RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of November 26, 1996, by and among
Canberra Industries, Inc.,
CII Acquisition LLC,
and each of
the Management Stockholders
(as defined herein) signatories hereto.
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS......................................................1
1.1 Definitions......................................................1
1.2 Other Defined Terms..............................................4
1.3 Interpretation...................................................6
SECTION 2. THE RECAPITALIZATION AND STOCK PURCHASES.........................6
2.1 Buyer's Purchase of New Shares...................................6
2.2 Company Redemption of Shares.....................................6
2.3 Options..........................................................7
2.4 Buyer's Purchase of Management Shares............................7
SECTION 3. CLOSING..........................................................8
3.1 The Closing......................................................8
3.2 Deliveries.......................................................8
(a) (i) The Company to Buyer.................................8
(ii) Buyer to the Company.................................8
(b) (i) The Company to the Paying Agent......................8
(ii) The Paying Agent to the Company......................8
(c) (i) Buyer to the Management Stockholders.................8
(ii) Management Stockholders and Related Stockholders to
Buyer................................................9
(d) (i) The Company and Buyer to the Optionholders...........9
(ii) Optionholders to the Company.........................9
(e) Withholding Rights.........................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER..........................9
4.1 Organization and Corporate Power.................................9
4.2 Authorization; No Breach.........................................9
4.3 Litigation......................................................10
4.4 Brokerage.......................................................10
4.5 Governmental Consents, etc......................................10
4.6 No Knowledge of Misrepresentations or Omissions.................10
4.7 Investment Intent...............................................11
4.8 Financing Commitment............................................11
4.9 Equity Commitment...............................................11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................11
5.1 Organization and Corporate Power................................11
5.2 Subsidiaries....................................................12
5.3 Authorization; No Breach........................................12
5.4 Capital Stock...................................................13
5.5 Financial Statements............................................13
5.6 Absence of Certain Developments.................................14
5.7 Title to Properties.............................................15
5.8 Tax Matters.....................................................16
5.9 Contracts and Commitments.......................................17
5.10 Proprietary Rights..............................................18
5.11 Litigation......................................................18
5.12 Brokerage.......................................................19
5.13 Governmental Consents, etc. ....................................19
5.14 Employee Benefit Plans..........................................19
5.15 Insurance.......................................................22
5.16 Compliance with Laws............................................22
5.17 Environmental Compliance and Conditions.........................22
5.18 Banking and Agency Arrangements.................................24
5.19 Fairness Opinion................................................24
5.20 Tender Offer....................................................24
5.21 Stockholder Commitments.........................................25
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT
STOCKHOLDERS..........................................................25
6.1 Authority and Related Matters...................................25
SECTION 7. PRECLOSING COVENANTS............................................26
7.1 Conduct of the Business.........................................26
7.2 Access to Books and Records.....................................26
7.3 Notification....................................................27
7.4 Action..........................................................27
7.5 Exclusive Dealing...............................................28
7.6 Agreement to Merge..............................................28
7.7 Buyer Members...................................................29
SECTION 8. AFFIRMATIVE COVENANTS OF BUYER..................................29
8.1 Action..........................................................29
8.2 Confidentiality.................................................29
SECTION 9. CONDITIONS OF CLOSING...........................................29
9.1 Conditions to Obligations of Buyer..............................29
(a) Representations and Warranties of the Company.............29
(b) Compliance With Agreement.................................29
(c) No Proceedings............................................29
(d) Approvals.................................................30
(e) Resignations..............................................30
(f) Solvency Opinion..........................................30
(g) Required Consents; HSR Act................................30
(h) Redemption and Stock Purchases............................30
(i) Management Agreements.....................................30
(j) Paying Agency Agreement...................................30
(k) Opinion...................................................31
(l) Organizational Documents..................................31
(m) Recapitalization Accounting...............................31
(n) Financing.................................................31
9.2 Conditions to Obligations of the Company........................31
(a) Representations and Warranties of Buyer...................31
(b) Compliance With Agreement.................................32
(c) No Proceedings............................................32
(d) Solvency Opinion..........................................32
(e) Required Consents; HSR Act................................32
(f) Financing.................................................32
(g) Purchase of New Shares....................................32
(h) Stockholder and Optionholder Deliveries...................32
(i) Purchase of Management Shares.............................32
(j) Opinion...................................................33
(k) Organizational Documents..................................33
(l) Recapitalization Accounting...............................33
9.3 Condition to Obligations of the Management Stockholders.........33
(a) Representations and Warranties of Buyer...................33
(b) Compliance With Agreement.................................33
(c) No Proceedings............................................33
(d) Solvency Opinion..........................................34
(e) Redemptions, Repurchases and Purchases....................34
(f) Purchase of New Shares....................................34
(g) Management Agreements.....................................34
(h) Management Bonus..........................................34
SECTION 10. ADDITIONAL COVENANTS OF THE PARTIES.............................34
10.1 Confidentiality of Information..................................34
10.2 Books and Records...............................................35
10.3 Notification....................................................35
10.4 Director and Officer Liability and Indemnification..............35
10.5 Regulatory Filings..............................................36
10.6 Contact with Customers and Suppliers............................36
10.7 Solvency Opinion................................................36
10.8 Survival........................................................36
10.9 Paying Agency Agreement.........................................36
10.10 Limitation of Recourse..........................................36
10.11 Disclosure Generally............................................37
10.12 Acknowledgment by Buyer.........................................37
10.13 Transfer and Similar Taxes......................................38
10.14 Further Assurances..............................................38
10.15 Appointment of New Board........................................38
10.16 Waiver of Certain Rights........................................38
10.17 New Option Plan.................................................38
10.18 ESOP............................................................39
10.19 Retirement Plans................................................39
10.20 Prohibition.....................................................39
10.21 Exchange of Shares..............................................39
10.22 Related Stockholder Commitments.................................39
SECTION 11. TERMINATION.....................................................40
11.1 Termination.....................................................40
11.2 Effect of Termination...........................................40
SECTION 12. MISCELLANEOUS...................................................40
12.1 Notices.........................................................40
12.2 Entire Agreement................................................42
12.3 Assignability and Amendments....................................42
12.4 Waiver..........................................................42
12.5 Governing Law...................................................42
12.6 Captions........................................................42
12.7 Press Releases and Communications...............................43
12.8 Counterparts....................................................43
12.9 Expenses........................................................43
12.10 Severability....................................................43
EXHIBITS:
Exhibit A - Form of Support Agreement
Exhibit B - Description of Charter Amendment
Exhibit C - Agreement and Plan of Merger
Exhibit D - Form of Stockholders' Agreement
SCHEDULES:
Schedule of Rollover Options
Schedule of Other Continuing Stockholders
Recapitalization and Stock Purchase Schedule
Section 2.1 : Buyer's Purchase of New Shares
Section 2.2 : Company Redemption of Shares
Section 2.3 : Company Repurchase of Options
Section 2.4 : Buyer's Purchase of Management Shares
Disclosure Schedule
Section 4.8 : Financing Commitment
Section 4.9 : Equity Commitment
Section 5.1 : Organization and Corporate Power
Section 5.2 : Subsidiaries
Section 5.4 : Capital Stock
Section 5.5 : Financial Statements
Section 5.6 : Absence of Certain Developments
Section 5.7 : Title to Properties
Section 5.8 : Tax Matters
Section 5.9 : Contracts and Commitments
Section 5.10 : Proprietary Rights
Section 5.11 : Litigation
Section 5.13 : Governmental Consents, etc.
Section 5.14 : Employee Benefit Plans
Section 5.15 : Insurance
Section 5.17 : Environmental Compliance and Conditions
Section 5.18 : Banking and Agency Arrangements
Section 6.1 : Authority and Related Matters
Section 9.1(g) : Required Consents; HSR Act
Section 9.2(f) : Required Consents; HSR Act
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
THIS RECAPITALIZATION AND STOCK PURCHASE AGREEMENT (this
"Agreement") made and entered into as of November 26, 1996, by and among CII
Acquisition LLC, a Delaware limited liability company ("Buyer"), Canberra
Industries, Inc., a Delaware corporation (the "Company"), and each of the
Management Stockholders (as defined below) signatories hereto.
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Company and the Management
Stockholders, and the Company and the Management Stockholders desire to sell to
Buyer, shares of the Company's Common Stock, and the Company desires to
repurchase from the Non-Management Stockholders shares of its Common Stock such
that Buyer shall own, immediately following the closing of the transactions
provided for in this Agreement, between 67.9% and 70.8% of the Fully Diluted, as
hereinafter defined, shares of the Company's Common Stock, and the Management
Stockholders and the Other Continuing Stockholders together shall own between
32.1% and 29.2% of the Fully Diluted shares of the Company's Common Stock; and
WHEREAS, it is intended that the transactions contemplated hereby be
recorded as a recapitalization for financial reporting purposes.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by all of the parties to this
Agreement, the parties to this Agreement agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions. The following terms shall have the following respective
meanings:
"Agreement" shall mean this Recapitalization and Stock Purchase
Agreement, including all schedules and exhibits hereto (each of which is hereby
incorporated as a part of this Agreement) and amendments hereto or thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement between Stonington Partners, Inc. and the Company dated July 25, 1996.
"Foreign Subsidiary Reorganization" shall mean the possible
restructuring of foreign Subsidiaries before Closing in a manner to be agreed
upon between Buyer and the
Company.
"Fully Diluted", when used with reference to shares of the Common
Stock of the Company, shall mean the number of issued and outstanding shares of
Common Stock (including therein Unvested Shares) plus the number of shares of
Common Stock issuable upon exercise of Options outstanding at the relevant time
(without taking into account new shares issuable pursuant to options under the
New Option Plan).
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"Management Bonus" shall mean the aggregate amount accruing through
the Closing Date and payable to the Management Stockholders pursuant to (i) the
customary executive bonus pool established by the Company in aggregate amount
not more than $1.5 million for U.S. employees and $250,000 for non-U.S.
employees, and (ii) a special bonus pool of not more than $1.2 million.
"Management Stockholder Representatives" shall mean both of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Management Stockholders" shall mean, collectively, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Staf van Cauter, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and "Management Stockholder" shall mean each of such Persons,
individually.
"Material Adverse Effect" shall mean, with respect to any event,
matter, condition or circumstance, a material adverse effect upon the financial
condition, operating results, business or prospects of the Company and its
Subsidiaries, or such other relevant entity, taken as a whole, or upon the
ability of any party hereto to consummate the transactions contemplated hereby.
"Non-Management Stockholders" shall mean all record holders of any
outstanding shares of Common Stock, other than the Management Stockholders.
"Other Continuing Stockholders" shall mean, collectively, such
Non-Management Stockholders as shall be determined by the Company and reasonably
approved by Buyer and who shall sign an agreement ("Exchange Agreement"), in
form reasonably satisfactory to the Company and Buyer agreeing to exchange his
Other Continuing Stockholder Retained Shares for shares of New Common Stock if
the charter amendment described in Section 7.6(a) shall become effective;
provided that the number of Other Continuing Stockholder Retained Shares,
together with the number of Management Retained Shares, shall, in the aggregate,
be
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more than 1,053,303 but less than 1,188,135 (in each case excluding Rollover
Options). The Company shall prepare and submit to Buyer a Schedule of Other
Continuing Stockholders (the "Schedule of Other Continuing Stockholders") at
least 5 days before the Closing identifying each of the Other Continuing
Shareholders and the number of Other Continuing Shareholder Retained Shares to
be retained by each of them. Such Schedule shall be subject to the reasonable
approval of Buyer.
"Paying Agency Agreement" shall mean that certain Paying Agency
Agreement by and among the Company and the Paying Agent, whereby the Paying
Agent will be appointed to perform certain actions on behalf of the Stockholders
and Optionholders in connection with the transactions contemplated hereby.
"Paying Agent" shall mean a paying agent to be agreed upon by the
Company and Buyer, acting pursuant to the terms of the Paying Agency Agreement.
"Person" shall include any individual, corporation, trust, estate,
partnership, joint venture, company, limited liability company, organization or
association (whether incorporated or not), governmental bureau, department or
agency thereof, or other entity of whatsoever kind or nature.
"Rollover Options" shall mean Options for an aggregate of 300,000
shares of Common Stock held by Optionholders listed on the Schedule of Rollover
Options (the "Schedule of Rollover Options"), in the amounts and at the strike
prices enumerated for each Optionholder thereon, such that an average exercise
price of all Rollover Options shall be between $10.00 and $10.50 per share. The
Company shall prepare and submit to Buyer the Schedule of Rollover Options at
least 5 days before the Closing identifying each of the Optionholders to hold
Rollover Options and the number of such Rollover Options. Such Schedule shall be
subject to the reasonable approval of Buyer.
"Security Interest" shall mean any mortgage, pledge, security
interest, encumbrance, adverse claim, charge or other lien, other than (i)
mechanic's, materialmen's and similar liens arising in the ordinary course of
business, (ii) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, provided
that in either case adequate reserves are being maintained in accordance with
GAAP, (iii) liens arising under worker's compensation, unemployment insurance,
social security, retirement and similar legislation, (iv) liens on goods in
transit incurred pursuant to those documentary letters of credit listed on the
Disclosure Schedule and (v) purchase money liens and liens securing rental
payments under those capital lease arrangements listed on the Disclosure
Schedule, if any.
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"Share Purchase Price" shall mean $22.25 per share.
"Stockholders" shall mean all of the Management Stockholders and the
Non-Management Stockholders collectively.
"Subsidiary" of a Person shall mean a corporation controlled by such
Person, directly or indirectly through one or more intermediaries.
"Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property ad valorem/personal property, stamp,
excise, occupation, sales, use, transfer, value added, alternative minimum,
estimated or other tax, including any interest, penalty or addition thereto,
whether disputed or not.
"Tax Returns" means any return, report, information return or other
document (including schedules or any related or supporting information) filed or
required to be filed with any governmental entity or other authority in
connection with the determination, assessment, payment or collection of any Tax
or the administration of any laws, regulations or administrative requirements
relating to any Tax.
1.2 Other Defined Terms. The capitalized terms set forth below are defined
in the following sections of this Agreement:
Defined Term Section
------------ -------
Agreement..................................................Preface
Buyer......................................................Preface
Buyer Member...................................................4.1
Buyer's Representatives........................................7.2
Cancelled Options...........................................2.3(a)
Closing........................................................3.1
Closing Date...................................................3.1
Common Stock...................................................5.4
Company....................................................Preface
Disclosure Schedule...................................Preface to 5
Environmental Claim...........................................5.17
Environmental Laws............................................5.17
Environmental Permits.........................................5.17
Equity Commitment..............................................4.9
ESOP.........................................................10.18
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ERISA......................................................5.14(a)
Financing Letters..............................................4.8
Fund...........................................................4.1
Hazardous Materials...........................................5.17
HSR Act........................................................4.5
Latest Balance Sheet...........................................5.5
Leases......................................................5.7(b)
Management Agreements.......................................9.1(i)
Management Option Shares....................................2.3(b)
Management Retained Shares.....................................2.4
Management Shares..............................................2.4
Merger.........................................................7.6
Merger Agreement...............................................7.6
Multiemployer Plan.........................................5.14(f)
Multiple Employer Plan.....................................5.14(f)
New Common Stock............................................7.6(a)
New Option Plan..............................................10.17
New Shares.....................................................2.1
Notices.......................................................12.1
Optionholders..................................................5.4
Options........................................................5.4
Other Continuing Stockholder Retained Shares...................2.2
Owned Property.................................................5.7
Pension Plans..............................................5.14(a)
Permits.......................................................5.13
Permitted Encumbrances.........................................5.7
Plans......................................................5.14(a)
Proprietary Rights............................................5.10
Recapitalization and Stock Purchase Schedule...................2.2
Redemption Shares..............................................2.2
Related Stockholders...........................................2.4
Retirement Plans.............................................10.19
Revised Disclosure Schedule....................................7.3
Rollover Options...............................................2.3
Securities Act.................................................4.6
SERPs.......................................................7.1(b)
Tender Offer...................................................2.2
Tender Offer Documents........................................5.20
Unvested Shares................................................5.4
Welfare Plans..............................................5.14(a)
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1.3 Interpretation. The following rules shall be used in interpreting this
Agreement:
(a) the language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any Person;
(b) the descriptive headings of this Agreement are inserted for
convenience only and do not constitute a Section of this Agreement;
(c) the use of the word "including" in this Agreement shall be by
way of example rather than by limitation; and
(d) "the Company's knowledge" shall mean the actual knowledge of any
of the Management Stockholders.
SECTION 2. THE RECAPITALIZATION AND STOCK PURCHASES
Subject to the terms and conditions set forth herein (including the
conditions set forth in Sections 9.1 and 9.2):
2.1 Buyer's Purchase of New Shares. At the Closing, (a) the Company shall
issue and sell to Buyer, and Buyer shall purchase from the Company, for a
purchase price per share equal to the Share Purchase Price, an aggregate number
of shares of Common Stock (the "New Shares") equal to 4,634,202, less the sum of
(i) the aggregate number of Management Shares which Buyer is obligated to
purchase pursuant to Section 2.4 below, (ii) the aggregate number of Other
Continuing Stockholder Retained Shares, (iii) the aggregate number of Management
Retained Shares, and (iv) a number of shares equal to the number of shares
issuable upon exercise of the Rollover Options; and (b) the Company shall issue
and deliver to Buyer a certificate or certificates, registered in the name of
Buyer, evidencing such New Shares against payment in full of the purchase price
therefor.
2.2 Company Redemption of Shares. As soon as reasonably practicable after
the date hereof, the Company shall commence a tender offer to purchase from each
Non-Management Stockholder, at a price per share equal to the Share Purchase
Price (the "Tender Offer") all shares of Common Stock and all Options held by
such Non-Management Stockholder other than (i) the aggregate number of shares to
be retained by Other Continuing Stockholders ("Other Continuing Stockholder
Retained Shares") as enumerated for each such Other Continuing Stockholder on
the Schedule of Other Continuing Stockholders, and (ii) all Rollover Options
held by Non-Management Stockholders. At the Closing, the Company shall redeem
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each share of Common Stock issued and outstanding immediately prior to the
Closing that is tendered pursuant to the Tender Offer (the "Redemption Shares")
at a redemption price per share equal to the Share Purchase Price.
2.3 Options.
(a) At the Closing, the Company shall cancel all Options held by
Non-Management Stockholders other than Rollover Options, (the "Cancelled
Options"), in exchange for a price per share of Common Stock issuable upon
exercise of each such Cancelled Option equal to the Share Purchase Price minus
the exercise price per share of Common Stock for such Repurchased Option.
(b) Immediately prior to Closing, the Management Stockholders shall
exercise all Options other than Rollover Options held by them and the Company
shall issue to such Management Stockholders the shares of Common Stock issuable
upon exercise of such Options ("Management Option Shares").
(c) The Rollover Options shall not be cancelled and shall remain
outstanding after the Closing.
2.4 Buyer's Purchase of Management Shares. At the Closing, the Management
Stockholders shall sell, and shall cause their Related Stockholders (as
hereinafter defined) to sell to Buyer, and Buyer shall purchase from the
Management Stockholders and Related Stockholders, for a per share purchase price
equal to the Share Purchase Price, shares of Common Stock held by such
Management Stockholders (which may include Management Option Shares) and Related
Stockholders (together the "Management Shares") as set forth on the
Recapitalization and Stock Purchase Schedule (the "Recapitalization and Stock
Purchase Schedule"). Management Shares (i) shall include all shares of Common
Stock held by the Management Stockholders other than the aggregate number of
shares to be retained by Management Stockholders and Related Stockholders
(together the "Management Retained Shares") as enumerated for each Management
Stockholder on the Recapitalization and Stock Purchase Schedule, and (ii) may
include the shares of any Persons related to Management Stockholders (including,
without limitation, in a manner specified in Section 318 of the Code) ("Related
Stockholders") to the extent so specified in the Recapitalization and Stock
Purchase Schedule. The Company may from time to time up to 5 days before Closing
revise the information referred to herein on the Recapitalization and Stock
Purchase Schedule by delivering to Buyer a revised Schedule; provided that the
number of Management Retained Shares, together with the number of Other
Continuing Stockholder Retained Shares, shall, in the aggregate, be more than
1,053,303 but less than 1,188,135 (in each case excluding Rollover Options). Any
such revised Schedule shall be subject to Buyer's consent, which shall not be
unreasonably
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withheld.
SECTION 3. CLOSING
3.1 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Day, ▇▇▇▇▇ & ▇▇▇▇▇▇, CityPlace I,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on February 15, 1997, or such
other date and place as the parties may agree in writing. The date of the
Closing is referred to herein as the "Closing Date."
3.2 Deliveries. At the Closing, subject to the terms and conditions set
forth herein (including the conditions set forth in Section 9 hereof) each party
hereto shall deliver to the appropriate parties hereto each of the documents,
instruments or evidences of satisfaction of conditions required to be delivered
by such party as a condition to Closing pursuant to Section 9 of this Agreement,
in form and substance reasonably satisfactory to the recipient thereof and its
counsel. In addition, the following deliveries shall be made at the Closing:
(a) (i) The Company to Buyer. The Company shall deliver to Buyer
certificates representing the New Shares to be purchased by Buyer pursuant to
Section 2.1 hereof. All such New Shares shall be free and clear of any and all
Security Interests (as such term is defined, without giving effect to the
exceptions set forth in clauses (i) through (v) thereof).
(ii) Buyer to the Company. Buyer shall deliver to the Company,
by wire transfer of immediately available funds, the aggregate amount set forth
in Section 2.1 hereof as the purchase price for the New Shares.
(b) (i) The Company to the Paying Agent. The Company shall deliver
to the Paying Agent, as agent for the Non-Management Stockholders, the purchase
price for the Redemption Shares of Non-Management Stockholders as set forth in
Section 2.2, by wire transfer of immediately available funds.
(ii) The Paying Agent to the Company. The Paying Agent, on
behalf of each Non-Management Stockholder, shall deliver to the Company for
cancellation all certificates representing Redemption Shares held by such
Non-Management Stockholder immediately prior to the Closing.
(c) (i) Buyer to the Management Stockholders. Buyer shall deliver to
each Management Stockholder and Related Stockholder the purchase price for the
Management Shares as set forth in Section 2.4 to be sold to Buyer by such
Management Stockholder or
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Related Stockholder, by wire transfer of immediately available funds.
(ii) Management Stockholders and Related Stockholders to
Buyer. Each Management Stockholder shall deliver, and shall cause their Related
Stockholders to deliver, to Buyer the certificate or certificates evidencing the
Management Shares to be sold to Buyer by such Management Stockholder or Related
Stockholder, duly endorsed for transfer or with properly executed stock powers,
together with any and all necessary documentary or transfer tax stamps duly
affixed and cancelled, free and clear of any and all Security Interests (as such
term is defined, without giving effect to the exceptions set forth in clause (i)
through (v) thereof).
(d) (i) The Company and Buyer to the Optionholders. The Company and
Buyer shall deliver to the Optionholders the price being paid in exchange for
the Cancelled Options of the Optionholders as set forth in Section 2.3, by wire
transfer of immediately available funds.
(ii) Optionholders to the Company. Each Optionholder shall
deliver to the Company for cancellation all documents or instruments (if any)
representing all Cancelled Options held by such Optionholder.
(e) Withholding Rights. The Company shall be entitled to deduct and
withhold from the amounts payable pursuant to this Agreement to any Optionholder
such amounts as the Company is required to deduct and withhold with respect to
the making of such payment under applicable tax law. Any amounts so deducted and
withheld pursuant to this Section 3.2(e) shall be paid over to the appropriate
taxing authority when due. To the extent that amounts are so deducted and
withheld by the Company, such amounts shall be treated for all purposes of this
Agreement as having been paid to the relevant Optionholder.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
4.1 Organization and Corporate Power. Buyer is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority and all
authorizations, licenses and permits necessary to own and operate its properties
and to carry on its businesses as now conducted, if any, except where the
failure to hold such authorizations, licenses and permits could not reasonably
be expected to have a Material Adverse Effect. Stonington Capital Appreciation
1994 Fund, L.P., a Delaware limited partnership (the "Fund"), is the sole member
of Buyer ("Buyer Member") and the managing member of Buyer.
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4.2 Authorization; No Breach. The execution, delivery and performance of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby have been approved by all necessary action on the part of Buyer and Buyer
Member and do not conflict with or result in any material breach of, or
constitute a material default under, result in a material violation of, result
in the creation of any material Security Interest upon any material assets of
Buyer or the Buyer Member, or, except as provided in Section 4.5, require any
material authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body under, the provisions of Buyer's
limited liability company agreement or any material indenture, mortgage, lease,
loan agreement or other material agreement or instrument to which Buyer or the
Buyer Member is bound, or any material law, statute, rule, regulation, order,
judgment or decree to which Buyer or any Buyer Member is subject. None of the
foregoing items shall be deemed to be "material" unless the failure to meet the
requirements thereof could reasonably be expected to have a Material Adverse
Effect. Assuming that this Agreement is a valid and binding obligation of the
Company and the other parties hereto, this Agreement constitutes a valid and
binding obligation of Buyer, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, similar laws of debtor relief
and general principles of equity.
4.3 Litigation. There are no actions, suits or proceedings pending or, to
Buyer's knowledge, threatened in writing against Buyer or the Buyer Member, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could reasonably be likely to have a Material Adverse
Effect.
4.4 Brokerage. There are no claims against the Company for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated hereby based on any agreement made by or on behalf of
Buyer or the Buyer Member.
4.5 Governmental Consents, etc. Except for the applicable requirements of
(i) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"),
(▇▇) the Atomic Energy Act relating to materials licenses, and (iii) the
regulations thereunder, to Buyer's knowledge, no material permit, consent,
approval or authorization of, or declaration to or filing with, any governmental
or regulatory authority is required in connection with any of the execution,
delivery or performance of this Agreement by Buyer or the consummation by Buyer
of any other transaction contemplated hereby.
4.6 No Knowledge of Misrepresentations or Omissions. Except as may be
disclosed to the Company in writing, Buyer has no actual knowledge that any of
the
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representations and warranties of the Company in this Agreement, the Disclosure
Schedule and the Revised Disclosure Schedule hereto are not true and correct in
all material respects, and Buyer has no actual knowledge of any material errors
in, or material omissions from, the Disclosure Schedule or the Revised
Disclosure Schedule to this Agreement.
4.7 Investment Intent. Buyer is acquiring the Common Stock hereunder for
its own account with the present intention of holding such for investment
purposes and not with a view to or for sale in connection with any public
distribution of the Common Stock in violation of any federal or state securities
laws. Buyer is an "accredited investor" (as such term is defined under
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). A duly authorized officer or director of the Managing Member
of Buyer who is sophisticated in financial matters and is able to evaluate the
risks and benefits of Buyer's investment in the Common Stock has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of the Common Stock, has had full access to such other information
concerning the Company as Buyer has requested and possesses substantial
information about, and familiarity with, the Company as a result of the
information provided. Buyer acknowledges that the Common Stock is being issued
and sold under exemptions from registration provided in the Securities Act and
under applicable state securities laws and, therefore, cannot be sold unless
subsequently registered under the Securities Act or applicable state securities
laws or an exemption from such registration is available, and that the
certificates representing the Common Stock purchased pursuant to this Agreement
will be imprinted with a legend to such effect.
4.8 Financing Commitment. Attached as Section 4.8 of the Disclosure
Schedule are financing letters obtained by Buyer (the "Financing Letters"). The
financing outlined in the Financing Letters is sufficient to fund the purchase
of the Redemption Shares and the Cancelled Options and to consummate the other
transactions contemplated hereby. Upon execution and acceptance thereof by the
parties thereto, such Financing Letters, from Bank of America National Trust and
Savings Association and BA Securities, Inc., and from CIBC Wood Gundy Securities
Corp. and CIBC Inc., shall be binding upon and enforceable against the parties
thereto in accordance with their terms.
4.9 Equity Commitment. Attached hereto as Section 4.9 of the Disclosure
Schedule is an equity commitment letter setting forth, among other things, the
binding commitment of the Buyer Member to provide $71.5 million of equity to
Buyer to consummate the transactions described herein subject to the conditions
set forth therein.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that, except as disclosed on
the Disclosure Schedule attached hereto (the "Disclosure Schedule"):
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5.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
The Company and each of its Subsidiaries has all requisite corporate power and
authority and all authorizations, licenses and permits necessary to own and
operate its properties and to carry on its businesses as now conducted, except
where the failure to hold such authorizations, licenses and permits could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company is qualified to do business and is in good standing
in each of the jurisdictions listed in Section 5.1 of the Disclosure Schedule.
Those jurisdictions are the only jurisdictions in which the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.2 Subsidiaries. The Disclosure Schedule lists every Subsidiary of the
Company and every stock, partnership, member, joint venture or other equity
interest owned by the Company or any of its Subsidiaries in any other
corporation, partnership, organization or entity or any rights to acquire the
same (excluding any such interest amounting to less than 1% of the equity of the
entity). Each of the Company's Subsidiaries is qualified to do business and is
in good standing in each of the jurisdictions listed in Section 5.2 of the
Disclosure Schedule. Those jurisdictions are the only jurisdictions in which the
ownership or leasing of such Subsidiary's properties or the conduct of such
Subsidiary's business requires such qualification, except where the failure to
be so qualified could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. All of the outstanding capital stock
of each of the Subsidiaries has been validly issued and is fully paid and
non-assessable. Except as disclosed in Section 5.2 of the Disclosure Schedule,
(i) there are no rights, subscriptions, warrants, options, conversion rights or
agreements of any kind outstanding to purchase or otherwise acquire any capital
stock or other securities of any of the Subsidiaries, and (ii) there are no
agreements or other obligations (contingent or otherwise) which require any of
the Subsidiaries to repurchase or otherwise acquire any of such Subsidiary's
capital stock or other securities. The Company or a Subsidiary owns directly the
amount of shares of capital stock of each of the Subsidiaries set forth in
Section 5.2 of the Disclosure Schedule as being owned by them, free of
pre-emptive and any subscription rights and from all Security Interests.
5.3 Authorization; No Breach. Except as set forth in Section 5.13, and
assuming the consents listed in the Disclosure Schedule pursuant to Section
5.09(d) have been obtained, the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby have been approved by all necessary corporate action on the part of the
Company's Board of Directors and do not conflict with or result in any material
-13-
breach of, or constitute a material default under, result in a material
violation of, result in the creation of any material Security Interest upon any
material assets of the Company or any of its Subsidiaries, or require any
material authorization, consent, approval, exemption or other action by or
notice to any third party or any court or other governmental body under, the
provisions of the Certificate of Incorporation or bylaws or any material
indenture, mortgage, lease, loan agreement or other material agreement or
instrument to which the Company or any Subsidiary is bound, or any material law,
statute, rule, regulation, order, judgment or decree to which the Company or any
Subsidiary is subject. None of the foregoing items shall be deemed to be
"material" unless the failure to meet the requirements thereof, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect. The Board of Directors of the Company, at a meeting duly called and
held, has determined that this Agreement and the transactions contemplated
hereby are fair to and in the best interests of the Stockholders, has approved
this Agreement and the transactions contemplated hereby and has recommended that
the Non-Management Stockholders tender shares of Common Stock held by them
pursuant to the Tender Offer. Assuming that this Agreement is a valid and
binding obligation of Buyer, this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, similar laws of debtor relief
and general principles of equity.
5.4 Capital Stock. The authorized number of shares of capital stock of the
Company consist of 15,000,000 shares of common stock, $.01 par value ("Common
Stock"), of which 12,146,352 shares are issued and outstanding on the date
hereof (including therein 104,141 shares that are restricted and subject to
unsatisfied vesting conditions ("Unvested Shares") and 777,869 shares are held
in treasury. Set forth on the Disclosure Schedule is a complete list of the
record holders of the Common Stock as shown on the records of the Company as of
the date hereof, together with the record number of shares held by each such
Stockholder as shown on the records of the Company. All of the outstanding
shares of Common Stock of the Company have been duly authorized and are validly
issued, fully paid (provided that Unvested Shares are subject to vesting
requirements) and nonassessable. The shares of Common Stock of the Company to be
issued pursuant to Section 2.1 hereof have been duly authorized and, when issued
and delivered against payment of the purchase price therefor in the manner set
forth in this Agreement, will be validly issued, fully paid and non-assessable.
The Company does not have any other capital stock, equity securities or
securities containing any equity features authorized, issued or outstanding, and
there are no agreements or other rights or arrangements existing or outstanding
which provide for the sale or issuance of any of the foregoing by the Company.
Except as is set forth in Section 5.4 of the Disclosure Schedule, (i) there are
no voting agreements, stockholder agreements or other similar agreements to
which the Company is a party or of which the Company is aware, (ii) there are no
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire any shares of Common Stock or
other equity securities of the Company of any kind, and (iii) there
-14-
are no agreements or other obligations (contingent or otherwise) which require
the Company to repurchase or otherwise acquire any shares of the Company's
Common Stock or other equity securities. The Disclosure Schedule sets forth the
amounts, holders and exercise price for all outstanding options to acquire
Common Stock from the Company ("Options") and the Persons who hold such Options
(the "Optionholders").
5.5 Financial Statements. The Company has furnished Buyer with copies of
(i) its unaudited consolidated balance sheet as of September 30, 1996, and the
related consolidated statement of income and consolidated statement of changes
in financial position for the nine-month period then ended (such balance sheet
is referred to herein as the "Latest Balance Sheet"), (ii) its audited
consolidated balance sheet and consolidated statements of income, consolidated
statements of stockholders' equity, and consolidated statements of cash flows,
for the fiscal years ended December 31, 1995 and December 31, 1994, together
with the notes thereto, and (iii) its unaudited consolidating balance sheet and
statement of income as of and for the nine-month period ended September 30,
1996. Such financial statements have been prepared in accordance with GAAP and
present fairly in all material respects the financial condition and results of
operations of the Company and its Subsidiaries as of the times and for the
periods referred to therein, subject in the case of the unaudited financial
statements to (i) the absence of footnote disclosures, (ii) changes resulting
from normal year-end adjustments and accruals, which adjustments and accruals
are consistent with those made or recorded in the prior year and (iii) the
Company does not prepare interim consolidated statements of cash flows. Except
to the extent specifically reserved against or reflected on the Latest Balance
Sheet or set forth in the Disclosure Schedule or otherwise contemplated by this
Agreement, the Company has no liabilities or obligations of any nature, whether
liquidated, unliquidated, absolute, contingent or otherwise which are or could
reasonably be expected to have a Material Adverse Effect.
5.6 Absence of Certain Developments. Except as otherwise contemplated by
this Agreement or as set forth in the Disclosure Schedule, since the date of the
Latest Balance Sheet, neither the Company nor any of its Subsidiaries has:
(a) borrowed any amount or incurred or become subject to any
material liabilities, except liabilities incurred in the ordinary course
of business, liabilities under contracts entered into in the ordinary
course of business and borrowings from banks (or similar financial
institutions) under existing credit facilities necessary to meet ordinary
course working capital requirements;
(b) mortgaged any of its real property, or, except in the ordinary
course of business, pledged or subjected to any Security Interest any
portion of its other assets;
(c) except in the ordinary course of business, sold, assigned or
transferred any
-15-
portion of its tangible assets;
(d) sold, assigned or transferred any material patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets;
(e) suffered any extraordinary losses or waived any rights of
material value;
(f) issued, sold or transferred any of its capital stock or other
equity securities, securities convertible into its capital stock or other
equity securities or warrants, options or other rights to acquire its
capital stock or other equity securities, or any bonds or debt securities;
(g) declared or paid any dividends or made any distributions on the
Company's capital stock or other equity securities or redeemed or
purchased any shares of the Company's capital stock or other equity
securities;
(h) increased the compensation, benefits or bonuses of any employee,
officer or director other than normal wage or salary increases granted in
the ordinary course of business;
(i) suffered any event, condition or circumstance that could
reasonably be likely to have a Material Adverse Effect;
(j) changed its accounting methods, principles or practices or
reversed any previously established accounting provisions, or realized any
extraordinary or non-recurring gain;
(k) failed to pay any material obligation of the Company or any of
its Subsidiaries, except any such obligation disputed in good faith;
(l) settled any pending or threatened litigation involving the
payment by the Company or any of its Subsidiaries of an amount exceeding
$250,000; or
(m) entered into any agreement, arrangement or understanding, or
otherwise resolved or committed, to do any of the foregoing.
5.7 Title to Properties.
(a) Set forth in Section 5.7 of the Disclosure Schedule is a list of
all fee simple interests in real property and improvements thereon owned by the
Company or any of its
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Subsidiaries (the "Owned Property"). Except as set forth in Section 5.7 of the
Disclosure Schedule, the Company and its Subsidiaries have good and marketable
record title to their respective Owned Property free and clear of any liens,
mortgages, easements, rights-of-way, licenses, use restrictions, claims,
charges, options, title defects or encumbrances of any nature whatsoever, except
for the Permitted Encumbrances (as defined below). As used herein, the term
"Permitted Encumbrances" means (i) liens for taxes, assessments and user charges
not yet due and payable or which are being contested in good faith and by
appropriate proceedings; (ii) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like liens, ▇▇▇▇▇▇ or inchoate, arising in
the ordinary course of business which are less than $10,000 in amount and which
are being contested in good faith and by appropriate proceedings; or (iii)
easements, rights-of-way, encroachments, restrictions, leases, title defects,
agreements, conditions and other similar encumbrances which, individually or in
the aggregate, (A) are not substantial in character, amount or extent in
relation to the applicable Owned Property and (B) do not materially detract from
the use, utility or value of the applicable Owned Property or otherwise
materially impair the present business operations at such location of the
Company or its Subsidiaries.
(b) The real property demised by the leases described in Section 5.7
of the Disclosure Schedule (the "Leases") constitutes all of the real property
leased by the Company and its Subsidiaries. The Leases are in full force and
effect, and the Company holds a valid and existing leasehold interest under each
of the Leases. The Company has delivered to Buyer complete and accurate copies
of each of the Leases, and none of the Leases have been modified in any material
respect, except to the extent that such modifications are disclosed by the
copies delivered to Buyer. To the Company's knowledge, neither the Company nor
any other party thereto is in default in any material respect under any of such
Leases.
(c) The Company owns valid title to all material items of the
personal property shown on the Latest Balance Sheet, free and clear of all
Security Interests, except (i) such personal property which has been disposed of
in the ordinary course of business since the date of the Latest Balance Sheet,
(ii) the Security Interests listed in the Disclosure Schedule, and (iii) such
other Security Interests and other encumbrances that do not materially interfere
with the use or value of such personal property.
5.8 Tax Matters. The Company has filed all federal and all material
foreign, state, county and local income, excise, property and other Tax Returns
which are required to be filed by it. All Taxes shown as owing by the Company on
all such returns and all other Taxes payable by the Company have been fully paid
or properly accrued in accordance with GAAP. The Company has furnished to the
Buyer complete and accurate copies of all such Tax Returns that are or have been
required to be filed for all taxable periods for which the statute of
limitations has not run, examination reports, and statements of deficiencies
assessed against or agreed to by
-17-
the Company. All such Tax Returns are true and correct in all material respects;
the provision for taxes on the Latest Balance Sheet is sufficient for all
accrued and unpaid Taxes as of the date thereof; and all material Taxes which
the Company is obligated to withhold (a) from amounts owing to any employee,
creditor or third party or (b) with respect to any of its assets or business
have been paid or properly accrued in accordance with GAAP. In addition, except
as set forth in Section 5.8 of the Disclosure Schedule, (i) no taxing authority
is now asserting or, to the Company's knowledge, threatening to assert against
the Company any deficiency or claim for Taxes, (ii) the Company has not granted
any waiver of any statute of limitations with respect to any Tax, (iii) the
Company is not currently under, or has not received notice of commencement of,
any Tax audit, and is not a party to any judicial proceeding with respect to
Taxes, (iv) there is no contract or agreement under which the Company has, or
may have, an obligation to contribute to the payment of any Tax of any other
Person (or pay any amount computed by reference to any Tax of any other Person),
(v) the Company has not been a member of any consolidated, combined, unitary or
similar group (other than a group of which the Company has been the common
parent) for purposes of filing Tax returns or paying Taxes at any time, (vi) the
Company is not a party to or bound by any tax sharing, tax indemnity, tax
allocation or similar agreement or arrangement, and (vii) the Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code.
5.9 Contracts and Commitments.
(a) Except as set forth in Section 5.9 of the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to any: (i) collective
bargaining agreement or contract with any labor union, (ii) bonus, pension,
profit sharing, severance, change of control, retirement or other form of
deferred compensation or similar agreement or plan, (iii) stock purchase, stock
option or similar plan or agreement, other than as set forth in Section 5.14 of
the Disclosure Schedule, (iv) contract for the employment of any officer,
employee or other person on a full-time or consulting basis, (v) agreement or
indenture relating to the borrowing of money or to mortgaging, pledging or
otherwise placing a lien on any material portion of the Company's or any of the
Subsidiaries' assets, (vi) guaranty of any obligation for borrowed money or
other material guaranty, (vii) lease or agreement under which it is lessee of,
or holds or operates, any personal property owned by any other party, for which
the annual rental exceeds $50,000, (viii) lease or agreement under which it is
lessor of or permits any third party to hold or operate any property, real or
personal, for which the annual rental exceeds $50,000, (ix) written contract or
group of related written contracts (including, without limitation, supply and
license agreements) with the same party or related parties for the purchase of
products or services, under which the undelivered balance of such products and
services has a selling price in excess of $100,000, (x) written contract or
group of related written contracts (including, without limitation, supply and
license agreements) with the same party or related parties for the sale of
products or services
-18-
under which the undelivered balance of such products or services has a sales
price in excess of $100,000, (xi) contract which prohibits the Company from
freely engaging in business anywhere in the world, (xii) written or oral
contract with any officer, director or stockholder, or (xiii) any material
collaboration or cooperation agreement.
(b) Buyer either has been supplied with, or has been given access
to, a true and correct copy of all written contracts which are referred to on
the Disclosure Schedule, together with all written amendments thereto, and, to
the Company's knowledge, accurate descriptions of all oral contracts and
amendments referred to therein.
(c) Each of the contracts listed in Section 5.9 of the Disclosure
Schedule constitutes a valid and binding obligation of the Company or any
Subsidiary a party thereto and, to the Company's knowledge, constitutes a valid
and binding obligation of the other parties thereto. Neither the Company nor any
Subsidiary is in default and, to the Company's knowledge, no other party thereto
is in default under any contract listed in Section 5.9 of the Disclosure
Schedule, except where such default could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(d) The Disclosure Schedule lists all third party consents to, or
approvals of, the execution, delivery or performance of this Agreement by the
Company required under any material indenture, mortgage, lease, loan agreement,
or other material agreement to which the Company or any Subsidiary of the
Company is a party.
5.10 Proprietary Rights. The Disclosure Schedule sets forth a list of all
patents, patent applications (including docketed patent or invention disclosures
awaiting filing, requests for reexamination, reissues, divisions, continuations,
continuations in part, patents of addition and extensions), trademarks, service
marks, trade names, corporate names, copyright registrations or copyright
applications (collectively, the "Proprietary Rights") necessary to or currently
used in the conduct of the Company's and its Subsidiaries' businesses as now
conducted. The Company and its Subsidiaries own and possess the right to use the
Proprietary Rights, free and clear of any Security Interests, necessary to or
currently used in the conduct of their businesses as now conducted. Except as
described in Section 5.10 to the Disclosure Schedule, during the five-year
period prior to the date of this Agreement, there have been no claims, demands
or notices of any Person pertaining to, or any proceedings which are pending or,
to the Company's knowledge, threatened, which (i) challenge the Company's or its
Subsidiaries' ownership interests in, or rights to use, the Proprietary Rights,
(ii) allege that any product or service of the Company or its Subsidiaries
infringe the intellectual property rights of others, or (iii) state that the
practice or use of any of the Proprietary Rights requires the consent or license
of such Person. To the Company's knowledge, except as set forth in Section 5.10
of the Disclosure Schedule, the Company has not infringed during such five-year
period and is not
-19-
currently infringing on the Proprietary Rights of any other Person. Section 5.10
of the Disclosure Schedule sets forth all material licenses of Proprietary
Rights to or from the Company and the Subsidiaries. Such licenses are valid and
binding on the Company and the Subsidiaries and, to the Company's knowledge, the
other parties thereto, and neither the Company nor any Subsidiary is in default
and, to the Company's knowledge, no other party thereto is in default under such
licenses, except where such default could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
5.11 Litigation. Section 5.11 of the Disclosure Schedule lists all
actions, suits, administrative, arbitration or other proceedings or governmental
investigations pending or, to the Company's knowledge, threatened in writing
against the Company or any of its Subsidiaries, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
(a) if determined adversely, could, individually or in the aggregate, either (i)
reasonably be expected to have a Material Adverse Effect or (ii) result in
damages in excess of $500,000 or (b) relate to the transactions contemplated
hereby. Except as set forth in Section 5.11 of the Disclosure Schedule, there
are no judgments or outstanding orders, injunctions, decrees, stipulations or
awards (whether rendered by a court or administrative agency, or by arbitration)
against the Company or any of its Subsidiaries or any of their respective
properties or businesses that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.12 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
hereby based on any agreement made by or on behalf of the Company other than the
fees and expenses of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated that have been disclosed
to Buyer (which fees and expenses shall be paid by the Company).
5.13 Governmental Consents, etc. Section 5.13 of the Disclosure Schedule
sets forth a list of all permits, licenses, consents, approvals and
authorization of governmental or regulatory authorities (collectively "Permits")
necessary to or used in the conduct of the Company's and its Subsidiaries'
businesses as now conducted. Each of such Permits is valid, subsisting and in
full force and effect and, to the knowledge of the Company, no suspension or
cancellation of any of them is threatened, except for such suspensions or
cancellations that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in Section 5.13
of the Disclosure Schedule, no written notice of cancellation, of default or of
any dispute concerning any Permit, or of any event, condition or state of facts
which constitutes or, after notice or lapse of time or both, would constitute a
breach or default under any Permit has been received by the Company or any
Subsidiary. To the knowledge of the Company, there are no pending or proposed
changes in permit requirements that would require the Company or any Subsidiary
to make material additional monetary payments in order to obtain, renew or
comply
-20-
with any Permit. Except for the applicable requirements of (i) the HSR Act, (ii)
the Atomic Energy Act relating to materials licenses, and (iii) the regulations
thereunder, no material permit, license, consent, approval or authorization of,
or declaration to or filing with, any governmental or regulatory authority is
required in connection with any of the execution, delivery or performance of
this Agreement by the Company or the consummation by the Company of any other
transaction contemplated hereby.
5.14 Employee Benefit Plans.
(a) The Disclosure Schedule sets forth a list of all (i)
nonqualified deferred compensation or retirement plans, (ii) qualified defined
contribution retirement plans, (iii) qualified defined benefit pension plans
(the plans described in (ii) and (iii) are collectively referred to as the
"Pension Plans"), (iv) welfare benefit plans (the "Welfare Plans"), and (v)
other employee benefit plans, programs, policies, practices, and other
arrangements providing benefits to any employee or former employee or
beneficiary or dependent thereof, whether or not written, and whether covering
one person or more than one person, sponsored or maintained by the Company or
any Subsidiary of the Company, or to which the Company or any Subsidiary of the
Company is obligated to contribute, on behalf of its employees. The Pension
Plans and the Welfare Plans are collectively referred to as the "Plans." Each of
the Pension Plans has received a favorable determination letter from the
Internal Revenue Service that such Plan is a "qualified plan" under Section
401(a) of the Code, and that the related trusts are exempt from tax under
Section 501(a) of the Code, and the Company is not aware of any facts or
circumstances that would jeopardize the qualification of such Pension Plan or
the related trust. The Plans comply in form and in operation in all material
respects with the requirements of the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). As used in the first sentence of
this Section 5.14(a), the terms "defined contribution plans" and "defined
benefit plans" have the respective meanings set forth in Sections 3(34) and
3(35) of ERISA.
(b) With respect to the Plans, all contributions required to be made
to any Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, for any period through the date hereof have
been timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof, have been fully reflected on the books and
records of the Company. With respect to the Plans, (i) there are no actions,
suits or claims pending, other than routine claims for benefits, (ii) there are
no accumulated funding deficiencies (within the meaning of Section 302 of ERISA
or Section 412 of the Code), (iii) the fair market value of the assets of each
Pension Plan equals or exceeds the actuarial present value of all accrued
benefits under such Plan (whether or not vested), on a termination basis, and
(iv) there have been no prohibited transactions (as that term is defined in
Section 406 of ERISA or Section 4975 of the Code) which could subject the
Company to any material liability under the Code or ERISA.
-21-
(c) With respect to each Plan, the Company has furnished to Buyer a
true, correct and complete copy of: (i) each writing constituting a part of such
Plan, including without limitation all plan documents, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii)
the current summary plan description, if any; (iv) the most recent annual
financial report, if any; and (v) the most recent determination letter from the
Internal Revenue Service, if any. Except as specifically provided in the
foregoing documents furnished to Buyer, there are no amendments to any Plan that
have been adopted or approved nor has the Company undertaken to make any such
amendments.
(d) Neither the Company nor any of its directors, officers,
employees, nor, to the Company's knowledge, any other "fiduciary," as such term
is defined in Section 3 of ERISA, has committed any breach of fiduciary
responsibility imposed by ERISA or any other applicable law with respect to the
Plans which would subject the Company, any of its Subsidiaries, or Buyer, or any
of their respective directors, officers or employees, to any material liability
under ERISA or any applicable law.
(e) The Company has not incurred any material liability for any tax
or civil penalty imposed by Section 4975 of the Code or Section 502 of ERISA.
(f) No Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a "Multiple Employer Plan") or a plan
subject to Title IV of ERISA, nor has the Company or any ERISA Affiliate of the
Company, at any time since September 2, 1974, contributed to or been obligated
to contribute to any Multiemployer Plan or Multiple Employer Plan or a plan
subject to Title IV of ERISA.
(g) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of the
Company following the Closing.
(h) The Company has no liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof,
except for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to the Company.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with
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any other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any employee of the
Company, other than pursuant to the transaction described in Section 10.18.
Without limiting the generality of the foregoing, no amount paid or payable by
the Company in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(j) No labor organization or group of employees of the Company has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed, with the National Labor Relations Board or any other labor relations
tribunal or authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material grievances, or
other material labor disputes pending or threatened against or involving the
Company.
(k) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
the Company to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any multiemployer plan.
(l) For purposes of this Section 5.14, (i) "employee" shall be
considered to include individuals rendering personal services to the Company as
independent contractors; (ii) "Controlled Group Liability" means any and all
liabilities under Title IV of ERISA, Section 302 of ERISA, Sections 412 and 4971
of the Code, the continuation coverage requirements of Section 601 et seq. of
ERISA and Section 4980B of the Code, and corresponding or similar provisions of
foreign laws or regulations, other than such liabilities that arise solely out
of, or relate solely to, the Plans; (iii) "ERISA Affiliate" means, with respect
to any entity, trade or business, any other entity, trade or business that is a
member of a group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or business,
or that is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
5.15 Insurance. Section 5.15 of the Disclosure Schedule sets forth a
summary of the insurance coverage maintained by the Company and its
Subsidiaries. All of such insurance policies are in full force and effect and
the Company is not in material default with respect to its obligations under any
of such insurance policies.
5.16 Compliance with Laws. The Company and each of the Subsidiaries have
-23-
complied in all material respects with all applicable laws and regulations of
foreign, federal, state and local governments and all agencies thereof, except
where the failure to so comply could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
5.17 Environmental Compliance and Conditions. Except as set forth in
Section 5.17 of the Disclosure Schedule, and except as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(a) each of the Company and its Subsidiaries complies and has complied with all
Environmental Laws applicable to the properties, assets or businesses of the
Company and its Subsidiaries, and possesses and complies with and has possessed
and complied with all Environmental Permits required under such laws except
where any non-compliance or failure to possess any Environmental Permit has not
had or could not reasonably be expected to result in, individually or in the
aggregate, material liability under Environmental Laws; (b) no modification,
revocation, reissuance, alteration, transfer, or amendment of any of the
Environmental Permits, or any review by, or approval of, any third party of any
of the Environmental Permits is required in connection with the execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby or the continuation of the business of the Company and its Subsidiaries
following such consummation; (c) none of the Company and its Subsidiaries has
received any Environmental Claim, and none of the Company and its Subsidiaries
is aware after reasonable inquiry of any threatened Environmental Claim; (d)
none of the Company and its Subsidiaries has assumed, contractually or by
operation of law, any liabilities or obligations under any Environmental Laws;
(e) to the Company's knowledge, there are no past or present events, conditions,
circumstances, practices, plans or legal requirements that could reasonably be
expected to result in material liability to the Company or any of its
Subsidiaries under Environmental Laws, prevent, or reasonably be expected to
materially increase the burden on the Company or any Subsidiary of, complying
with Environmental Laws or of obtaining, renewing, or complying with all
Environmental Permits required under such laws; or (f) to the Company's
knowledge, there are and have been no Hazardous Materials or other conditions at
or from any property owned, operated or otherwise used by the Company or any
Subsidiary now or in the past that could reasonably be expected to give rise to
material liability of the Company or any Subsidiary under any Environmental Law.
For purposes of this Agreement, the following terms shall have the following
meanings:
"Environmental Claim" means any written or oral notice, claim,
demand, action, suit, complaint, proceeding or other communication by any
Person alleging liability or potential liability arising out of, relating
to, based on or resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous Materials at any location,
whether or not owned, leased or operated by the Company or any of its
Subsidiaries, or (ii) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental Permit, or
(iii) otherwise relating to obligations or liabilities under
-24-
any Environmental Laws.
"Environmental Permits" means all permits, licenses, registrations
and other governmental authorizations required for the Company and the
operations of the Company's and its Subsidiaries' facilities and otherwise
to conduct its business under Environmental Laws.
"Environmental Laws" means all applicable federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law,
as they exist at the date hereof, relating in any manner to contamination,
pollution or protection of human health or the environment, including
without limitation the Comprehensive Environmental Response, Compensation
and Liability Act, the Solid Waste Disposal Act, the Resource Conservation
and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Occupational Safety and Health Act, the
Emergency Planning and Community-Right-to-Know Act, the Safe Drinking
Water Act, all as amended, and similar state laws.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials, substances
and forces, including but not limited to electromagnetic fields, regulated
pursuant to, or that could form the basis of liability under, any
Environmental Law.
5.18 Banking and Agency Arrangements. The Disclosure Schedule sets forth
in Section 5.18 a list of:
(a) each bank, savings and loan or similar financial institution in
which the Company or any of its Subsidiaries has an account or safe deposit box
or other custodial arrangement and the numbers of such accounts or safe deposit
boxes maintained by the Company and any of its Subsidiaries;
(b) the names of all Persons authorized to draw on each such account
or to have access to any such safe deposit box facility; and
(c) each general or special powers of attorney granted by the
Company or any of its Subsidiaries and each other agency arrangement (if any)
between the Company and any of its Subsidiaries and any third parties.
5.19 Fairness Opinion. The Company has received, on or prior to the date
hereof, the
-25-
opinion, in a form reasonably satisfactory to the Company, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ &
Co. Incorporated to the effect that the consideration to be received by the
Stockholders for Common Stock in the transactions provided for under Section 2
of this Agreement is fair, from a financial point of view, to such Stockholders.
5.20 Tender Offer. The Company's offer to purchase shares of Common Stock
and Options held by Non-Management Stockholders, the related letter of
transmittal and any other information or documents prepared by the Company in
connection with the Tender Offer (collectively, the "Tender Offer Documents")
shall not, at the time the Tender Offer Documents or any amendments or
supplements thereto are first published, sent or given to Non-Management
Stockholders, as the case may be, 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, in the light of the
circumstances under which they were made, not misleading. The Tender Offer
Documents will comply as to form in all material respects with the requirements
of applicable law, except that no representation is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Buyer specifically for inclusion in the
Tender Offer Documents.
5.21 Stockholder Commitments. The Company has received written commitments
from Stockholders owning a majority of the issued and outstanding Common Stock
of the Company to support the transactions provided for herein as set forth in
the support agreement attached hereto as Exhibit A ("Support Agreement").
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
MANAGEMENT STOCKHOLDERS
Each Management Stockholder severally (as to himself or herself and not as
to any other Management Stockholder) represents and warrants to Buyer that:
6.1 Authority and Related Matters.
(a) Such Management Stockholder has all requisite power to execute
and deliver this Agreement and to perform his obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Management Stockholder, and, assuming the due
execution hereof by each of the Company, Buyer and the other Management
Stockholders, this Agreement (but without making any representation or warranty
as to the Management Agreements) constitutes the legal, valid and binding
obligation of such Management Stockholder, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy laws, similar laws
of debtor relief and general principles of equity.
-26-
(b) Such Management Stockholder is the record and beneficial owner
of the aggregate number of shares of Common Stock held by such Management
Stockholder as set forth on the Recapitalization and Stock Purchase Schedule.
Except for this Agreement and the transactions contemplated hereby, and except
as disclosed in Section 6.1 to the Disclosure Schedule, there are no agreements,
arrangements, warrants, options, puts, calls, rights or other commitments or
understandings of any character to which such Management Stockholder is a party
or by which any of his or her respective assets is bound and relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration, voting
or transfer of any shares of Common Stock or other capital stock of the Company.
Upon consummation of the transactions contemplated hereby, good title to the
shares of Common Stock to be sold by such Management Stockholder will be
delivered to Buyer, free and clear of any Security Interests.
(c) Neither the execution and delivery by such Management
Stockholder of this Agreement nor the consummation by such Management
Stockholder of the transactions contemplated hereby will conflict with, result
in a breach of the terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of acceleration, amendment,
termination or cancellation or a loss of rights under, or result in the creation
or imposition of any Security Interest upon any of such Management Stockholder's
Common Stock or any of the assets or properties of such Management Stockholder
under any note, instrument, agreement, mortgage, lease, license, franchise or
judgment, order, award or decree to which such Management Stockholder is bound,
or any statute, other law or regulatory provision affecting such Management
Stockholder.
SECTION 7. PRECLOSING COVENANTS
7.1 Conduct of the Business.
(a) From the date hereof until the Closing Date, except as
contemplated by this Agreement, the Company shall carry on its businesses in the
ordinary course and substantially in the same manner as heretofore conducted.
(b) Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, except as contemplated by this Agreement or
consented to by Buyer, the Company and its Subsidiaries shall not (i) issue,
sell or deliver any shares of their capital stock or issue or sell any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe for, any shares of their capital stock, (ii) effect any
recapitalization, reclassification, stock dividend, stock split or like change
in their capitalization, (iii) amend their respective Certificates of
Incorporation or bylaws, (iv) make any capital expenditures exceeding $250,000
per expenditure or $1,000,000 in the aggregate, (v) amend, modify or waive any
rights under any confidentiality or non-disclosure agreements, (vi) enter into
any license of material
-27-
Proprietary Rights (other than in the ordinary course of business and consistent
with past practice), (vii) enter into any contracts that would be required to be
set forth on the Disclosure Schedule pursuant to Section 5.9(d), or (viii) take
any action referred to in Section 5.6 hereof; provided that, notwithstanding
anything to the contrary contained in this Agreement, the Company shall be
permitted, prior to or concurrent with the Closing, (v) to establish a so-called
Rabbi Trust with respect to the existing Supplemental Executive Retirement
Agreements ("SERPs") with Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ and to fund said
trust as contemplated by said SERPs with an aggregate contribution of no more
than $1.9 million, (w) to pay the Management Bonus, (x) to effect the Foreign
Subsidiary Reorganization, (y) to eliminate any vesting requirement in
outstanding Options listed on Section 7.1 of the Disclosure Schedule, and (z) to
repurchase the Cancelled Options and issue the Management Option Shares as
provided in Section 2.3.
7.2 Access to Books and Records. From the date hereof until the Closing
Date, the Company shall afford to Buyer and its authorized representatives (the
"Buyer's Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books and records of the Company
and its Subsidiaries in order for Buyer to have the opportunity to make such
investigation as it shall reasonably desire to make of the affairs of the
Company and its Subsidiaries.
7.3 Notification. From the date hereof until the Closing Date, the Company
shall disclose to Buyer in writing any material variances from the
representations and warranties made by it in Article 5 promptly upon discovery
thereof, and such disclosures shall be deemed to amend and/or supplement the
Disclosure Schedule attached hereto in the form of a "Revised Disclosure
Schedule" delivered to Buyer. The Revised Disclosure Schedule shall cure and
correct for all purposes, other than Section 9.1(a), any breach of any
representation or warranty which would have existed by reason of the Company not
having added such Revised Disclosure Schedule.
7.4 Action.
(a) Subject to the terms and conditions of this Agreement, the
Company shall take, or cause to be taken, all actions, and do or cause to be
done all things necessary, proper or advisable (to the extent commercially
reasonable) under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby as soon as reasonably possible
(including using reasonable efforts to cause the conditions set forth in Section
9.1 to be satisfied).
(b) Promptly following the date of this Agreement, the Company shall
undertake to prepare the Tender Offer Documents, and Buyer shall cooperate with
the Company
-28-
with respect thereto. All mailings to Stockholders in connection with the Tender
Offer shall be subject to the prior review, comment and reasonable approval of
Buyer. The Company will use its best efforts to cause the Tender Offer Documents
to be mailed to the Stockholders as promptly as practicable following execution
of this Agreement. The Company agrees promptly to correct any information in the
Tender Offer Documents that shall be or have become false or misleading in any
material respect. The Company shall not, without Buyer's prior consent, which
consent shall not be unreasonably withheld, waive any material condition to the
Tender Offer or make any other material changes in the terms and conditions of
the Tender Offer. The Company, at Buyer's reasonable request, shall extend the
Tender Offer, provided that this Agreement has not theretofore been terminated.
Buyer shall not request that the Company make any change to the terms and
conditions of the Tender Offer which decreases the price per share of Common
Stock payable in the Tender Offer, changes the form of consideration payable in
the Tender Offer (other than by adding consideration) or imposes conditions to
the Tender Offer which are, in the judgment of the Company, materially adverse
to the Stockholders.
(c) The Company agrees to provide, and will cause its Subsidiaries
and its and their respective officers, employees and advisors to provide, all
reasonably necessary cooperation in connection with the arrangement of the
financing contemplated by the Commitment Letters.
(d) The Company and Buyer shall cooperate with any reasonable
requests of the other or of the Company's or Buyer's certified public
accountants related to the recording of the transactions contemplated by this
Agreement as a recapitalization for financial reporting purposes. In furtherance
of the foregoing, the Company and Buyer shall each provide to the other for the
prior review of the advisors of such other any description of the transactions
contemplated by this Agreement which is meant to be disseminated.
7.5 Exclusive Dealing. During the period from the date of this Agreement
through the Closing or the earlier termination of this Agreement pursuant to
Section 11.1, neither the Company nor the Management Stockholders shall engage
in discussions or negotiations with any Person (other than Buyer and Buyer's
Representatives) concerning, or enter into any agreement with respect to, any
purchase or sale of the Common Stock or any merger, sale of substantial assets
or similar transaction involving the Company (other than the sale of assets in
the ordinary course of business consistent with past practice) or its
securities, and the Company shall instruct its representatives or agents to
cease all such discussions or negotiations. From and after the date hereof, the
Company or its advisors shall use reasonable efforts to secure the return of
confidential information regarding the Company which has been provided to any
Person (other than Buyer and Buyer's Representatives) in connection with
discussions or negotiations concerning any of the foregoing transactions. The
Company shall notify Buyer as promptly as practicable of all the relevant
details relating to all inquiries or proposals which it or any of its officers,
directors, employees or representatives may receive after the date of this
Agreement
-29-
relating to any such transactions and, if such inquiry or proposal is in
writing, the Company shall deliver to Buyer a copy thereof.
7.6 Agreement to Merge. In the event that less than 100% of the Fully
Diluted shares of Common Stock (other than New Shares, Other Continuing
Stockholder Retained Shares, Management Retained Shares, and Rollover Options)
have been validly tendered by the holders thereof in the Tender Offer and not
withdrawn or are being purchased by Buyer pursuant to Section 2.4, unless
otherwise expressly agreed by the Company, Buyer and the Management Stockholder
Representatives, (a) the charter of the Company shall be duly amended to provide
for a new class of Common Stock ("New Common Stock") as described in Exhibit B
hereto, (b) the Company, Buyer and the Management Stockholders agree that a
merger (the "Merger") pursuant to the agreement and plan of merger attached
hereto as Exhibit C (as the same may be amended from time to time) (the "Merger
Agreement") shall be consummated with the result that, after giving effect
thereto, 100% of the Common Stock held by the Non-Management Stockholders (but
excluding the Other Continuing Stockholder Retained Shares) will be acquired for
an amount of cash per share equal to the Share Purchase Price, and Buyer shall
own between 67.9% and 70.8% of the Fully Diluted capital stock of the Company
and the Management Stockholders and Other Continuing Stockholders shall own
between 32.1% and 29.2% of the Fully Diluted capital stock of the Company, and
(c) prior to the Merger, each Management Stockholder (together with Related
Stockholders and Other Continuing Stockholders as provided in the Merger
Agreement) shall surrender and exchange all Management Shares held by such
Management Stockholder for New Canberra Common Stock as provided in Section 1.1
of the Merger Agreement. In no event shall the Merger include a merger of the
Buyer with the Company.
7.7 Buyer Members. From the date hereof until the Closing Date, the
membership of Buyer shall consist solely of the Fund or of the Fund and a
wholly-owned affiliate of the Fund.
SECTION 8. AFFIRMATIVE COVENANTS OF BUYER
Buyer agrees that, from the date hereof, through and including the
Closing, Buyer shall:
8.1 Action. Subject to the terms and conditions of this Agreement, take,
or cause to be taken, all actions, and do or cause to be done all things
necessary, proper or advisable (to the extent commercially reasonable) under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby (including using reasonable efforts to cause
the conditions set forth in Section 9.2 to be satisfied and to consummate the
transactions contemplated hereby as soon as reasonably possible). Buyer agrees
to use its reasonable best efforts to arrange the financing contemplated by the
Financing Letters, including using its reasonable best efforts (A) to assist the
Company in the negotiation of definitive agreements with respect thereto and (B)
to satisfy all conditions applicable to Buyer in such definitive agreements.
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Subject to the conditions set forth in Section 9.1, Buyer agrees to obtain the
equity committed pursuant to the Equity Commitment.
8.2 Confidentiality. Continue to comply in all respects with the terms of
the Confidentiality Agreement.
SECTION 9. CONDITIONS OF CLOSING
9.1 Conditions to Obligations of Buyer. The obligations of Buyer to effect
the transactions contemplated hereby shall be subject to the satisfaction or
waiver at or immediately prior to the Closing of the following conditions:
(a) Representations and Warranties of the Company. The
representations and warranties made by the Company in Section 5 of this
Agreement shall be true and correct (without giving effect to any knowledge
qualifications contained therein and excluding the effect of materiality
qualifiers or any materiality standard contained therein) at and as of the
Closing Date as though then made, except to the extent that all inaccuracies in
such representations and warranties do not, individually or in the aggregate,
have a Material Adverse Effect.
(b) Compliance With Agreement. Prior to or at the Closing Date, the
Company shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby, cause such transactions to be rescinded or have a Material
Adverse Effect upon Buyer or the Company.
(d) Approvals. Buyer shall have received, in form and substance
reasonably satisfactory to Buyer and its counsel, certified copies of all
documents evidencing action taken by the Company's Board of Directors with
respect to the transactions contemplated hereby.
(e) Resignations. Immediately prior to the Closing, each of the
members of the Company's Board of Directors then in office shall have submitted
to Buyer a written resignation as a Director, effective as of the Closing.
(f) Solvency Opinion. A "solvency opinion" shall have been obtained
in form and substance reasonably satisfactory to Buyer and its counsel.
-31-
(g) Required Consents; HSR Act. All consents that are required as a
result of the transactions contemplated hereunder and the failure of which to
obtain could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect shall have been obtained and all applicable waiting
periods in respect of the transactions contemplated hereby under the HSR Act
shall have been terminated or expired.
(h) Redemption and Stock Purchases. Subject to Section 7.6, the
Company shall have redeemed the Redemption Shares in accordance with Section 2.2
hereof and repurchased the Cancelled Options in accordance with Section 2.3
hereof, the Company shall have issued to Buyer stock certificates representing
the New Shares in accordance with Section 2.1, and the Management Stockholders
shall have delivered to Buyer stock certificates representing the Management
Shares duly endorsed for transfer or with duly executed stock powers in
accordance with Section 2.4.
(i) Management Agreements. The Company shall have (i) established
the New Option Plan, (ii) entered into employment agreements with Messrs. ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ in substantially the forms heretofore discussed between Buyer and
Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, and (iii) entered into a stockholders' agreement
with each of the Management Stockholder Representatives in substantially the
form attached hereto as Exhibit D (the "Stockholders' Agreement"), but with such
changes as may be agreed to by the Company, the Buyer, and the Management
Stockholder Representatives (the items described in (i), (ii) and (iii) hereof
being collectively referred to as the "Management Agreements").
(j) Paying Agency Agreement. The Company shall have entered into a
Paying Agency Agreement in form and substance reasonably satisfactory to Buyer,
and such agreement shall be in full force and effect.
(k) Opinion. Buyer shall have received the opinion of Day, ▇▇▇▇▇ &
▇▇▇▇▇▇, counsel to the Company, that (i) the execution, delivery and performance
of the Agreement by the Company has been duly authorized and approved by all
required corporate action on the part of the Company, (ii) the Agreement
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms (subject to customary exceptions) and (iii) when
issued, the New Shares shall have been duly authorized, validly issued, fully
paid and nonassessable.
(l) Organizational Documents. The Company shall have delivered to
Buyer each of the following: (i) a certificate of the Company, signed by an
officer of the Company, certifying to such individual's knowledge and on behalf
of the Company the fulfillment of the condition set forth in Section 9.1(a) of
this Agreement (taking into account any disclosures made in the Revised
Disclosure Schedule), (ii) certified copies of the Company's Certificate of
Incorporation, bylaws, and all Board resolutions necessary to consummate the
transactions contemplated hereby; (iii) good standing certificates for the
jurisdiction of incorporation of the
-32-
Company and each of its domestic Subsidiaries and for each jurisdiction in which
the Company or Packard Instrument Company, Inc., a Subsidiary, is qualified to
do business; and (iv) a certificate, signed by the secretary or assistant
secretary of the Company, certifying as to the names of the officers of the
Company authorized to sign this Agreement and the other documents contemplated
hereby and as to specimens of the true signature of such officers.
(m) Recapitalization Accounting. The Company shall have delivered to
Buyer a certificate of the Company, signed by an officer of the Company,
certifying that the Company has been advised by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP that the
transactions contemplated hereby shall be recorded as a recapitalization for
financial reporting purposes.
(n) Financing. The Company shall have obtained the financing as
contemplated by the Financing Letters (or such alternative financing as is
reasonably acceptable to Buyer and the Company).
Buyer may waive any condition specified in this Section 9.1 if Buyer
executes a writing so stating at or prior to the Closing; provided that if the
Closing is consummated, all such conditions shall be deemed to have been
satisfied or waived by Buyer.
9.2 Conditions to Obligations of the Company. The obligations of the
Company to effect the transactions contemplated hereby shall be subject to the
satisfaction or waiver at or immediately prior to the Closing of the following
conditions:
(a) Representations and Warranties of Buyer. The representations and
warranties made by Buyer in or pursuant to this Agreement shall be true and
correct in all material respects (without giving effect to any knowledge
qualifications contained therein and excluding the effect of multiple
materiality qualifiers or any multiple materiality standard) at and as of the
Closing Date as though then made and as though the Closing Date was substituted
for the date of this Agreement at or prior to the Closing.
(b) Compliance With Agreement. Prior to or at the Closing Date,
Buyer shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
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(d) Solvency Opinion. A "solvency opinion" shall have been obtained,
and such opinion, in form and substance reasonably satisfactory to counsel to
the Company, shall have been addressed and delivered to the Company at or prior
to the Closing.
(e) Required Consents; HSR Act. All consents that are required as a
result of the transactions contemplated hereunder and the failure of which to
obtain could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect shall have been obtained and all applicable waiting
periods in respect of the transactions contemplated hereby under the HSR Act
shall have been terminated or expired.
(f) Financing. The Company shall have obtained the financing as
contemplated by the Financing Letters (or such alternative financing as is
reasonably acceptable to the Buyer and Company).
(g) Purchase of New Shares. Subject to Section 7.6, Buyer shall have
paid the full purchase price for and accepted delivery from the Company of the
New Shares in accordance with Section 2.1 hereof.
(h) Stockholder and Optionholder Deliveries. Subject to Section 7.6,
the Stockholders and Optionholders shall have made their respective deliveries
in accordance with Section 3.2 hereof.
(i) Purchase of Management Shares. Subject to Section 7.6, Buyer
shall have paid the full purchase price for and accepted delivery from the
Management Stockholders of the Management Shares in accordance with Section 2.4
hereof.
(j) Opinion. The Company shall have received the opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, counsel to Buyer, that (i) the execution,
delivery and performance of the Agreement by the Buyer has been duly authorized
and approved by all required corporate action on the part of the Buyer, and (ii)
the Agreement constitutes a valid and binding obligation of the Buyer,
enforceable in accordance with its terms (subject to customary exceptions).
(k) Organizational Documents. Buyer shall have delivered to the
Company each of the following: (i) a certificate of Buyer, signed by the
Managing Member of Buyer, certifying to such individual's knowledge and on
behalf of Buyer, the fulfillment of the conditions set forth in Section 9.2(a)
of this Agreement, (ii) a certificate of Buyer's Managing Member certifying that
all action necessary to authorize the transactions contemplated hereby has been
taken; (iii) a good standing certificate for the jurisdiction of organization of
Buyer; and (iv) a certificate of Buyer, signed by the Managing Member of Buyer,
certifying as to the names of the individuals authorized to sign this Agreement
and the other documents contemplated hereby
-34-
and as to specimens of the true signature of such individuals.
(l) Recapitalization Accounting. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have
advised the Company that the transactions contemplated hereby shall be recorded
as a recapitalization for financial reporting purposes.
The Company may waive any condition specified in this Section 9.2 if the
Company executes a writing so stating at or prior to the Closing; provided that
if the Closing is consummated, all such conditions shall be deemed to have been
satisfied or waived by the Company.
9.3 Condition to Obligations of the Management Stockholders. The
obligations of each Management Stockholder to effect the transactions
contemplated hereby shall be subject to the satisfaction or waiver at or
immediately prior to the Closing of the following conditions:
(a) Representations and Warranties of Buyer. The representations and
warranties made by Buyer in or pursuant to this Agreement shall be true and
correct in all material respects (without giving effect to any knowledge
qualifications contained therein and excluding the effect of multiple
materiality qualifiers or any multiple materiality standard) at and as of the
Closing Date as though then made and as though the Closing Date was substituted
for the date of this Agreement at or prior to the Closing.
(b) Compliance With Agreement. Prior to or at the Closing Date,
Buyer shall have complied in all material respects with all of its material
obligations under this Agreement.
(c) No Proceedings. No action or proceeding before any court or
government body shall be pending wherein an unfavorable judgment, decree or
order would prevent the performance of this Agreement or the consummation of any
of the transactions contemplated hereby, declare unlawful the transactions
contemplated hereby or cause such transactions to be rescinded.
(d) Solvency Opinion. A "solvency opinion" shall have been obtained,
and such opinion, in form and substance reasonably satisfactory to counsel to
the Management Stockholder Representatives, shall have been addressed to the
Management Stockholders and Optionholders and delivered to the Paying Agent and
to the Management Stockholders at or prior to the Closing.
(e) Redemptions, Repurchases and Purchases. Subject to Section 7.6,
the Paying Agent or the Management Stockholders shall have received, in
accordance with Section
-35-
3.2, payment by wire transfer of immediately available funds as set forth on the
Recapitalization and Stock Purchase Schedule of the amounts necessary to redeem,
repurchase or purchase, as the case may be, the Redemption Shares, the Cancelled
Options and the Management Shares in accordance with Section 2.2, 2.3 and 2.4,
respectively, hereof.
(f) Purchase of New Shares. Subject to Section 7.6, Buyer shall have
paid the full purchase price for and accepted delivery from the Company of the
New Shares in accordance with Section 2.1 hereof.
(g) Management Agreements. The Company shall have entered into the
Management Agreements.
(h) Management Bonus. The Company shall have paid to the Management
Stockholders the Management Bonus.
Each Stockholder and Optionholder may waive (as to such Stockholder or
Optionholder alone) any condition specified in this Section 9.3 if such
Stockholder or Optionholder executes a writing so stating at or prior to the
Closing; provided that if the Closing is consummated, all such conditions shall
be deemed to have been satisfied or waived by each Stockholder and Optionholder.
SECTION 10. ADDITIONAL COVENANTS OF THE PARTIES
10.1 Confidentiality of Information. Buyer acknowledges that the terms and
provisions of the Confidentiality Agreement are in full force and effect. In the
event that this Agreement is terminated and the transactions contemplated hereby
are not consummated, the Confidentiality Agreement shall continue to be in full
force and effect in accordance with its terms and shall be binding upon Buyer.
10.2 Books and Records. Unless otherwise consented to in writing by the
Paying Agent, the Company shall not, for a period of seven years following the
Closing Date, destroy or otherwise dispose of any of the books and records of
the Company pertaining to the period prior to the Closing Date without first
offering to surrender to the Paying Agent such books and records or any portion
thereof which the Company may intend to destroy or dispose of.
10.3 Notification. Prior to the Closing, Buyer shall promptly notify the
Company if Buyer obtain actual knowledge that (i) any of the representations and
warranties of the Company in this Agreement and the Disclosure Schedule or the
Revised Disclosure Schedule are not true and correct in all material respects,
or if Buyer obtains actual knowledge of any material errors in, or omissions
from, the Disclosure Schedule or the Revised Disclosure Schedule, or (ii) the
-36-
representations and warranties of Buyer in this Agreement and the Schedules
hereto are not true and correct in all material respects.
10.4 Director and Officer Liability and Indemnification.
(a) For a period of seven years after the Closing, the Company shall
not, and the Buyer shall not permit the Company to, amend, repeal or modify any
provision in the Certificate of Incorporation or bylaws of the Company relating
to the exculpation or indemnification of former officers and directors (unless
required by law) in any manner adverse to such officers or directors, it being
the intent of the parties that the officers and directors of the Company prior
to the Closing shall continue to be entitled to such exculpation and
indemnification to the fullest extent permitted under applicable law.
(b) The Company shall use its reasonable best efforts to bind,
effective as of the Closing Date, from an insurance carrier or carriers
reasonably satisfactory to the Company, directors' and officers' liability
insurance run-off and tail coverage of the lesser of (i) $20,000,000 and (ii)
the coverage that can be purchased for a single premium for six years of
coverage of $450,000, protecting those persons who were directors and officers
of the Company immediately prior to the Closing from liability with respect to
claims made during the six years immediately following the Closing Date as a
result of acts or omissions occurring or alleged to have occurred on or prior to
the Closing Date which were committed or alleged to have been committed by such
officers or directors in their capacity as such. The Company shall pay, at or
prior to Closing, all premiums for said coverage for said period of six years.
(c) If the coverage described in (b) above cannot for any reason be
bound, the Company and Buyer hereby agree to maintain in effect continuously
during the six years immediately following the Closing Date, from an insurance
carrier or carriers reasonably satisfactory to the Management Stockholder
Representatives, directors' and officers' liability insurance coverage of the
lesser of (i) $20,000,000 and (ii) the coverage that can be purchased for an
annual premium of $75,000, protecting those persons who were directors and
officers of the Company immediately prior to the Closing from liability with
respect to claims made during the six years immediately following the Closing
Date as a result of acts or omissions occurring or alleged to have occurred on
or prior to the Closing Date which were committed or alleged to have been
committed by such officers or directors in their capacity as such. The Company
shall maintain such insurance in effect and pay all required premiums for said
period of six years.
10.5 Regulatory Filings. Buyer and the Company shall, as promptly as
practicable after execution of this Agreement, make or cause to be made all
filings and submissions under the HSR Act (including request for early
termination), the Atomic Energy Act with respect to materials licenses, and any
other laws or regulations applicable to Buyer or the Company and as
-37-
may be required of any of them for the consummation of the transactions
contemplated hereby, and Buyer shall be responsible for all filing fees under
the HSR Act. Buyer and the Company shall coordinate and cooperate with each
other in exchanging such information and assistance as any of them may
reasonably request in connection with all of the foregoing.
10.6 Contact with Customers and Suppliers. Buyer and Buyer's
Representatives shall not contact or communicate with the employees (other than
the Management Stockholders), customers, suppliers and licensors of the Company
or its Subsidiaries in connection with the transactions contemplated hereby
except with the prior written consent of the Company, which consent may be
withheld in the discretion of the Company or conditioned upon an officer of the
Company being present at any such meeting or conference.
10.7 Solvency Opinion. Buyer and the Company shall obtain a "solvency
opinion" and shall cause such opinion to be addressed and delivered to the
Stockholders and Optionholders and the Company at or prior to the Closing.
10.8 Survival. The representations and warranties set forth in this
Agreement and in any certificates delivered at the Closing in connection with
this Agreement shall terminate as of the Closing and shall have no further force
or effect and neither Buyer nor the Company, nor the individuals signing such
certificates, shall have any liability whatsoever on account thereof, except
that the representations and warranties of the Management Stockholders set forth
in the last sentence of Section 6.1(b) shall survive indefinitely.
10.9 Paying Agency Agreement. The Company shall enter into the Paying
Agency Agreement prior to the Closing.
10.10 Limitation of Recourse. Following the Closing, neither the Company,
any Stockholder, any Optionholder, or the Paying Agent shall have any liability
or obligation to indemnify Buyer or the Company or any of their agents,
representatives, successors or assigns for any claim or any loss or liability
arising from or in any way relating to this Agreement or any of the transactions
contemplated hereby or any other transaction or event occurring on or prior to
the Closing (including, without limitation, any misrepresentation or inaccuracy
in, or breach of, any representations or warranties or any breach or failure in
performance prior to Closing of any covenants or agreements (including those
contained in Section 2 and Section 3 of this Agreement) made by the Company in
this Agreement or in any Exhibit or Schedule hereto or any certificate or
instrument delivered hereunder). Following the Closing, no claim based on,
relating to or arising out of any of the foregoing shall be brought or
maintained by Buyer or the Company or their respective successors or permitted
assigns against any officer, director or employee (present or former) of the
Company, the Paying Agent or any Stockholder or Optionholder. Without limiting
the generality of the foregoing, in the absence of fraud, neither
-38-
Buyer nor its successors or permitted assigns shall be entitled to claim or seek
any rescission of the transactions consummated under this Agreement or other
remedy at law or in equity. Following the Closing, Buyer and the Company shall
have no liability whatsoever with respect to payment of any amount owing
pursuant to Section 2 or Section 3 of this Agreement to any Stockholder,
Optionholder or Management Stockholder so long as the Company and Buyer, as
appropriate, shall have delivered to the Paying Agent or the Management
Stockholders the redemption price, repurchase price or purchase price for the
Redemption Shares, the Cancelled Options, and the Management Shares,
respectively, as set forth in Section 3.2 of this Agreement.
10.11 Disclosure Generally. If and to the extent any information required
to be furnished in the Disclosure Schedule or the Revised Disclosure Schedule is
contained in this Agreement or in the Disclosure Schedule or the Revised
Disclosure Schedule, such information shall be deemed to be included in all
Schedules and all Sections thereof in which the information is required to be
included to the extent that it is reasonably apparent that such disclosure
relates to the affected Schedule or Section. The inclusion of any information in
the Disclosure Schedule or the Revised Disclosure Schedule shall not be deemed
to be an admission or acknowledgment by the Company, in and of itself, that such
information is material to or outside the ordinary course of the business of the
Company or required to be disclosed on the Disclosure Schedule or the Revised
Disclosure Schedule.
10.12 Acknowledgment by Buyer. BUYER HAS CONDUCTED TO ITS SATISFACTION AN
INDEPENDENT INVESTIGATION AND VERIFICATION OF THE FINANCIAL CONDITION, RESULTS
OF OPERATIONS, ASSETS, LIABILITIES, PROPERTIES AND PROJECTED OPERATIONS OF THE
COMPANY. IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, BUYER HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT
INVESTIGATION AND VERIFICATION AND THE REPRESENTATIONS AND WARRANTIES OF THE
COMPANY EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT, INCLUDING THE
SCHEDULES ATTACHED HERETO. SUCH REPRESENTATIONS AND WARRANTIES BY THE COMPANY
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE COMPANY
TO BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND BUYER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED (INCLUDING, BUT NOT
LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION,
RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OR THE PROSPECTS OF THE COMPANY)
ARE SPECIFICALLY DISCLAIMED BY THE COMPANY.
10.13 Transfer and Similar Taxes. All transfer, documentary, stamp,
registration and
-39-
other similar Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by the Company when due, and the
Company shall file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, stamp, registration and other Taxes
and fees.
10.14 Further Assurances. From time to time, as and when requested by any
party hereto, any other party shall execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other party may reasonably deem
necessary or desirable to evidence and effectuate the transactions contemplated
hereby.
10.15 Appointment of New Board. Buyer and each Management Stockholder
agree that, on the Closing Date and immediately prior to Closing, Buyer and each
such Management Stockholder shall take such actions as are necessary and as they
are capable of taking to elect the new Directors of the Company as agreed
between Buyer and the Management Stockholder Representatives or as set forth in
the Management Agreements; provided that, if the Closing shall not occur on the
date of such election, Buyer and each such Management Stockholder shall take
such actions as are necessary and as they are capable of taking to remove (or
cause to be removed) the new Directors and to re-elect (or cause to be
re-elected) each of the members of the Board of Directors of the Company in
office immediately prior to the election of the new Directors.
10.16 Waiver of Certain Rights. The Company hereby waives its right of
first refusal under the Bylaws of the Company with respect to the sale by the
Management Stockholders to Buyer pursuant to Section 2.4 hereof.
10.17 New Option Plan. The Company shall establish, effective as of the
Closing Date, a new stock option plan ("New Option Plan") for employees of the
Company, in a form approved by the Company, Buyer, and the Management
Stockholder Representatives and shall reserve for issuance thereunder a number
of shares equal to thirteen percent (13%) of the outstanding shares of the
Company and Rollover Options immediately following the Closing (not less than
602,446 shares). In addition, Buyer and the Management Stockholder
Representatives shall agree, at least 5 days before the Closing, on initial
grants of options under the New Option Plan to be made effective as of the
Closing Date.
10.18 ESOP. The Company shall authorize and take, on or prior to the
Closing Date, all action required to merge the Company's employee stock
ownership plan ("ESOP") into the Company's 401(k) thrift savings plan, effective
as of the Closing Date.
10.19 Retirement Plans. From and after the Closing, and so long as Buyer
shall own a
-40-
majority of the outstanding shares of Common Stock of the Company, the Company
shall maintain, and shall cause its Subsidiaries to maintain, in existence for
their respective employees pension and retirement plans providing benefits and
contributions substantially comparable in the aggregate to those maintained by
the Company and its Subsidiaries immediately prior to Closing; provided that
such benefits and contributions maintained by the Company and its Subsidiaries
immediately prior to the Closing are consistent with past practice.
10.20 Prohibition. Buyer agrees that it shall not enter into a merger with
the Company without the prior written approval of the Management Stockholder
Representatives. Buyer agrees that it will indemnify and hold the Management
Stockholders harmless from any additional tax liability imposed on such
Stockholders attributable to "dividend" distributions under Section 302 of the
Code, or any successor to said Section, and any related costs and expenses
(including attorneys' and accountants' fees), arising from any breach of this
Section 10.20.
10.21 Exchange of Shares. Each Management Stockholder agrees to surrender
and exchange all Management Shares held by such Management Stockholders for an
equal number of shares of New Common Stock as provided in Section 1.1 of the
Merger Agreement. If any Person listed on the Schedule of Other Continuing
Stockholders shall fail to execute an Exchange Agreement, the Management
Stockholders agree to increase the amount of Management Retained Shares as
required so that the number of Other Continuing Stockholders Retained Shares,
together with the number of Management Retained Shares, shall, in the aggregate
be more than 1,053,303 but less than 1,188,135 (in each case excluding Rollover
Options).
10.22 Related Stockholder Commitments. Each Management Stockholder with
respect to whom a Related Stockholder is listed on the Recapitalization and
Stock Purchase Schedule shall use his reasonable best efforts to obtain from
such Related Stockholder a written commitment, in form reasonably agreed upon by
the Company and Buyer, to sell shares of Common Stock held by such Related
Stockholder to Buyer (and to retain other shares) to the extent set forth on
such Recapitalization and Stock Purchase Schedule.
SECTION 11. TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual consent of Buyer and the Company;
(b) by Buyer, if there has been a material violation or breach by
the Company
-41-
or any Management Stockholder of any covenant, representation or warranty
contained in this Agreement which has prevented or would prevent the
satisfaction of any condition to the obligations of Buyer at the Closing and
such violation or breach has not been waived by Buyer or, in the case of a
covenant breach, cured by the Company within ten days after written notice
thereof from Buyer;
(c) by the Company, if there has been a material violation or breach
by Buyer of any covenant, representation or warranty contained in this Agreement
which has prevented or would prevent the satisfaction of any condition to the
obligations of the Company at the Closing and such violation or breach has not
been waived by the Company or, with respect to a covenant breach, cured by Buyer
within ten days after written notice thereof from the Company; or
(d) by either Buyers or the Company if the transactions contemplated
hereby have not been consummated by March 31, 1997; provided that neither Buyer
nor the Company shall be entitled to terminate this Agreement pursuant to this
Section 11.1(d) if such Person's knowing and willful breach of this Agreement
has prevented the consummation of the transactions contemplated hereby.
11.2 Effect of Termination. In the event of termination of this Agreement
by either Buyer or the Company as provided above, the provisions of this
Agreement shall immediately become void and of no further force and effect
(other than Sections 10.1, this Section 11.2 and Section 12 hereof, which shall
survive the termination of this Agreement), and there shall be no liability on
the part of Buyer, the Company, or any Stockholder or Optionholder to one
another, except for any knowing and willful breaches of this Agreement by any
such party prior to the time of such termination, in which case such breaching
party shall only be severally liable for its knowing and willful breach.
SECTION 12. MISCELLANEOUS
12.1 Notices. All notices, requests, demands and other communications
(collectively, "Notices") given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given or made as follows: (a) if
sent by registered or certified mail in the United States return receipt
requested, postage and fees prepaid, upon receipt; (b) if sent by reputable
private air courier (such as UPS, DHL or Federal Express), two business days
after sending; (c) if sent by facsimile transmission, with a copy mailed on the
same day in the manner provided in (a) or (b) above, when transmitted and
receipt is confirmed by telephone; or (d) if otherwise actually personally
delivered, when delivered. All Notices shall be delivered to the following
addresses:
If to the Company:
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
With a copy to:
Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
CityPlace I
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Non-Management Stockholders, Optionholders or
Management Stockholders:
to such Person at the address as set forth in the
stock transfer books of the Company.
with a copy to Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ as set forth above.
If to Buyer:
CII Acquisition LLC
c/o Stonington Partners, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. End
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Any of the parties to this Agreement may from time to time change its address
for receiving
-43-
Notices by giving written notice thereof in the manner set forth above.
12.2 Entire Agreement. This Agreement and the Schedules and Exhibits and
the other writings and agreements specifically identified herein and the
Confidentiality Agreement contain the entire agreement among the parties with
respect to the transactions contemplated hereby and supersede all previous oral
negotiations, commitments, understandings and agreements.
12.3 Assignability and Amendments. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of Buyer, the
Company, and the Management Stockholders signatories hereto and each of their
respective successors, assigns, estate and heirs, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by Buyer or the Company without the prior written consent of the other
(and, following the Closing, the Paying Agent). This Agreement and the Schedules
and Exhibits hereto cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by Buyer and the Company and, prior to the Closing,
the other parties hereto (and, following the Closing, the Paying Agent), except
that the Disclosure Schedule shall be amended and supplemented by the Revised
Disclosure Schedule, as set forth in Section 7.3 hereof.
12.4 Waiver. No provision of this Agreement may be waived unless in
writing signed by Buyer and the Company (and, following the Closing, the Paying
Agent) and waiver of any one provision of this Agreement shall not be deemed to
be a waiver of any other provision.
12.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
12.6 Captions. The various captions and headings contained in this
Agreement are for reference only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement.
12.7 Press Releases and Communications. No press release or public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued or made without the joint approval of Buyer and the Company,
unless required by law (in the reasonable opinion of counsel) in which case
Buyer and the Company shall have the right to review such press release or
announcement prior to publication.
12.8 Counterparts. This Agreement may be executed in any number of
counterparts,
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each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12.9 Expenses. Whether or not the transactions provided for in this
Agreement shall be effected, all costs and expenses incurred by the Company in
connection with this Agreement and the transactions contemplated hereby,
including without limitation attorneys' fees and the fees of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ &
Co., Incorporated, shall be paid by the Company, and all costs and expenses
incurred by Buyer in connection with this Agreement and the transactions
contemplated hereby shall be paid by Buyer except as set forth below. In
addition, the Company shall pay the fees and expenses of a single counsel for
the Management Stockholders incurred in connection with review of and advice
with respect to the provisions of this Agreement and the transactions
contemplated herein for and on behalf of said Management Stockholders. If the
transactions provided for in this Agreement shall be effected, the Company shall
reimburse Buyer for its expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation fees of advisors
and experts and a fee to Stonington Partners, Inc. for structuring and arranging
the financing for such transactions, the estimated amounts of which have been
disclosed to the Company in writing on or before the date of execution hereof.
None of the Company, the Management Stockholders, or Buyer shall have any
responsibility for any fees for expenses incurred by or on behalf of any other
Person.
12.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement is interpreted by a court
of competent jurisdiction and found to be invalid or unenforceable with respect
to a specific set of facts, or under a specific set of circumstances, neither
the enforceability nor the validity of such provisions with respect to any other
facts or under any other circumstances shall thereby be impaired. The
unenforceability or invalidity of any such provision with respect to a specific
fact or circumstance shall not result in the interpretation of the remainder of
this Agreement, or any Section thereof, in a manner inconsistent with the intent
of the parties as evidenced by the terms of this Agreement, or such Section, as
a whole.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Recapitalization and Stock Purchase Agreement as of the day and year first above
written.
CII ACQUISITION LLC
By: STONINGTON CAPITAL APPRECIATION
1994 FUND, L.P., its Managing Member
By: STONINGTON PARTNERS, L.P.,
its General Partner
By: STONINGTON PARTNERS, INC. II,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. End
----------------------------------
Name: ▇▇▇▇▇▇ ▇. End
Title: Partner
CANBERRA INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
MANAGEMENT STOCKHOLDERS
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ Staf van Cauter
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Staf van Cauter
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
