EXHIBIT 10.13
AMENDED AND RESTATED REORGANIZATION AGREEMENT
among
▇▇▇▇▇▇ INDUSTRIES INC.,
▇▇▇▇▇▇ MICRO INC.,
and
▇▇▇▇▇▇ ENTERTAINMENT INC.
TABLE OF CONTENTS(1)
Page
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions...................................... 1
_________________
(1) The Table of Contents is not a part of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 2.1. Corporate Existence and Power.................... 3
SECTION 2.2. Corporate Authorization.......................... 3
SECTION 2.3. Governmental Authorization....................... 3
SECTION 2.4. Non-Contravention................................ 4
ARTICLE 3
CERTAIN LIABILITIES; CERTAIN ASSETS
SECTION 3.1. Assumed Liabilities.............................. 4
SECTION 3.2. Certain Contingent Assets........................ 8
SECTION 3.3. Certain Adjustments.............................. 9
ARTICLE 4
GENERAL COVENANTS
SECTION 4.1. Conduct of the Business.......................... 10
SECTION 4.2. Access; Confidentiality.......................... 11
SECTION 4.3. Best Efforts; Further Assurances................. 12
SECTION 4.4. Loans; Repurchase Agreements..................... 12
SECTION 4.5. Cross-Guarantees................................. 13
SECTION 4.6. Public Announcements............................. 14
SECTION 4.7. Notices of Certain Events........................ 14
ARTICLE 5
SURVIVAL; INDEMNIFICATION
SECTION 5.1. Survival......................................... 15
SECTION 5.2. Indemnification.................................. 15
SECTION 5.3. Procedures....................................... 15
ARTICLE 6
TERMINATION
SECTION 6.1. Grounds for Termination.......................... 17
SECTION 6.2. Effect of Termination............................ 17
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings......................................... 17
SECTION 7.2. Entire Agreement................................. 17
SECTION 7.3. Notices.......................................... 18
SECTION 7.4. Applicable Law................................... 18
SECTION 7.5. Severability..................................... 18
SECTION 7.6. Successors, Assigns, Transferees................. 18
SECTION 7.7. Counterparts..................................... 19
SECTION 7.8. Amendments and Waivers........................... 19
SECTION 7.9. Consent to Jurisdiction.......................... 19
EXHIBITS
Exhibit I - Form of Master Services Agreement
Exhibit II - Form of Risk Management Agreement
Exhibit III - Form of Data Center Services Agreement
Exhibit IV - Form of Tax Sharing and Tax Services Agreement
Exhibit V - Form of Employee Benefits Transfer and Assumption
Agreement
AMENDED AND RESTATED REORGANIZATION AGREEMENT
AGREEMENT dated as of September 4, 1996, as amended and
restated as of October 17, 1996, among ▇▇▇▇▇▇ Industries Inc., a Tennessee
corporation ("Industries"), ▇▇▇▇▇▇ Micro Inc., a Delaware corporation
("Micro"), and ▇▇▇▇▇▇ Entertainment Inc., a Tennessee corporation
("Entertainment" and, together with Industries and Micro, the "Ingram
Companies").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as
used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such other Person; provided that for purposes of this
Agreement no Ingram Company shall be deemed an Affiliate of any other
Ingram Company. For purposes of this definition, the term "control", when
used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting
securities, by contract or otherwise, and the terms "controlling",
"controlled by" and "under common control with" have meanings correlative
to the foregoing.
"Ancillary Agreements" means (i) the Master Services Agreement
substantially in the form attached as Exhibit I hereto, (ii) the Risk
Management Agreement substantially in the form attached as Exhibit II
hereto, (iii) the Data Center Services Agreement substantially in the form
attached as Exhibit III hereto, (iv) the Tax Sharing and Tax Services
Agreement substantially in the form attached as Exhibit IV hereto and (v)
the Employee Benefits Transfer and Assumption Agreement substantially in
the form attached as Exhibit V hereto. [Names of these Agreements will be
changed to reflect amendments and restatements thereof, if necessary.]
"Carrying Cost" means, with respect to any investment, the
carrying cost of such investment from the date specified in Article 3 with
respect to such investment to the date of disposition of such investment,
calculated by Industries on the basis of the average borrowing rate of
Industries during such period as published from time to time by the
Industries treasury department as applied to the amount of Industries'
invested capital from time to time with respect to such investment.
"Covered Person" means (i) with respect to Micro, each
Subsidiary of Micro, (ii) with respect to Entertainment, each Subsidiary of
Entertainment and (iii) with respect to Industries, each business operating
unit of Industries and each Subsidiary of Industries (other than Micro,
Entertainment and their respective Subsidiaries); provided that "Covered
Person" shall in no event include Cactus, Magnolia or IMS.
"Effective Time" means the effective time of the First
Closing as defined in the Exchange Agreement.
"Exchange Agreement" means the Amended and Restated Exchange
Agreement dated as of September 4, 1996, as amended and restated as of
October 17, 1996, among each Ingram Company and the Persons listed on the
signature pages thereof.
"Material Adverse Effect" means, with respect to any Ingram
Company, a material adverse effect on the business, assets, condition
(financial or otherwise) or result of operations of the business of such
Ingram Company and its Subsidiaries taken as a whole.
"Person" means an individual, corporation, partnership,
association, trust, limited liability company or other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Second Closing" shall have the meaning set forth in the
Exchange Agreement.
"Subsidiary" means, with respect to Industries, Entertainment
or Micro, any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions are directly or indirectly
owned by such Person immediately after the Closing.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
----- -------
Cactus 3.2
▇▇▇▇▇▇ Agreement 3.2
Currently Pledged Stock 4.4
IMS 3.1
Indemnified Party 5.3
Indemnifying Party 5.3
IOBC 3.1
IPSI 3.2
Loss 5.2
Magnolia 3.1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Each party represents and warrants to each other party as of
September 4, 1996, as of October 17, 1996 and as of the Effective Time that:
SECTION 2.1. Corporate Existence and Power. Such party is
a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except where the failure to have such governmental licenses,
authorizations, permits, consents and approvals does not have a Material
Adverse Effect or would not prevent such party from performing any of its
obligations hereunder or under the Ancillary Agreements.
SECTION 2.2. Corporate Authorization. The execution,
delivery and performance by such party of this Agreement and each of the
Ancillary Agreements to which such party is a party are within its
corporate powers and have been duly authorized by all necessary corporate
and stockholder action on its part. This Agreement constitutes, and when
executed and delivered, each of the Ancillary Agreements to which such
party is a party will constitute, a valid and binding agreement of such
party.
SECTION 2.3. Governmental Authorization. The execution,
delivery and performance by such party of this Agreement and each of the
Ancillary Agreements to which such party is a party require no action by or
in respect of, or filing with, any governmental body, agency or official
other than (i) compliance with any applicable requirements of the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder and (ii) such other matters where
the failure to take such action or make such filing would not have a
Material Adverse Effect or prevent such party from performing any of its
obligations hereunder or the Ancillary Agreements.
SECTION 2.4. Non-Contravention. The execution, delivery
and performance by such party of this Agreement and each of the Ancillary
Agreements to which such party is a party do not (i) violate the
certificate of incorporation or bylaws of such party, (ii) assuming
compliance with the matters referred to in Section 2.3, violate any
applicable law, rule, regulation, judgment, injunction, order or decree,
(iii) constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any party or to
a loss of any benefit relating to the business of such party to which any
party is entitled under any permit or license or any provision of any
agreement, contract or other instrument binding upon any party or by which
any of the assets of such party is or may be bound or (iv) result in the
creation or imposition of any lien on any asset of such party, except, in
the case of clauses (ii) through (iv), as would not, individually or in the
aggregate, have a Material Adverse Effect or prevent such party from
performing in any material respect any of its obligations hereunder or
under the Ancillary Agreements.
ARTICLE 3
CERTAIN LIABILITIES; CERTAIN ASSETS
SECTION 3.1. Assumed Liabilities. (a) Upon the terms and
subject to the conditions of this Agreement and except as otherwise
provided in the Ancillary Agreements, each party agrees, at the Effective
Time, to assume, or remain liable for, as the case may be, and shall
thereafter pay, perform and discharge, the following liabilities and
obligations:
(i) liabilities and obligations incurred by such party (in
the case of Micro and Entertainment) and its Covered Persons, or by
any Covered Person of such party (in the case of Industries), with
respect to periods ending on or prior to the Effective Time, other
than liabilities and obligations arising directly or indirectly as a
result of (1) any intentional act which is tortious or (2) any
illegal act, in either case committed by (x) a corporate officer of
Industries (except for actions that are believed by such person to
be in furtherance of his duties as an officer or employee of Micro,
Entertainment, any of their respective Covered Persons or a Covered
Person of Industries), (y) any other employee of Industries whose
responsibilities are not primarily associated with Micro,
Entertainment, any of their respective Covered Persons or a Covered
Person of Industries, or (z) any other employee or agent of another
party;
(ii) liabilities and obligations incurred by any other party
(if such other party is Micro or Entertainment) and its Covered
Persons, or by any Covered Person of any other party (if such other
party is Industries), with respect to periods ending on or prior to
the Effective Time arising directly or indirectly as a result of (x)
any intentional act which is tortious or (y) any illegal act, in
either case committed by an employee or agent of such party or its
Covered Persons (in the case of Micro or Entertainment) or by a
Covered Person of such party (in the case of Industries);
(iii) in the case of Industries and subject to Section
3.1(b)(ii), general corporate level liabilities and obligations
recorded under Industries' internal accounting system as "home
office" liabilities up to an aggregate amount of $100,000 incurred by
Industries with respect to periods ending on or prior to the
Effective Time, to the extent that such liabilities and obligations
(x) are not attributable to Micro, Entertainment, any of their
respective Covered Persons or any Covered Person of Industries, (y)
have not been reserved for on the December 31, 1995 balance sheet of
any Ingram Company and (z) are extraordinary and non-recurring in
nature and arise other than in the ordinary course of business;
(iv) in the case of Micro, in the event that the net proceeds
from a disposition by Industries of its investment in common stock
of Stream, Inc. are less than $500,580, liabilities and
obligations in an amount equal to the sum of (x) such shortfall
and (y) the Carrying Cost of such investment from and after
December 31, 1995.
(v) in the case of Industries, (x) the first $4,500,000 of
liabilities and obligations payable in connection with the
settlement following December 31, 1995 of Bluewater Insurance,
Ltd. claims arising under the treaties listed on Schedule
3.1(a)(v) and (y) liabilities and obligations payable in
connection with the settlement following December 31, 1995 of such
Bluewater Insurance, Ltd. claims in excess of the second
$4,500,000 of such liabilities and obligations; and
(vi) liabilities and obligations incurred by such party and
its Covered Persons with respect to periods beginning after the
Effective Time.
(b) Upon the terms and subject to the conditions of this
Agreement, each of Industries, Micro and Entertainment agrees, at the
Effective Time, to assume (or retain, as the case may be) 23.01%, 72.84%
and 4.15%, respectively, of the following liabilities and obligations:
(i) liabilities and obligations incurred by any party or any
of its Covered Persons with respect to periods ending on or prior
to the Effective Time arising directly or indirectly as a result
of (x) any intentional act which is tortious or (y) any illegal
act, in either case committed by a corporate officer of Industries
(except for actions that are believed by such person to be in
furtherance of his duties as an officer or employee of Micro,
Entertainment, any of their respective Covered Persons or a
Covered Person of Industries), or any other employee of Industries
whose responsibilities are not primarily associated with Micro,
Entertainment, any of their respective Covered Persons or a
Covered Person of Industries;
(ii) general corporate level liabilities and obligations
recorded under Industries' internal accounting system as "home
office" liabilities in excess of an aggregate amount of $100,000
incurred by Industries with respect to periods ending on or prior
to the Effective Time to the extent that such liabilities and
obligations (x) are not attributable to Micro, Entertainment, any
of their respective Covered Persons or any Covered Person of
Industries, (y) have not been reserved for on the December 31,
1995 balance sheet of any Ingram Company and (z) are extraordinary
and non-recurring in nature and arise other than in the ordinary
course of business (in which case, all of such liabilities and
obligations in excess of $1.00 shall be assumed or retained
pursuant to this Section 3.1(b)(ii) and Industries shall be
reimbursed for any excess amounts paid in respect of such
liabilities and obligations pursuant to Section 3.1(a)(iii));
(iii) (x) liabilities and obligations, to the extent
accrued on December 31, 1995 (and not otherwise included in
amounts to be allocated to the parties hereto pursuant to the
provisions of Section 6.5 or Section 7.12 of the Exchange
Agreement), incurred by Industries under the ▇▇▇▇▇▇ Industries
Inc. Supplemental Executive Retirement Plan and the Ingram
Supplemental Thrift Plan in respect of ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and (y) liabilities and
obligations incurred by Industries in an amount equal to (A) the
aggregate purchase price paid by Industries for up to 135,000
shares of common stock of Micro purchased by Industries in the
initial public offering of Micro common stock, plus (B) if
Industries does not purchase 135,000 shares of Micro common stock
in such initial public offering, the product of (1) 135,000, less
the number of shares actually purchased in such initial public
offering, and (2) the price of one share of Micro common stock
sold in such initial public offering;
(iv) liabilities and obligations incurred by Industries in
an amount equal to the loss recognized in connection with the
disposition and winding up of the business by Industries of Ingram
Merchandising Services Inc. ("IMS") to the extent that such loss
causes the equity of IMS as reported on a stand alone basis to be
less than $8,956,000;
(v) liabilities and obligations incurred by Industries in
an amount equal to the sum of (x) the loss recognized in
connection with the disposition by Industries of its partnership
interest in Magnolia Coal Terminal ("Magnolia") or a disposition
by Magnolia of all or substantially all of its assets (which loss
shall be calculated after taking into account (A) expenses
incurred, and indemnification payments received, after December
31, 1995 in connection with environmental matters relating to such
investment, (B) distributions received after December 31, 1995 in
respect of such investment and (C) contributions made after
December 31, 1995 with respect to such investment) and (y) the
Carrying Cost of such investment from and after December 31, 1995;
(vi) liabilities and obligations up to an aggregate amount
of $4,500,000 payable in connection with the settlement following
December 31, 1995 of Bluewater Insurance, Ltd. claims arising
under the treaties set forth on Schedule 3.1(a)(v), in excess of
the first $4,500,000 of such liabilities and obligations; and
(vii) liabilities and obligations up to an aggregate amount
of $2,500,000 incurred by Industries or Ingram Ohio Barge Co.
("IOBC") pursuant to the guarantees by Industries and IOBC of the
obligations of IOBC under the 1974 charter agreement with Mellon
Bank, as Owner Trustee, and the 1975 charter agreement with Fleet
National Bank of Connecticut (formerly U.S. Trust), as such
guarantees may be amended, modified or supplemented from time to
time.
(c) Notwithstanding anything herein to the contrary, each
party hereto agrees that, following the Effective Time and prior to the
Second Closing, Industries and Entertainment will be liable on a joint and
several basis for the obligations of Industries and Entertainment under
Section 3.1(a) and 3.1(b).
(d) Without limiting the generality of the last sentence of
Section 7.6, nothing in this Agreement shall be deemed to give rise to, or
accelerate the performance of, any obligation of any party owing to a Person
other than a party to this Agreement.
SECTION 3.2. Certain Contingent Assets.
Upon the terms and subject to the conditions of this Agreement, the parties
hereto agree that each of the following assets shall be allocated 23.01% to
Industries, 72.84% to Micro and 4.15% to Entertainment:
(i) the amount by which the gain recognized in connection
with the disposition by Industries of its partnership interest in
Magnolia or a disposition by Magnolia of all or substantially all of
its assets (which gain shall be calculated after taking into account
(x) expenses incurred, and indemnification payments received, after
December 31, 1995 in connection with environmental matters relating
to such investment, (y) distributions received after December 31,
1995 in connection with such investment and (z) contributions made
after December 31, 1995 with respect to its investment in Magnolia)
exceeds the Carrying Cost of such investment from and after December
31, 1995;
(ii) the amount by which the proceeds recognized by
Industries in connection with the disposition by Industries of its
investment in common stock of Stream, Inc. as of December 31, 1995
exceed the sum of (x) $500,580 plus (y) the Carrying Cost of such
investment from and after December 31, 1995; and
(iii) the amount of net cash flow distributed to Industries
resulting from the sale and liquidation of the ownership interest
of Ingram Petroleum Service Inc. ("IPSI") in Ingram Cactus
Company ("Cactus") (net of applicable income taxes and after
liquidation of assets and liabilities of IPSI inclusive of the
cost of liquidating the Cactus subsidiaries), minus the book value
(net equity of IPSI calculated in accordance with generally
accepted accounting principles at December 31, 1995), minus the
Carrying Cost of Industries' equity investment in IPSI from and
after December 31, 1995. It is understood and agreed by the
parties that (1) an initial allocation of the net amount referred
to in this clause (iii) shall be made among the parties 30 days
after final determination of the working capital adjustment as
provided for in Section 1.11 (a) of the Purchase Agreement (the
"▇▇▇▇▇▇ Agreement") with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated March 28, 1996,
which shall provide for Cactus' remaining unliquidated liabilities
and (2) a final allocation among the parties shall be made at such
time thereafter as all significant liabilities have been resolved
or the parties have mutually agreed on final provisions for all
significant unresolved liabilities; provided that the parties
shall use all reasonable efforts to cause such liabilities to be
resolved no later than 24 months after consummation of the
transactions contemplated by the ▇▇▇▇▇▇ Agreement.
SECTION 3.3. Certain Adjustments.
(a) Notwithstanding anything herein to the contrary, the
parties agree that, in consideration of distributions to Industries
previously made by Micro and Entertainment, no amounts shall be allocated
to, and no liabilities or obligations shall be assumed or borne by, Micro
or Entertainment pursuant to Section 6.5(a) or Section 7.12 of the Exchange
Agreement or pursuant to Article 3 of this Agreement, until the aggregate
of such amounts, costs, expenses, liabilities and obligations shall exceed
$20,778,000, in the case of Micro, or $1,160,000, in the case of
Entertainment, in which event such allocation or assumption shall be made
only to the extent of such excess. To the extent that the aggregate of
such costs, expenses, liabilities and obligations is less than $20,778,000
in the case of Micro, or $1,160,000 in the case of Entertainment,
Industries shall make a payment in the amount of such difference to Micro
or Entertainment, as the case may be.
(b) Notwithstanding anything herein to the contrary, the
amount of any gain or loss to be allocated among the Ingram Companies
pursuant to this Article 3 shall be determined after taking into account
the actual tax consequences of the recognition of such gain or loss to the
party recognizing such gain or loss (which consequences shall include, in
the case of any such gain, the amount of any tax imposed thereon and, in
the case of any such loss, any deduction to which such party becomes
entitled as a result thereof).
ARTICLE 4
GENERAL COVENANTS
Each party hereto agrees that:
SECTION 4.1. Conduct of the Business. From September 4,
1996 until the Second Closing (or, with respect to Micro, until the
Effective Time), such party shall conduct its business in the ordinary
course consistent with past practice and the published policies and
procedures of the Ingram Companies and use its best efforts to preserve
intact the business organizations and relationships with third parties and
keep available the services of the present employees of its business.
Without limiting the generality of the foregoing, from September 4, 1996
until the Second Closing (or, with respect to Micro, until the Effective
Time) and except in connection with the transactions contemplated hereby or
by the Ancillary Agreements (or, with respect to actions taken prior to the
Effective Time, as otherwise approved by the board of directors of
Industries), such party will not:
(a) enter into any lease, contract, agreement, commitment,
arrangement or transaction, other than in the ordinary course of business
consistent with past practice;
(b) sell, lease, license or otherwise dispose of any assets
except (i) pursuant to existing contracts or commitments or (ii) in the
ordinary course of business consistent with past practice;
(c) modify, amend, cancel, terminate, forfeit, assign or
encumber in any material manner, other than in the ordinary course of
business consistent with past practice, any existing material franchise,
license, permit, consent, authority, operating right, lease, contract,
agreement, commitment or arrangement;
(d) incur, assume or guarantee any indebtedness for borrowed
money other than in the ordinary course of business consistent with past
practice;
(e) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock, or issue,
repurchase, redeem or otherwise acquire any outstanding shares of capital
stock or other ownership interests, other than in the ordinary course of
business consistent with past practice;
(f) amend any material term of any outstanding security;
(g) create or assume any lien on any material asset other
than in the ordinary course of business consistent with past practice;
(h) make any loan, advance or capital contribution to or
investment in any Person other than loans, advances or capital contributions
to or investments in wholly-owned subsidiaries or employees or as otherwise
made in the ordinary course of business consistent with past practice;
(i) (A) grant any severance or termination pay to any
director or officer, (B) enter into any individual employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee, (C) change
benefits payable under existing severance or termination pay policies or
employment agreements or (D) change compensation, bonus or other benefits
payable to directors, officers or employees, other than, in the case of
each of clauses (A) through (D) above, in the ordinary course of business
consistent with past practice; or
(j) agree or commit to do any of the foregoing.
SECTION 4.2. Access; Confidentiality. (a) Each party
will, at and after the Effective Time, afford to each other party and its
agents reasonable access to its properties, books, records, employees and
auditors to the extent necessary to permit such other party to determine
any matter relating to its rights and obligations hereunder or to any
period ending at or before the Effective Time. Each of Industries and
Entertainment will, at and after the Second Closing, afford to the other
and its agents reasonable access to its properties, books, records,
employees and auditors to the extent necessary to permit such other party
to determine any matter relating to its rights and obligations hereunder or
to any period ending at or before the Second Closing.
(b) After the Effective Time, each party will hold, and will
use its best efforts to cause its respective officers, directors,
employees, accountants, counsel, consultants, advisors, agents and
Affiliates to hold, in confidence, unless compelled to disclose by judicial
or administrative process or by other requirements of law, all confidential
documents and information concerning the business of the other parties,
except (i) to the extent that such information can be shown to have been
(A) in the public domain through no fault of such party or (B) later
lawfully acquired by such party on a non-confidential basis or (ii) to the
extent that such documents and information are required to be furnished to
the lenders of such party in connection with guarantees of indebtedness
owing to such lenders that are furnished by such other parties. The
obligation of such party and its Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect
to such information as they would take to preserve the confidentiality of
their own similar information.
SECTION 4.3. Best Efforts; Further Assurances. Subject to
the terms and conditions of this Agreement, the parties hereto will use their
best efforts (but without the payment of money) to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. Each party
agrees to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be reasonably
necessary or desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 4.4. Loans; Repurchase Agreements. (a) Loans
that have been made by Industries to certain employees of Micro and
Entertainment shall be transferred by Industries as of the Effective Time to
Micro (with respect to employees of Micro) and to Entertainment (with respect
to employees of Entertainment), in each case in consideration for the
principal balance (plus accrued interest) of each such loan. Loans that have
been made after the Effective Time by Industries to certain employees of
Entertainment shall be transferred by Industries as of the Second Closing to
Entertainment, in consideration for the principal balance (plus accrued
interest) of each such loan.
(b) At or prior to the Effective Time, Micro shall enter into
bank repurchase agreements effective as of the Effective Time with respect to
the Micro securities to be received pursuant to the Exchange Agreement in
exchange for shares of Industries Common Stock (the "Currently Pledged Stock")
currently pledged as collateral for loans made by First American National
Bank, NationsBank, N.A. or NationsBank of Tennessee, N.A. to certain
stockholders of Industries. At or prior to the Second Closing, Entertainment
shall enter into bank repurchase agreements effective as of the Second Closing
with respect to the Entertainment securities to be received pursuant to the
Exchange Agreement in exchange for shares of Currently Pledged Stock. Such
repurchase agreements shall be in form and substance satisfactory to Micro or
Entertainment, as the case may be, it being understood that such repurchase
agreements shall be similar to Industries' current bank repurchase agreements.
Industries shall be released from its obligations under Industries' current
bank repurchase agreements with respect to the Currently Pledged Stock
exchanged in the Exchange. Such release shall be effective at the Effective
Time (with respect to shares of Currently Pledged Stock exchanged pursuant to
the Exchange Agreement at the Effective Time) and at the Second Closing (with
respect to shares of Currently Pledged Stock exchanged pursuant to the
Exchange Agreement at the Second Closing).
SECTION 4.5. Cross-Guarantees. Each of Industries and
Entertainment hereby agrees, upon the request of Micro, to guarantee, for
the fees and on the other terms and conditions set forth on Schedule 4.5,
(i) indebtedness incurred by Micro pursuant to credit facilities of Micro
entered into at or prior to the Effective Time or pursuant to any
replacements, refinancings or renewals thereof which do not increase the
aggregate amount of the indebtedness guaranteed and are on terms
substantially the same as the prior facilities or otherwise reasonably
acceptable to Industries and Entertainment, (ii) indebtedness incurred by
Micro the proceeds of which are used by Micro to repay indebtedness owing
to Industries, Entertainment or their respective Subsidiaries and (iii)
amounts payable by Micro under the Master Lease dated as of December 20,
1995 by and between Lease Plan North America, Inc. and ▇▇▇▇▇▇ Micro L.P.
Commencing at the Effective Time, Micro shall reimburse Entertainment or
Industries, as the case may be, for the difference between (x) the actual
cost of indebtedness incurred by Entertainment or Industries in connection
with any type of financing transaction (up to an amount of such financing
equal to the amount of indebtedness guaranteed by Entertainment or
Industries, as the case may be), and the amount which such portion of such
financing would have cost had all such guarantees been released at such
time and (y) any increased cost of existing indebtedness of Industries or
Entertainment arising as a result of the failure to have all guarantees
released at such time. Each of Entertainment and Industries agrees to give
Micro 75 days prior written notice of the incurrence by it of any
indebtedness (other than indebtedness incurred pursuant to facilities
entered into as of the Effective Time) subject to reimbursement as
described above. Such written notice shall set forth the proposed amount
of such indebtedness and shall specify the material terms and conditions of
such indebtedness being proposed at such time, to the extent known by
Entertainment or Industries at the time of such notice. Fees payable to
Industries and Entertainment pursuant to Schedule 4.5 for any month shall
be allocated between them in accordance with their relative book values as
of the end of the prior month.
SECTION 4.6. Public Announcements. The parties agree to
consult with each other before issuing any press release or making any public
statement with respect to this Agreement, the Ancillary Agreements or the
consummation of the transactions contemplated hereby and thereby and, except
as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make
any such public statement without the prior written consent of all of the
parties hereto, which will not unreasonably be withheld.
SECTION 4.7. Notices of Certain Events. Each party hereto
shall promptly notify each other party of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened, against, relating to or
involving or otherwise affecting such party challenging this
Agreement or any Ancillary Agreement or the transactions contemplated
hereby or thereby or seeking to prohibit, alter, prevent or
materially delay the Effective Time; and
(iv) any materially adverse developments affecting the
business and operations of such party which become known to it,
including without limitation any change which has had or is
reasonably likely to have a Material Adverse Effect on such party.
ARTICLE 5
SURVIVAL; INDEMNIFICATION
SECTION 5.1. Survival. The representations and warranties
of the parties hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall not
survive the Effective Time. The covenants and agreements to be performed
hereunder shall remain in full force and effect in accordance with their
terms (or, if no survival period is specified, indefinitely).
Notwithstanding the preceding sentence, any covenant or agreement in
respect of which indemnity may be sought under this Agreement shall survive
the time at which it would otherwise terminate pursuant to the preceding
sentence, if notice of the breach thereof giving rise to such right to
indemnity shall have been given to the party against whom such indemnity
may be sought prior to such time.
SECTION 5.2. Indemnification. Each party hereby
indemnifies each other party and its Affiliates against and agrees to hold
each of them harmless from any and all damage, loss, liability and expense
(including without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit
or proceeding, including any expenses incurred in connection with the
enforcement of rights of any party pursuant to this Agreement)
(collectively, "Loss") incurred or suffered by such other party or any of
its Affiliates arising out of:
(i) any breach of any covenant or agreement to be performed
by such party pursuant to this Agreement; and
(ii) the failure of such party to perform its obligations with
respect to any liability assumed (or retained) by such party pursuant
to Section 3.1.
SECTION 5.3. Procedures. (a) The party seeking
indemnification under Section 5.2 (the "Indemnified Party") shall give prompt
written notice to the party against whom indemnity is sought (the
"Indemnifying Party") of any claim, assertion, event or proceeding of which
such Indemnified Party has knowledge concerning any Loss as to which such
Indemnified Party may request indemnification under such Section; provided
that the failure to give such notice shall not relieve the Indemnifying Party
from any liability under Section 5.2, except to the extent that the
Indemnifying Party has been prejudiced by such failure.
(b) With respect to any such claim or proceeding by or in
respect of a third party, the Indemnifying Party shall have the right to
direct, through counsel of its own choosing, reasonably satisfactory to the
Indemnified Party, the defense or settlement thereof at its own expense. If
the Indemnifying Party elects to assume the defense of any such claim or
proceeding, the Indemnifying Party thereby waives its right to contest its
obligation to indemnify the Indemnified Party pursuant to this Section with
respect to such claim or proceeding and the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall
be paid by the Indemnified Party. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its records and personnel
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with the Indemnifying Party in
the defense or settlement thereof, and the Indemnifying Party shall reimburse
the Indemnified Party for all of its reasonable out-of-pocket expenses in
connection therewith. Upon assumption of the defense of any such claim or
proceeding by the Indemnifying Party, the Indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability for so long as the Indemnifying Party is diligently defending such
claim or demand, unless the Indemnifying Party consents in writing to such
payment or unless a final judgment from which no appeal may be taken is
entered against the Indemnified Party for such liability. If the Indemnifying
Party shall fail to assume and pursue the defense, the Indemnified Party shall
have the right to undertake the defense or settlement thereof at the
Indemnifying Party's expense (subject to the liability of the Indemnifying
Party pursuant to Section 5.2). No third party claim may be settled by the
Indemnified Party without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. Any such settlement shall include
as an unconditional term thereof the giving by the claimant or the plaintiff
to the Indemnified Party of a release of the Indemnified Party from all
liability in respect of such claim; provided that if the Indemnifying Party
submits to the Indemnified Party a bona fide settlement offer from the third
party claimant of any claim (which settlement offer shall include as an
unconditional term of it the release by the claimant or the plaintiff to the
Indemnified Party from all liability in respect of such claim) and the
Indemnified Party refuses to consent to such settlement, then thereafter the
Indemnifying Party's liability to the Indemnified Party for indemnification
with respect to such claim shall not exceed the settlement amount included in
said bona fide settlement offer, and the Indemnified Party shall either assume
the defense of such claim or pay the Indemnifying Party's attorney's fees and
other out-of-pocket costs incurred thereafter in continuing the defense of
such claim.
(c) Each payment made pursuant to Section 5.2 of an amount
equal to $1,000,000 or more shall be made promptly following final
determination of such claim and each such payment of an amount of less than
$1,000,000 shall be made no later than the end of the calendar quarter next
following the date on which the amount of such claim was finally determined.
Any such payment shall be limited to the amount of any liability or damage
that remains after deducting therefrom any indemnity, contribution or other
similar payment recoverable by the Indemnified Party from any third party with
respect thereto.
ARTICLE 6
TERMINATION
SECTION 6.1. Grounds for Termination. This Agreement shall
terminate in its entirety upon the termination of the Exchange Agreement
pursuant to Section 7.6(a) of the Exchange Agreement. Section 4.1 of this
Agreement shall terminate upon the termination of the Exchange Agreement
pursuant to Section 7.6(b) of the Exchange Agreement.
SECTION 6.2. Effect of Termination. If this Agreement is
terminated as permitted by Section 6.1, such termination shall be without
liability of any party (or any stockholder, director, officer, employee,
agent, member, consultant or representative of such party) to the other
parties to this Agreement.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Headings. The headings in this Agreement are
for convenience of reference only and shall not control or affect the
meaning or construction of any provision hereof.
SECTION 7.2. Entire Agreement. This Agreement, the
Ancillary Agreements, the Exchange Agreement, the Related Agreements (as
defined in the Exchange Agreement) and the Board Representation Agreement
(as defined in the Exchange Agreement) constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. This Agreement and such other agreements
supersede all prior agreements and understandings between the parties
hereto with respect to the subject matter hereof and thereof.
SECTION 7.3. Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing (including telecopier or similar writing) and
shall be given to such party at its address set forth on the signature
pages hereof, or to such other address as the party to whom notice is to be
given may provide in a written notice to the party giving such notice, a
copy of which written notice shall be on file with the Secretary of
Industries. If notice is given pursuant to this Section of a permitted
successor or assign of a party to this Agreement, then notice shall
thereafter be given as set forth above to such successor or assign of such
party to this Agreement. Each such notice, request or other communication
shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified on the signature pages hereof
and electronic or oral confirmation of receipt is received, (ii) if given
by mail, at the close of business on the third business day hours after
such communication is deposited in the mails with first class postage
prepaid addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 7.3.
SECTION 7.4. Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee without regard to the conflicts of law rules of such state.
SECTION 7.5. Severability. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability of the remainder
of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted
by law.
SECTION 7.6. Successors, Assigns, Transferees. No party
may assign or otherwise transfer any of its rights under this Agreement
without the consent of each other party. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns. Neither this
Agreement nor any provision hereof shall be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement,
those who agree to be bound hereby and their respective successors and
permitted assigns.
SECTION 7.7. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 7.8. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 7.9. Consent to Jurisdiction. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of any Tennessee
State Court or United States Federal Court sitting in the Middle District
of Tennessee over any suit, action or proceeding arising out of or relating
to this Agreement. Each party hereto waives any right it may have to
assert the doctrine of forum non conveniens or to object to venue to the
extent any proceeding is brought in accordance with this Section 7.9.
Nothing in this paragraph shall affect or limit any right to serve process
in any manner permitted by law, to bring proceedings in the courts of any
jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
▇▇▇▇▇▇ INDUSTRIES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-President
One Belle ▇▇▇▇▇ Place
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ MICRO INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ENTERTAINMENT INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman & President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
