closing Date; provided, however, that (i) the representations
and warranties made pursuant to Sections 3.01, 3.02, 3.03 and 3.04 shall survive
indefinitely, (ii) the representations and warranties dealing with Tax matters
shall survive as provided in Section 7.08(c), and (iii) insofar as any claim is
made by the Purchaser for the breach of any representation or warranty of the
Sellers contained herein relating to environmental matters, such representations
and warranties shall, for purposes of such claims by the Purchaser, survive the
Closing until the expiration of the applicable statute of limitations with
respect to the environmental liabilities (giving effect to any waiver,
mitigation or extension thereof). If written notice of a claim has been given
prior to the expiration of the applicable representations and warranties by the
Purchaser to the Sellers, then the relevant representations and warranties shall
survive as to such claim, until such claim has been finally resolved.
(b) The representations and warranties of the Purchaser
contained in this Agreement and the Ancillary Agreements shall survive the
Closing until the second anniversary of the Closing Date. If written notice of a
Claim has been given prior to the expiration of the applicable representations
and warranties by the Sellers to the Purchaser, then the relevant
representations and warranties shall survive as to such Claim, until such Claim
has been finally resolved.
SECTION 9.02. Indemnification by the Principal Sellers. (a)
The Purchaser and its Affiliates, officers, directors, employees, agents,
successors and assigns (each a "Purchaser
45
55
Indemnified Party") shall be indemnified and held harmless by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, jointly and severally, and the other Principal Sellers
severally for and against any and all Liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' fees and expenses) actually suffered
or incurred by them (including, without limitation, any Action brought or
otherwise initiated by any of them) (hereinafter a "Loss"), arising out of or
resulting from:
(i) the breach of any representation or warranty made by the
Principal Sellers contained in this Agreement or the Ancillary
Agreements;
(ii) the breach of any covenant or agreement by the
Principal Sellers contained in this Agreement or the Ancillary
Agreements; and
(iii) Liabilities of the Company or any Subsidiary, whether
arising before or after the Closing Date, arising from or relating to
any of the items listed in subsection (b) of Section 3.14 of the
Disclosure Schedule.
(b) A Purchaser Indemnified Party shall give the Principal
Sellers notice of any matter which a Purchaser Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement,
within 60 days of such determination, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of indemnification is claimed
or arises. The obligations and Liabilities of the Principal Sellers under this
Article IX with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article IX ("Third Party
Claims") shall be governed by and be contingent upon the following additional
terms and conditions: if a Purchaser Indemnified Party shall receive notice of
any Third Party Claim, the Purchaser Indemnified Party shall give the Principal
Sellers notice of such Third Party Claim within 30 days of the receipt by the
Purchaser Indemnified Party of such notice; provided, however, that the failure
to provide such notice shall not release the Principal Sellers from any of their
obligations under this Article IX except to the extent that the Principal
Sellers are materially prejudiced by such failure and shall not relieve the
Principal Sellers from any other obligation or Liability that they may have to
any Purchaser Indemnified Party otherwise than under this Article IX. If the
Principal Sellers acknowledge in writing their obligation to indemnify the
Purchaser Indemnified Party hereunder against any Losses that may result from
such Third Party Claim, then the Principal Sellers shall be entitled to assume
and control the defense of such Third Party Claim at their expense and through
counsel of their choice if they give notice of their intention to do so to the
Purchaser Indemnified Party within five days of the receipt of such notice from
the Purchaser Indemnified Party; provided, however, that, if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Purchaser Indemnified Party in its sole and
absolute discretion for the same counsel to represent both the Purchaser
Indemnified Party and the Principal Sellers, then the Purchaser Indemnified
Party shall be entitled to retain its own counsel in each jurisdiction for which
the Purchaser Indemnified Party determines counsel is required, at the expense
of the Principal Sellers. In the event that the Principal Sellers exercise the
right to undertake any such defense against any such Third Party Claim as
provided above, the Purchaser Indemnified Party shall cooperate with the
Principal Sellers in such defense and make available
46
56
to the Principal Sellers, at the Principal Sellers' expense, all witnesses,
pertinent records, materials and information in the Purchaser Indemnified
Party's possession or under the Purchaser Indemnified Party's control relating
thereto as is reasonably required by the Principal Sellers. Similarly, in the
event the Purchaser Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Principal Sellers shall
cooperate with the Purchaser Indemnified Party in such defense and make
available to the Purchaser Indemnified Party, at the Principal Sellers' expense,
all such witnesses, records, materials and information in the Principal Sellers'
possession or under the Principal Sellers' control relating thereto as is
reasonably required by the Purchaser Indemnified Party. No such Third Party
Claim may be settled by the Principal Sellers without the prior written consent
of the Purchaser Indemnified Party which consent shall not be unreasonably
withheld; provided, however, that no Purchaser Indemnified Party shall be
required to consent to any settlement that involves any relief to any party
other than the payment of monetary damages.
SECTION 9.03. Indemnification by the Purchaser. (a) The
Sellers and their respective Affiliates, officers, directors, employees, agents,
successors and assigns (each a "Seller Indemnified Party") shall be indemnified
and held harmless by the Purchaser for and against any and all Losses, arising
out of or resulting from:
(i) the breach of any representation or warranty made by
the Purchaser contained in this Agreement or the Ancillary Agreements;
or
(ii) the breach of any covenant or agreement by the
Purchaser contained in this Agreement or the Ancillary Agreements.
(b) A Seller Indemnified Party shall give the Purchaser notice
of any matter which such the Seller Indemnified Party has determined has given
rise to a right of indemnification under this Agreement, within 60 days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the Purchaser under this Article IX
with respect to Losses arising from Third Party Claims shall be governed by and
be contingent upon the following additional terms and conditions: if a Seller
Indemnified Party shall receive notice of any Third Party Claim, such Seller
Indemnified Party shall give the Purchaser notice of such Third Party Claim
within 30 days of the receipt by the Seller Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not release the
Purchaser from any of its obligations under this Article IX except to the extent
that the Purchaser is materially prejudiced by such failure and shall not
relieve the Purchaser from any other obligation or Liability that it may have to
any Seller Indemnified Party otherwise than under this Article IX. If the
Purchaser acknowledges in writing its obligation to indemnify a Seller
Indemnified Party hereunder against any Losses that may result from such Third
Party Claim, then the Purchaser shall be entitled to assume and control the
defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to such Seller Indemnified
Party within five days of the receipt of such notice from the Seller Indemnified
Party; provided, however, that, if there exists or is reasonably likely to exist
a conflict of interest that would make it inappropriate in the judgment of such
Seller Indemnified Party in its sole and absolute
47
57
discretion, for the same counsel to represent both the Seller Indemnified Party
and the Purchaser, then the Seller Indemnified Party shall be entitled to retain
its own counsel, in each jurisdiction for which the Seller Indemnified Party
determines counsel is required, at the expense of the Purchaser. In the event
that the Purchaser exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Seller Indemnified Party shall
cooperate with the Purchaser in such defense and make available to the
Purchaser, at the Purchaser's expense, all witnesses, pertinent records,
materials and information in the Seller Indemnified Party's possession or under
the Seller Indemnified Party's control relating thereto as is reasonably
required by the Purchaser. Similarly, in the event the Seller Indemnified Party
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Purchaser shall cooperate with the Seller Indemnified Party in such
defense and make available to the Seller Indemnified Party, at the Purchaser's
expense, all such witnesses, records, materials and information in the
Purchaser's possession or under the Purchaser's control relating thereto as is
reasonably required by the Seller Indemnified Party. No such Third Party Claim
may be settled by the Purchaser without the prior written consent of the Seller
Indemnified Party which consent shall not be unreasonably withheld; provided,
however, that no Seller Indemnified Party shall be required to consent to any
settlement that involves any relief to any party other than the payment of
monetary damages.
SECTION 9.04. Limits on Indemnification. Notwithstanding
anything to the contrary contained in this Agreement: (a) an Indemnifying Party
shall not be liable for any claim for indemnification pursuant to Section
9.02(a)(i) or 9.03(a)(i), unless and until the aggregate amount of indemnifiable
Losses which may be recovered from the Indemnifying Party equals or exceeds
$625,000 for such Losses from the first dollar thereof, after which the
Indemnifying Party shall be liable for such Losses from the first dollar
thereof; (b) no Losses may be claimed under Section 9.02(a)(i) or 9.03(a)(i) by
an Indemnified Party or shall be reimbursable by an Indemnifying Party or shall
be included in calculating the aggregate Losses set forth in clause (a) above
other than Losses in excess of $5,000 resulting from any single or aggregated
claims arising out of the same facts, events or circumstances and (c) the
maximum amount of indemnifiable Losses which may be recovered from an
Indemnified Party arising out of or resulting from the causes set forth in
Section 9.02(a)(i) or 9.03(a)(i), as the case may be, shall be an amount equal
to $25,000,000; provided, however, that the maximum amount of indemnifiable
Losses which may be recovered from the Principal Sellers arising out of or
resulting from environmental liabilities or Tax liabilities shall be an amount
equal to $43,750,000 plus 25% of the Adjustment Amount.
SECTION 9.05. Distributions from Escrow Fund. In the event
that (a) the Sellers shall not have objected to the amount claimed by the
Purchaser for indemnification with respect to any Loss in accordance with the
procedures set forth in the Escrow Agreement or (b) the Sellers shall have
delivered notice of their disagreement as to the amount of any indemnification
requested by the Purchaser and either (i) the Sellers and the Purchaser shall
have, subsequent to the giving of such notice, mutually agreed that the Sellers
are obligated to indemnify the Purchaser for a specified amount and shall have
so jointly notified the Escrow Agent or (ii) a final nonappealable judgment
shall have been rendered by the court having jurisdiction over the matters
relating to such claim by the Purchaser for indemnification from the Sellers and
the Escrow Agent shall have received, in the case of clause (i) above, written
instructions from the
48
58
Sellers and the Purchaser or, in the case of clause (ii) above, a copy of the
final nonappealable judgment of the court, the Escrow Agent shall deliver to the
Purchaser from the Escrow Fund any amount determined to be owed to the Purchaser
under this Article IX or under Article VII hereof in accordance with the Escrow
Agreement.
SECTION 9.06. Tax Matters. Anything in this Article IX (except
for the specific reference to Tax matters in Section 9.01 and 9.06 and the
specific limitations set forth in the proviso to the final sentence of Section
9.04) to the contrary notwithstanding, the rights and obligations of the parties
with respect to indemnification for any and all Tax matters shall be governed by
Article VII.
SECTION 9.07. Sellers' Representative; Approval of Sellers.
(a) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is hereby constituted and appointed as agent for and on
behalf of the Sellers (the "Sellers' Representative") to give and receive
notices and communications, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Sellers' Representative for the
accomplishment of the foregoing. Such agency may be changed by a vote of holders
of a majority of the Shares immediately prior to the Closing upon not less than
ten Business Days' prior written notice to the Purchaser. In the event of the
death or disability (for more than 40 Business Days) of the Sellers'
Representative or his resignation as Sellers' Representative and until a
successor Sellers' Representative shall be appointed as provided above, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ shall act as the Sellers' Representative pending the appointment of
the successor Sellers' Representative. No bond shall be required of the Sellers'
Representative and the Sellers' Representative shall receive no compensation for
his/her services. Notices or communications to or from the Sellers'
Representative shall constitute notice to or from each of the Sellers. In
connection with this Agreement, any Ancillary Agreement, and any instrument,
agreement or document relating hereto or thereto, and in exercising or failing
to exercise all or any of the powers conferred upon the Sellers' Representative
hereunder or thereunder, the Sellers' Representative shall incur no
responsibility whatsoever to any Seller by reason of any error in judgment or
other act or omission performed or omitted hereunder or thereunder or any other
agreement, instrument or document, excepting the only responsibility for any act
or failure to act which represents willful misconduct. The Sellers'
Representative shall be indemnified, jointly and severally, by the Sellers
against all Losses of any nature whatsoever, arising out of or in connection
with any claim or proceeding relating to the acts or omissions of the Sellers'
Representative hereunder or pursuant to any Ancillary Agreement.
(b) A decision, act, consent or instruction of the Sellers'
Representative shall constitute a decision of all Sellers and shall be final,
binding and conclusive upon each such Seller, and the Purchaser may rely upon
any such decision, act, consent, or instruction of the Sellers' Representative
as being the decision, act, consent or instruction of each Seller. The Purchaser
is hereby relieved from any liability to any person for any acts done by it in
accordance with such decision, act, consent or instruction of the Sellers'
Representative.
(c) The Purchaser and the Company agree that, after the
Closing, the reasonable administrative expenses of Sellers' Representative, but
not any fees or expenses of
49
59
attorneys or other advisors, shall be paid from time to time from the Escrow
Fund; provided that such fees and expenses of attorneys and other advisors may
be paid only out of, and prior to, any final distribution from the Escrow Fund
to the Sellers.
SECTION 9.08. Other Indemnity Matters. (a) In the absence of
fraud (i) the parties hereto agree that from and after the Closing Date their
sole and exclusive remedy with respect to breaches of the representations and
warranties contained herein shall be the indemnification provisions of this
Article IX and (ii) that with respect to breaches of representations and
warranties of the Principal Sellers other than those relating to environmental
liabilities or Tax, the sole recourse of Purchaser will be to the Escrow Fund
held by the Escrow Agent.
(b) All amounts payable under this Article IX to any
Indemnified Party in respect of any Loss shall be reduced by the amount of any
tax benefits actually realized by such Indemnified Party and shall be increased
by the amount of any tax cost actually incurred by such Indemnified Party in
respect of such Loss or such indemnity payments.
(c) With respect to breaches of the representation and
warranty of the Purchaser contained in Section 4.04(b), for which the Sellers
are entitled to indemnification under Article IX, the Sellers shall recover
losses (subject to the limitations set forth in Section 9.04) in shares of
Purchaser Common Stock valued based on the closing price as reported on the
NASDAQ National Market System one day prior to the payment by the Purchaser to
the Sellers pursuant hereto.
(d) Each Principal Seller, other than ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have a maximum liability with respect to any of the
Principal Sellers' indemnification obligations hereunder equal to such Principal
Sellers' pro rata portion of any such obligation.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by either the Sellers or the Purchaser if the Closing
shall not have occurred by October 31, 2001; provided, however, that
the right to terminate this Agreement under this Section 10.01(a) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such
date;
(b) by either the Purchaser or the Sellers in the event that
any Governmental Authority shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable; or
50
60
(c) by the mutual written consent of the Sellers and the
Purchaser.
SECTION 10.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of either
party hereto except (a) as set forth in Sections 5.03 and 11.01 and (b) that
nothing herein shall relieve either party from liability for any breach of this
Agreement.
SECTION 10.03. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 10.04.
SECTION 10.04. Waiver. Any party to this Agreement may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements of the other party or conditions to such party's obligations
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any of such rights.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, and all retention
bonuses or other transaction related bonuses paid to employees, consultants or
advisors of the Sellers, the Company or any Subsidiary incurred in connection
with this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred. For the avoidance of doubt, it is understood that neither
the Company nor any of its Subsidiaries shall reimburse the costs and expenses
of the Sellers as set forth above.
SECTION 11.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by an internationally recognized overnight courier service,
by telecopy or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11.02):
51
61
(a) if to the Sellers:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
Museum Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) if to the Purchaser:
B/E Aerospace
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
General Counsel & Vice President of Law
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 11.03. Public Announcements. Except as required by
applicable Law or NASDAQ rules, no party to this Agreement shall make, or cause
to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated by this Agreement or otherwise
communicate with any news media without the prior written consent of the other
party, and the parties shall cooperate as to the timing and contents of any such
press release or public announcement.
SECTION 11.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other
52
62
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 in an acceptable manner in
order that the transactions contemplated by this Agreement are consummated as
originally contemplated to the greatest extent possible.
SECTION 11.05. Entire Agreement. This Agreement and the
Ancillary Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Sellers and the
Purchaser with respect to the subject matter hereof and thereof.
SECTION 11.06. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Sellers and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser); provided, however, that the
Purchaser may assign this Agreement or any of its rights and obligations
hereunder to one or more Affiliates of the Purchaser without the consent of the
Sellers provided that such assignment shall not relieve the Purchaser from any
of its obligations under this Agreement.
SECTION 11.07. No Third Party Beneficiaries. Except for the
provisions of Article IX relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, including, without limitation, any union or
any employee or former employee of the Sellers, the Company or any Subsidiary,
any legal or equitable right, benefit or remedy of any nature whatsoever,
including, without limitation, any rights of employment for any specified
period, under or by reason of this Agreement.
SECTION 11.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any state or federal court sitting in the
State of Florida. The parties hereto hereby (a) submit to the exclusive
jurisdiction of any state or federal court sitting in the State of Florida for
the purpose of any Action arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the transactions contemplated by this Agreement may not
be enforced in or by any of the above-named courts.
SECTION 11.09. Waiver of Jury Trial. Each of the parties
hereto hereby waives to the fullest extent permitted by applicable law any right
it may have to a trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each of the parties hereto (a)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce that
53
63
foregoing waiver and (b) acknowledges that it and the other party hereto have
been induced to enter into this Agreement and the transactions contemplated by
this Agreement, as applicable, by, among other things, the mutual waivers and
certifications in this Section 11.09.
SECTION 11.10. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 11.11. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
SECTION 11.12. Concerning the Trustees. The parties each
acknowledge and agree that the respective trustees of the trusts are parties
hereto are executing this Agreement in their respective capacities as trustees
and not in their individual capacities. Such trustees shall incur no personal
liability to any party hereunder by virtue of their execution and delivery of
this Agreement or otherwise and the parties hereto agree to look solely to the
assets of the trust parties hereto with respect to any Claims they may have
against such trust.
[Signatures are on next page]
54
64
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
B/E AEROSPACE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Corporate Senior Vice President
of Administration and Chief
Financial Officer
SELLERS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
65
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 6-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 8-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2000 8-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 8-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2000 8-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Trustee
66
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1997 10-YEAR GRAT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Trustee
