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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 29, 2000
JACKSON PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-53987 75-2470881
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2997 Clarkson Road
Chesterfield, Missouri 63017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (636) 207-2700
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Not Applicable
(Former name or former address, if changed since last report)
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INFORMATION TO BE INCLUDED IN REPORT
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On December 29, 2000, Jackson Products, Inc. (the "Company"), SCG
Acquisition LLC ("SCG") and certain of the stockholders of the Company entered
into a Stock Purchase Agreement (the "Purchase Agreement"), whereby SCG agreed
to acquire 50% of the common stock of the Company (the "Common Stock") from the
current stockholders of the Company (the "Stockholders") who execute the
Purchase Agreement or an amendment thereto. The Stockholders will continue to
hold 50% of the Common Stock and will continue to have the right to appoint a
majority of the board of directors of the Company. The transaction has been
approved by the boards of directors of the Company and SCG and is expected to
close in February 2001.
Included as exhibits hereto are the Purchase Agreement and the documents
relating thereto and the foregoing description is qualified in its entirety by
reference to and incorporation of the terms and provisions contained in those
exhibits.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not Applicable.
Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Regulation FD Disclosure.
Not Applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
JACKSON PRODUCTS, INC.
Date: January 16, 2001 By: /s/ Christopher T. Paule
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Name: Christopher T. Paule
Title: President
EXHIBIT INDEX
Exhibit
Number Description
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2.1 Stock Purchase Agreement dated as of December 29, 2000 by and among
Jackson Products, Inc., SCG Acquisition LLC and the selling
stockholders signatory thereto*....................................
* The schedules to this agreement have not been filed pursuant to
Item 601(b)(2) of Regulation S-K. Such schedules will be filed
upon the request of the Securities and Exchange Commission.
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STOCK PURCHASE AGREEMENT
by and among
JACKSON PRODUCTS, INC.,
SCG ACQUISITION LLC
and
THE SELLING STOCKHOLDERS SIGNATORY HERETO
Dated as of December 29, 2000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...............................................1
Section 1.1. Definitions..........................................1
Section 1.2. Terminology..........................................3
ARTICLE II PURCHASE AND SALE OF COMPANY SHARES.......................4
Section 2.1. Basic Transaction....................................4
Section 2.2. Purchase Price.......................................4
Section 2.3. The Closing..........................................4
Section 2.4. Closing Deliveries by the Sellers....................4
Section 2.5. Closing Deliveries by Buyer..........................5
Section 2.6. Execution by Stockholders............................5
Section 2.7. Conversion and Exercise..............................5
Section 2.8. Access...............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH SELLER
AND THE COMPANY...........................................6
Section 3.1. Title to Shares......................................6
Section 3.2. Authorization of Transaction.........................7
Section 3.3. Noncontravention.....................................7
Section 3.4. Broker Fees..........................................7
Section 3.5. Capitalization.......................................7
Section 3.6. Credit Agreement Representation......................7
Section 3.7. Authorization of Transaction by the Company..........7
Section 3.8. Noncontravention by the Company......................8
Section 3.9. Disclaimer of Other Representations and Warranties...8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...................8
Section 4.1. Organization of the Buyer............................8
Section 4.2. Authorization of Transaction.........................8
Section 4.3. Noncontravention.....................................8
Section 4.4. Brokers' Fees........................................8
Section 4.5. Investment Representations and Covenants of
the Buyer............................................9
Section 4.6. Confidential Information.............................9
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ARTICLE V CONDITIONS TO OBLIGATION OF BUYER.........................9
Section 5.1. Representations and Warranties.......................9
Section 5.2. Compliance with Agreements and Covenants.............9
Section 5.3. Consents.............................................9
Section 5.4. Documents............................................9
Section 5.5. Legal Action.........................................9
Section 5.6. Certificate..........................................9
Section 5.7. Stockholders Agreement...............................9
Section 5.8. Execution by Stockholders; Conversion and Exercise...9
Section 5.9. Amendment of By-Laws.................................9
Section 5.10. Amendment of Certificate of Incorporation...........10
Section 5.11. Appointment of Directors............................10
Section 5.12. Assignment of Proceeds and Security Agreement.......10
Section 5.13. Material Adverse Change.............................10
Section 5.14. Inaccuracies........................................10
Section 5.15. Management Stockholders.............................10
Section 5.16. Releases............................................10
ARTICLE VI CONDITIONS TO OBLIGATION OF THE SELLERS..................10
Section 6.1. Representations and Warranties......................10
Section 6.2. Compliance with Agreements and Covenants............10
Section 6.3. Consents............................................10
Section 6.4. Documents...........................................10
Section 6.5. Legal Action........................................11
Section 6.6. Certificate.........................................11
Section 6.7. Stockholders Agreement..............................11
Section 6.8. Releases............................................11
ARTICLE VII SURVIVAL AND REMEDY; INDEMNIFICATION................... 11
Section 7.1. Survival of Representations and Warranties..........11
Section 7.2. Indemnification by the Sellers......................11
Section 7.3. Indemnification by the Buyer........................12
Section 7.4. Third-Party Claims..................................12
Section 7.5. Other Indemnification Provisions....................13
ARTICLE VIII TERMINATION..............................................13
Section 8.1. Termination of Agreement............................13
Section 8.2. Effect of Termination...............................13
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ARTICLE IX MISCELLANEOUS............................................14
Section 9.1. Expenses............................................14
Section 9.2. Press Releases and Public Announcements.............14
Section 9.3. No Third-Party Beneficiaries........................14
Section 9.4. Entire Agreement....................................14
Section 9.5. Succession and Assignment...........................14
Section 9.6. Counterparts........................................14
Section 9.7. Headings............................................14
Section 9.8. Notices.............................................14
Section 9.9. Governing Law.......................................15
Section 9.10. Amendments and Waivers..............................15
Section 9.11. Severability........................................16
Section 9.12. Construction........................................16
Section 9.13. Incorporation of Exhibits, Annexes and Sections.....16
Section 9.14. Specific Performance................................16
Section 9.15. Submission to Jurisdiction..........................16
Section 9.16. Sellers Representative..............................16
Section 9.17. Binding Effect......................................17
Section 9.18. Acknowledgments of Buyer............................17
Exhibits
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Exhibit A Form of Stockholders Agreement
Exhibit B Form of Mayer, Brown & Platt Legal Opinion
Exhibit C Form of Vinson & Elkins L.L.P. Legal Opinion
Exhibit D Form of Amended and Restated and By-Laws
Exhibit E Form of Second Amended and Restated Certificate of Incorporation
Exhibit F Form of Release
Schedules
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Schedule I Capitalization; Equity Arrangements
Schedule II Purchased Securities
Schedule III Credit Agreement Schedules
Schedule IV Events Since September 30, 2000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement entered into as of December 29, 2000, by and
among Jackson Products, Inc., a Delaware corporation (the "Company"), SCG
Acquisition LLC, a Delaware limited liability company (the "Buyer"), and certain
of the stockholders of the Company listed under the heading "Sellers" on the
signature page hereto (each a "Seller" and collectively, the "Sellers"). The
Buyer, the Sellers and the Company are referred to collectively herein as the
"Parties". Certain capitalized terms used herein are defined in Article I.
W I T N E S S E T H
WHEREAS, the Sellers own all of the outstanding Class A Common Stock, Class
C Common Stock, Warrants and Options of the Company;
WHEREAS, prior to the consummation of the transactions contemplated by this
Agreement, the Sellers shall convert certain shares of Class C Common Stock into
shares of Class A Common Stock and Class B Common Stock, exercise all of the
outstanding Warrants for shares of Class A Common Stock and exercise certain
outstanding Options for shares of Class C Common Stock (collectively, the
"Conversion");
WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers
desire to sell to the Buyer, the shares of Class A Common Stock and Class B
Common Stock listed on Schedule II hereto upon the terms and subject to the
conditions set forth herein;
WHEREAS, for and in consideration of the agreement of Buyer to provide the
funds to pay certain amounts payable by the Company as contemplated by Section
2.2, the Company enters into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms shall have the following
meanings for the purposes of this Agreement:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means with respect to any Person, (a) any Person which
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, or (b) any Person
who is a director or executive officer (i) of such Person, (ii) of any
Subsidiary of such Person, or (iii) of any Person described in clause (a) above,
or with respect to any Stockholder, the Company; provided, that any Affiliate of
a corporation shall be deemed an Affiliate of such corporation's stockholders.
For purposes of this definition, "control" of a Person shall mean the power,
direct or indirect, (i) to vote or direct the voting of more than 50% of the
outstanding shares of Voting Stock of such Person, or (ii) to direct or cause
the direction of the management and policies of such Person, whether by contract
or otherwise.
"Agreement" means this Agreement, including all exhibits and schedules
hereto, as it and they may be amended from time to time in accordance herewith
or therewith, as applicable.
"Authority" means any governmental, regulatory or administrative body,
agency, subdivision or authority, any court or judicial authority, any public,
private or industry regulatory authority, whether foreign, national, federal,
state or local, or any Person lawfully empowered by any of the foregoing to
enforce or seek compliance with any regulation.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banking institutions in the State of New York are authorized or required
by Law or other governmental action to close.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Funding Amount" has the meaning set forth in Section 2.2.
"Buyer Indemnifying Party" has the meaning set forth in Section 7.3.
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"Claim Notice" has the meaning set forth in Section 7.4(a).
"Class A Common Stock" means the Class A Common Stock, par value $0.01 per
share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value $0.01 per
share, of the Company.
"Class C Common Stock" means the Class C Common Stock, par value $0.01 per
share, of the Company.
"Closing" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 2.3.
"Closing Payments" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means, collectively, the Class A Common Stock, the Class B
Common Stock and the Class C Common Stock.
"Company" has the meaning set forth in the Preamble.
"Company Securities" means the Common Stock, the Warrants and the Options.
"Confidentiality Agreement" means the Confidentiality Agreement, dated as
of July 14, 2000, between the Company and Summit Capital Group, LLC relating to
the transactions contemplated hereby.
"Contract" means any contract, lease, commitment, understanding, sales
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan permit or license, whether written or oral, which is
intended or purports to be binding and enforceable.
"Conversion" has the meaning set forth in the Preamble.
"Credit Agreement" means the Revolving Credit and Acquisition Loan
Agreement, dated as of April 22, 1998, as amended by Amendment Agreement No. 1,
dated as of June 19, 1998, as amended by Amendment Agreement No. 2, dated as of
May 17, 1999, by and among the Company, the Lenders parties thereto, BankBoston,
N.A., as Agent, and Mercantile Bank National Association, as Co-Agent.
"Indemnified Party" has the meaning set forth in Section 7.4(a).
"Indemnifying Party" has the meaning set forth in Section 7.4(a).
"Indenture" shall mean the Indenture, dated as of April 22, 1998, executed
by the Company, its Subsidiaries and Jackson Acquisition, Inc. in favor of State
Street Bank and Trust Company.
"Law" means any law, statute, regulation, ordinance, rule, order, decree,
judgment, consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed upon or imposed by any Authority.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Lien" means any mortgage, lien (except any lien for Taxes not yet due and
payable), charge, restriction, pledge, security interest, option, lease or
sublease, claim, right of any third party, easement, encroachment or
encumbrance.
"Material Adverse Change" means a change which would reasonably be expected
to have a material adverse effect on the business or financial condition or
prospects of the Company and its Subsidiaries taken as a whole; provided, that
in determining whether a Material Adverse Change has occurred, changes or
effects relating to (i) conditions in the highway safety product industry or the
personal safety product industry generally or (ii) United States or global
economic conditions or financial markets in general, will not be considered.
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"Option Proceeds" has the meaning set forth in Section 2.7(c).
"Options" means any options outstanding as of the date hereof to acquire
shares of Class C Common Stock.
"Parties" has the meaning set forth in the Preamble.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
or an Authority.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchased Securities" has the meaning set forth in Section 2.1.
"SAR Agreements" means the Stock Appreciation Rights Agreements, dated as
of April 22, 1998, between the Company and each of Robert H. Elkin and
Christopher T. Paule.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning set forth in the
Stockholders Agreement.
"Sellers" shall mean the Persons listed under the heading "Sellers" on the
signature page hereto and each other Stockholder who executes an amendment to
this Agreement prior to the Closing and becomes a party hereto.
"Seller Indemnifying Party" shall have the meaning set forth in Section
7.2.
"Sellers Representative" means John W. Jordan II or his appointed
successor.
"Sellers Representative Replacement Instrument" has the meaning set forth
in Section 9.16(b).
"Stockholder" means any Person who owns shares of Common Stock.
"Stockholders Agreement" means the Stockholders Agreement, among the
Company, the Buyer and the Sellers, in substantially the form attached as
Exhibit A hereto.
"Subsidiary" means any Person in which is, directly or indirectly,
controlled by the Company, where the term control shall have the same meaning as
set forth in the definition of Affiliates.
"Summit Directors" has the meaning set forth in the Stockholders Agreement.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including Taxes under Code ss59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other Tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning set forth in Section 7.4(a).
"Warrant Proceeds" has the meaning set forth in Section 2.7(b).
"Warrants" means the warrants to acquire 27,721.23 shares of Class A Common
Stock issued pursuant to the Securities Purchase Agreement.
Section 1.2. TERMINOLOGY. All article, section, subsection, schedule and
exhibit references used in this Agreement are to this Agreement unless otherwise
specified. All schedules and exhibits attached to this Agreement constitute a
part of this Agreement and are incorporated herein. Unless the context of this
Agreement clearly requires otherwise, (a) the singular shall include the plural
and the plural shall include the singular wherever and as often as may be
appropriate, (b) the words "includes" or "including" shall mean "including
without limitation" and (c) the words "hereof," "herein," "hereunder," and
similar terms in this Agreement shall refer to this Agreement as a whole and not
any particular section or article in which such words appear.
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ARTICLE II
PURCHASE AND SALE OF COMPANY SHARES
SECTION 2.1. BASIC TRANSACTION. Subject to the terms and conditions of this
Agreement, at the Closing, the Sellers shall collectively sell, assign, convey,
transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and
take assignment and delivery of, all right, title and interest in and to a
number of shares of Common Stock (which shares shall be Class A Common Stock,
except as expressly set forth in Section 2.7(d)) equal to fifty percent (50%) of
the shares of Common Stock (determined on a fully-diluted basis) issued and
outstanding on the Closing Date or subject to being issued pursuant to Options
granted by the Company on or prior to the Closing Date, in the amounts set forth
opposite the name of each such Seller on Schedule II, as such schedule may be
amended from time to time, for the consideration specified below in Section 2.2
(collectively, the "Purchased Securities").
SECTION 2.2. PURCHASE PRICE. The Buyer agrees to pay to the Sellers at the
Closing for the Purchased Securities an aggregate purchase price (the "Purchase
Price") equal to $41,500,000 (the "Buyer Funding Amount") less the Closing
Payments by delivery of cash payable by wire transfer or delivery of other
immediately available funds. The Purchase Price shall be reduced, on a
dollar-for-dollar basis, by the following payments (the "Closing Payments") to
be paid at Closing for the benefit of the Company from the Buyer Funding Amount:
(i) to Merrill Lynch & Co., (ii) to TJC Management Corp. and (iii) in respect of
the SAR Agreements, in each case, as a result of the transactions contemplated
by this Agreement.
SECTION 2.3. THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Mayer, Brown &
Platt, 1675 Broadway, New York, NY 10019, U.S.A., commencing at 10:00 a.m. local
time on the second Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Buyer and the Sellers Representative may mutually determine (the "Closing
Date"); provided, however, that the Closing Date shall be no earlier than
February 1, 2001.
SECTION 2.4. CLOSING DELIVERIES BY THE SELLERS. To effect the transfer
referred to in Section 2.1 hereof and the delivery of the consideration
described in Section 2.2 hereof, the Sellers shall, on or prior to the Closing
Date, deliver the following to the Buyer:
(a) certificates evidencing fifty percent (50%) of the shares of
Common Stock, (determined on a fully-diluted basis) (which shares shall be
Class A Common Stock, except as expressly set forth in Section 2.7 (d)) in
the amounts set forth opposite the name of each such Seller on Schedule II
hereto, as such schedule may be amended from time to time, free and clear
of any and all Liens, duly endorsed in blank by the applicable Seller for
transfer or accompanied by stock powers duly executed in blank;
(b) all consents, approvals, releases and waivers from all Authorities
and other Persons required or necessary as a result of the transactions
contemplated hereby, reasonably satisfactory in form and substance to the
Buyer and its counsel;
(c) the Stockholders Agreement executed by each Seller and each other
Person that will be a Stockholder of the Company upon Closing other than
the Buyer;
(d) a legal opinion prepared by Mayer, Brown & Platt, or such other
law firm reasonably acceptable to the Buyer, in substantially the same form
attached as Exhibit B hereto;
(e) confirmations and releases from Merrill Lynch & Co., TJC
Management Corp. and the beneficiaries of the SAR Agreements providing that
all payments to such parties due and owing as a result of the transactions
contemplated by this Agreement have been paid in full and indemnifying and
releasing the Buyer and the Company against all claims arising prior to the
Closing Date and, except with respect to TJC Management Corp., providing
that their respective agreements with the Company are terminated and are of
no further force or effect (and any obligation of the Company with respect
thereto have been fully paid or otherwise satisfied);
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(f) all other documents required to be delivered pursuant to Article V
hereof not specifically mentioned above in this Section 2.4 and all other
documents and certificates reasonably requested by Buyer related to the
consummation of the transactions contemplated hereby; and
(g) all instruments and documents executed and delivered to the Buyer
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to the Buyer.
SECTION 2.5. CLOSING DELIVERIES BY BUYER. To effect the transfer to in
Section 2.1 hereof and the delivery of the consideration described in Section
2.2 hereof, the Buyer shall, on or prior to the Closing Date, deliver the
following to the Sellers Representative:
(a) the Buyer Funding Amount by wire transfer of immediately available
funds to accounts designated by written notice by Sellers Representative
and each recipient of one of the Closing Payments to the Buyer at least
five Business Days prior to the Closing Date (Sellers Representative will
be responsible for disbursing the Purchase Price to the Sellers pro rata in
accordance with their respective ownership percentages set forth on
Schedule II);
(b) the Stockholders Agreement executed by the Buyer;
(c) a legal opinion prepared by Vinson & Elkins L.L.P., or such other
law firm reasonably acceptable to the Sellers Representative, in
substantially the same form as Exhibit C hereto;
(d) all other documents required to be delivered pursuant to Article
VI hereof not specifically mentioned above in this Section 2.5 and all
other documents and certificates reasonably requested by the sellers
related to the consummation of the transaction contemplated hereby; and
(e) all instruments and documents executed and delivered to the
Sellers and the Sellers Representative pursuant hereto shall be in form and
substance, and shall be executed in a manner, reasonably satisfactory to
the Sellers Representative.
SECTION 2.6. EXECUTION BY STOCKHOLDERS. The Buyer recognizes that not all
of the Stockholders will execute this Agreement on the date hereof. The Company
and the Stockholders who are executing this Agreement on the date hereof will,
within a reasonable time after the date hereof but, in any event, on or before
the Closing Date, (i) cause each of the other Stockholders of the Company to (A)
execute an amendment to this Agreement that makes such Stockholders a Seller
under this Agreement and causes such Stockholder (along with the original
signatories hereto) to collectively sell, assign, convey, transfer and deliver
to the Buyer fifty percent (50%) of the Common Stock (determined on a
fully-diluted basis) as described in Section 2.1 and (B) take the actions set
forth in Section 2.7 and (ii) cause all Stockholders to execute the Stockholders
Agreement.
SECTION 2.7. CONVERSION AND EXERCISE.
(a) Three Business Days prior to the Closing, each Seller who is
a holder of Class C Common Stock shall, to the extent being sold
pursuant to this Agreement, convert such shares into shares of Class A
Common Stock and, if requested by the Sellers Representative under
Section 2.7 (d), shares of Class B Common Stock, and one Business Day
prior to the Closing, the Company shall issue and deliver to the
Sellers Representative stock certificates evidencing the Class A
Common Stock and Class B Common Stock issued upon such conversion and
shall cancel the Class C Common Stock .
(b) Three Business Days prior to Closing, each Stockholder who is
a holder of Warrants shall exercise such Warrants for Class A Common
Stock in accordance with its terms, and in connection with such
exercise, each such Stockholder shall deliver to the Company their
Warrants together with exercise instructions and certified checks or
wire transfers representing the exercise price (the "Warrant
Proceeds"), and one Business Day prior to the Closing, the Company
shall issue and deliver to the Sellers Representative stock
certificates evidencing the Class A Common Stock issued upon such
exercise and shall cancel the Warrants. The Warrant Proceeds are
hereby assigned, transferred and delivered by the Company to the
Sellers Representative for purposes of being paid and distributed
pursuant to Section 2.5(a). Each Seller who is a holder of Warrants
agrees that the issuance of the Class A Common Stock by the Company
upon the exercise of the Warrants constitutes full performance of all
obligations of the Company in respect of the Warrants.
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(c) Three Business Days prior to Closing, each Seller who is a
holder of Options shall, to the extent such Seller is selling under
this Agreement shares of Class C Common Stock issuable upon the
exercise of such Options, exercise such Options for Class C Common
Stock (notwithstanding anything to the contrary in the Options or any
option plan or option agreement incident to the Options) in accordance
with its terms, and in connection with such exercise, each such Seller
shall deliver to the Company their Options together with exercise
instructions and certified checks or wire transfers representing the
exercise price (the "Option Proceeds"), and one Business Day prior to
the Closing, the Company shall issue and deliver to the Sellers
Representative stock certificates evidencing the Class C Common Stock
issued upon such exercise and shall cancel the Options. The Option
Proceeds are hereby assigned, transferred and delivered by the Company
to the Sellers Representative for purposes of being paid and
distributed pursuant to Section 2.5(a). Each Seller who is a holder of
Options agrees that the issuance of the Class C Common Stock by the
Company upon the exercise of the Options constitutes full performance
of all obligations of the Company in respect of the Options. Such
shares of Class C Common Stock shall be converted into shares of Class
A Common Stock and Class B Common Stock pursuant to Section 2.7(a).
(d) The Parties hereto acknowledge and agree that it is the
intent of the Parties to convey at Closing to Buyer a number of shares
of Common Stock equal to 50% of all outstanding Common Stock as of the
Closing plus all Common Stock that are subject to issuance after
Closing as a result of exercise of Options that have been granted on
or prior to the Closing Date ("Option Shares"). However, in order to
comply with the requirements of the Indenture, to the extent there
exist Option Shares as of the Closing, the Common Stock conveyed to
Buyer shall include Class B Common Stock (which may consist of shares
of Class C Common Stock converted to Class B Common Stock pursuant to
Section 2.7(a) or shares of Class A Common Stock otherwise converted
to Class B Common Stock) equal to 50% of the Option Shares. Such Class
B Common Stock may be converted to Class A Common Stock by Buyer at
any time, subject to the restrictions in the Stockholders Agreement.
SECTION 2.8. ACCESS. Each Seller and Company agree that during the period
commencing on the date hereof and ending on the Closing Date, the Buyer and its
counsel, accountants and other authorized representatives may review and inspect
the books, records and other assets and properties of the Company, and each
Seller and the Company shall cause to be made available to Buyer and such
persons, the officers and other employees of the Company and its counsel,
accountants and other advisors and representatives from time to time during
normal business hours so as to permit Buyer and its representatives to fully
discuss and have access to the knowledge of such officers, employees, advisors
and representatives of the Company as Buyer deems reasonably necessary with
respect to the affairs of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
AND THE COMPANY
Each Seller (severally and on behalf of itself only and not jointly) and
the Company hereby represents and warrants to the Buyer that the statements
contained in this Article III (but the Company represents and warrants only as
to Sections 3.5 through 3.8 and each Seller represents and warrants only as to
Sections 3.1 through 3.6) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then) with respect to such Seller or the Company as the case may be.
SECTION 3.1. TITLE TO SHARES. It holds of record and owns beneficially all
of the Common Stock as set forth opposite such Seller's name on Schedule I, free
and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Liens, options, warrants,
purchase rights, Contracts, commitments, equities, claims and demands. It is not
a party to any option, warrant, purchase right or other Contract or commitment
that could require it to sell, transfer or otherwise dispose of any capital
stock of the Company (other than this Agreement).
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SECTION 3.2. AUTHORIZATION OF TRANSACTION. It has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. With respect to each Seller
that is not a natural person, the execution, delivery and performance by it of
this Agreement has been duly and validly approved by its board of directors or
other governing body, and no other corporate actions or proceedings on the part
of it are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement, and upon execution, the Stockholders
Agreement, constitutes the valid and legally binding obligation of each Seller,
enforceable in accordance with its terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally and by equitable principles. It need not give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any Authority in order to consummate the transactions contemplated
by this Agreement.
SECTION 3.3. NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any Law, or other restriction of any Authority to which it is
subject or any provision of its formation documents; (b) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under any material Contract to which it is a party or by
which it is bound or to which any of its assets is subject or (c) require any
filing or registration by it with, or consent or approval with respect to it of,
any Authority. There are no voting trusts or other agreements (including as to
voting, preferential purchase rights, registration rights, or any other matter)
relating to the Company Securities held by it that will be binding on such
Company Securities or cause to exist any rights, liabilities or obligations for
the holders thereof after Closing, except for the Stockholders Agreement and, in
the case of Company Securities that will not be Purchased Securities, the
agreements listed in Schedule I.
SECTION 3.4. BROKER FEES. There are no Liabilities or obligations to pay
any fees or commissions to any broker, finder, agent or other Person with
respect to the transactions contemplated by this Agreement for which the Buyer
will be liable or obligated, or the Company will be liable or obligated, after
the Closing.
SECTION 3.5. CAPITALIZATION. Schedule I sets forth the authorized, issued
and outstanding capital stock of the Company and each Subsidiary (as well as all
treasury shares) and all authorized, issued and outstanding warrants, options,
subscription and other rights in equity, or convertible into the equity of, the
Company or any Subsidiary. The Company Securities have been duly authorized and
are validly issued, fully paid and non-assessable, with no liability attaching
to the ownership thereof. Except as set forth on Schedule I hereto or pursuant
to the Conversion, neither the Company nor any of the Subsidiaries have any
contingent or other obligations to purchase, redeem or otherwise acquire any
Company Securities, stock or any interest therein or to pay any dividend or make
any distribution in respect thereof. Neither the Company nor any of the
Subsidiaries is a party to any voting agreement, voting trust or similar
agreement or arrangement relating to the Company Securities or any agreement or
arrangement (except for the Stockholders Agreement) relating to or providing for
registration rights with respect to the Company Securities.
SECTION 3.6. CREDIT AGREEMENT REPRESENTATION. The representations and
warranties set forth in Section 8 of the Credit Agreement are true and correct,
except as set forth on the disclosure schedule attached hereto as Schedule III
(the subparts of which correspond to the applicable section number of Section 8
of the Credit Agreement).
SECTION 3.7. AUTHORIZATION OF TRANSACTION BY THE COMPANY. The Company has
full power and authority (including full corporate power and authority) to
execute this Agreement and to perform its obligations hereunder. The execution,
delivery and performance by the Company of this Agreement has been duly and
validly approved by the board of directors of the Company, and no other
corporate actions or proceedings on the part of the Company are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement, and upon execution, the Stockholders Agreement, constitutes the valid
and legally binding obligation of the Company, enforceable in accordance with
its terms and conditions, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally and by
equitable principles. The Company need not give any notice to, make any filing
with, or obtain any authorization, consent or approval of any Authority in order
to consummate the transactions contemplated by this Agreement.
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SECTION 3.8. NONCONTRAVENTION BY THE COMPANY. Neither the execution and the
delivery of this Agreement by Company, nor the consummation of the transactions
contemplated hereby, will (a) violate any Law, or other restriction of any
Authority to which the Company is subject or any provision of its formation
documents; (b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any Contract to which
the Company is a party or by which it is bound or to which any of its assets is
subject or (c) require any filing or registration by the Company with, or
consent or approval with respect to it of, any Authority. There are no
shareholder agreements (including as to voting, preferential purchase rights,
registration rights, or any other matter) to which the Company is a party that
will be binding on or cause to exist any rights, liabilities or obligations for
the Company after Closing, except the Stockholders Agreement and the agreements
listed in Schedule I.
SECTION 3.9. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Neither
the Sellers nor the Company make, and they have not made, any representations or
warranties relating to the Company or any Subsidiaries in connection with the
transactions contemplated hereby other than those expressly set forth in this
Article III. It is also understood that any cost estimates, projections or other
productions, any data, any financial information or any memoranda or
presentations are not and shall not be deemed to be or to include
representations or warranties of the Sellers and the Company, except to the
extent otherwise expressly covered by the representations and warranties
hereunder. No person has been authorized by the Sellers or the Company to make
any representation or warranty relating to the Company or any Subsidiary, the
businesses of the Company or any Subsidiary or otherwise in connection with the
transactions contemplated hereby except as set forth in this Article III and, if
made, such representation or warranty must not be relied upon as having been
authorized by the Company, any Subsidiary or any of the Sellers and the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Sellers that the statements
contained in Sections 4.1 through 4.6 with respect to it are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then).
SECTION 4.1. ORGANIZATION OF THE BUYER. It is a limited liability company
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware.
SECTION 4.2. AUTHORIZATION OF TRANSACTION. It has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance by it of this Agreement has been duly
and validly approved by the governing body of it, and no other actions or
proceedings on the part of it are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement, and upon execution, the
Stockholders Agreement, constitutes the valid and legally binding obligation of
it, enforceable in accordance with its terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally and by equitable principles. It need not give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any Authority in order to consummate the transactions contemplated
by this Agreement.
SECTION 4.3. NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any Law of any Authority to which it is subject or any
provision of its limited liability company certificate or agreement, (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any material Contract to which it is a
party or by which it is bound or to which any of its assets is subject or (c)
require any filing or registration by it with, or consent or approval with
respect to it, any Authority.
SECTION 4.4. BROKERS' FEES. It has no Liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which any Seller could become
liable or obligated.
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SECTION 4.5. INVESTMENT REPRESENTATIONS AND COVENANTS OF THE BUYER.
(a) It is acquiring the Company Securities for investment for its own
account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and it has no present intention of
selling, granting any participation in or otherwise distributing the same
in violation of the Securities Act. It does not have any Contract with any
Person to sell, transfer or grant participation to such Person, with
respect to any of the Company Securities.
(b) It represents that it has sufficient knowledge and experience in
financial and business matters to evaluate the merits and risks of its
investment in the Company, and it has the ability to bear the economic
risks of such investment.
(c) It represents that it is an "accredited investor" pursuant to Rule
501 of Regulation D under the Securities Act.
SECTION 4.6. CONFIDENTIAL INFORMATION. It is not in breach of and has
complied in all respects with its obligations under the Confidentiality
Agreement.
ARTICLE V
CONDITIONS TO OBLIGATION OF BUYER
The obligation of the Buyer to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
SECTION 5.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Article III above shall be true and correct in all
material respects at and as of the Closing Date.
SECTION 5.2. COMPLIANCE WITH AGREEMENTS AND COVENANTS. The Sellers shall
have performed and complied in all material respects with all of the covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by them on or prior to the Closing Date.
SECTION 5.3. CONSENTS. The Parties shall have received all other
authorizations, consents and approvals referred to in Sections 3.3 and 4.3
above.
SECTION 5.4. DOCUMENTS. All actions to be taken by the Sellers and the
Sellers Representative in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Buyer.
SECTION 5.5. LEGAL ACTION. There shall not be any threatened or pending
action, proceeding or other application before any Authority brought by any
Person or Authority challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain any material damages from the Sellers or the Buyer as a result of such
transaction.
SECTION 5.6. CERTIFICATE. The Sellers shall deliver a certificate to the
Buyer, in form and substance reasonably satisfactory to the Buyer to the effect
that each of the conditions specified in Section 5.1, 5.2 and 5.13 is satisfied
in all respects.
SECTION 5.7. STOCKHOLDERS AGREEMENT. Each of the Company, the Sellers, and
each other Person that will be a Stockholder of the Company upon Closing (other
than the Buyer) shall have executed the Stockholders Agreement.
SECTION 5.8. EXECUTION BY STOCKHOLDERS; CONVERSION AND EXERCISE. The
Sellers shall have performed or caused to be performed, as the case may be, the
covenants and obligations pursuant to Sections 2.6 and 2.7 on or prior to the
Closing Date.
SECTION 5.9. AMENDMENT OF BY-LAWS. The Stockholders shall have duly
adopted, amended and restated the Amended and Restated By-Laws of the Company in
substantially the form attached hereto as Exhibit D.
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SECTION 5.10. AMENDMENT OF CERTIFICATE OF INCORPORATION. The Stockholders
shall have duly adopted the Second Amended and Restated Certificate of
Incorporation of the Company in substantially the form attached hereto as
Exhibit E.
SECTION 5.11. APPOINTMENT OF DIRECTORS. The Summit Directors have been
appointed to the board of directors of the Company.
SECTION 5.12. ASSIGNMENT OF PROCEEDS AND SECURITY AGREEMENT. TJC Management
Corporation shall have delivered an Assignment of Proceeds and Security
Agreement in a form to be reasonably agreed between TJC Management Corporation
and the Buyer whereby SCG Acquisition LLC or its designee shall be entitled to
receive one half of all proceeds received by TJC Management Corporation under
that certain Management Consulting Agreement, dated as of August 16, 1995, by
and among the Company and TJC Management Corporation, as amended.
SECTION 5.13. MATERIAL ADVERSE CHANGE. Since September 30, 2000 and except
as set forth on Schedule IV, no Material Adverse Change shall have occurred and
the Company shall not have taken any action set forth in Article III, Section Q
of the Amended and Restated By-Laws in substantially the form attached hereto as
Exhibit D.
SECTION 5.14. INACCURACIES. The Company and its Subsidiaries shall not be
in violation of the Securities Act, and no filing required under the Securities
Act made by the Company or any of its Subsidiaries shall contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading.
SECTION 5.15. MANAGEMENT STOCKHOLDERS. The Stockholders of the Company that
are employees of the Company and its Subsidiaries (other than Robert H. Elkin,
Allan A. Hunning and Darold G. Oltjenbruns) shall upon consummation of the
transactions contemplated by this Agreement continue to own at least 80% of the
Common Stock (determined on a fully-diluted basis) held by such Stockholders as
of the date hereof and Christopher T. Paule shall upon consummation of the
transactions contemplated by this Agreement continue to own at least 80% of the
Common Stock (determined on a fully-diluted basis) held by him as of the date
hereof.
SECTION 5.16. RELEASES. Each of the Sellers and the Company shall have
entered into releases, substantially in the form of Exhibit F attached hereto
(modified as applicable for the Party giving the release), on or before the
Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATION OF THE SELLERS
The obligation of the Sellers to consummate the transactions to be
performed by Sellers in connection with the Closing is subject to satisfaction
of the following conditions:
SECTION 6.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Article IV above shall be true and correct in all
material respects at and as of the Closing Date.
SECTION 6.2. COMPLIANCE WITH AGREEMENTS AND COVENANTS. The Buyer shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by it on or prior to the Closing Date.
SECTION 6.3. CONSENTS. The Parties shall have received all other
authorizations, consents and approvals referred to in Sections 3.3 and 4.3
above.
SECTION 6.4. DOCUMENTS. All actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Sellers.
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SECTION 6.5. LEGAL ACTION. There shall not be any threatened or pending
action, proceeding or other application before any Authority brought by any
Person or Authority challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain any material damages from the Sellers or the Buyer as a result of such
transaction.
SECTION 6.6. CERTIFICATE. The Buyer shall deliver a certificate to the
Sellers to the effect that each of the conditions specified in Section 6.1 and
6.2 is satisfied in all respects.
SECTION 6.7. STOCKHOLDERS AGREEMENT. The Buyer shall have executed the
Stockholders Agreement.
SECTION 6.8. RELEASES. The Buyer shall have entered into a release,
substantially in the form of Exhibit F attached hereto, on or before the Closing
Date.
ARTICLE VII
SURVIVAL AND REMEDY; INDEMNIFICATION
SECTION 7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the terms
and conditions of this Agreement, together with the warranties, representations
and agreements contained herein or in any instrument or document delivered or to
be delivered pursuant to this Agreement, shall survive the execution of this
Agreement and the Closing Date, notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto. Except as provided below,
the representations and warranties and the indemnities related thereto of the
Sellers contained in Article III of this Agreement and the representations and
warranties and the indemnities related thereto of the Buyer contained in Article
IV shall survive the Closing and continue in full force and effect indefinitely.
Notwithstanding anything in this Agreement to the contrary, the representations
and warranties set forth in Section 3.6 shall not survive the Closing and none
of the Company or any Seller shall have any liability with respect thereto after
Closing.
SECTION 7.2. INDEMNIFICATION BY THE SELLERS. In the event that there is a
breach (or an alleged breach) of any of the representations or warranties made
by any Seller or Company (each a "Seller Indemnifying Party") in Article III of
this Agreement or any other document contemplated hereby, or in any document
relating hereto or thereto, then, in each case, provided that the Buyer makes a
written claim for indemnification against such Seller Indemnifying Party, such
Seller Indemnifying Party agrees (subject to the limitations set forth in this
Section 7.2) to, severally and on behalf of itself only and not jointly,
indemnify the Buyer and each of their respective Affiliates, directors,
officers, partners, trustees, employees, representatives, agents and members
from and against, and agrees to hold the Buyer and any of the foregoing persons
harmless from, any and all Adverse Consequences incurred or suffered by the
Buyer or any of the foregoing persons resulting from, arising out of, relating
to, in the nature of, or caused by any breach of, or any inaccuracy in, any
representation or warranty made by such Seller Indemnifying Party pursuant to
this Agreement, any agreement or instrument contemplated hereby, any document
relating hereto or thereto; provided, however, that such Seller Indemnifying
Party's obligation to indemnify such persons from and against the entirety of
any Adverse Consequences resulting from, arising out of, or relating to the
items identified in this Article VII shall not exceed the net proceeds received
by such Seller Indemnifying Party pursuant to this Agreement.
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SECTION 7.3. INDEMNIFICATION BY THE BUYER. In the event that there is a
breach (or an alleged breach) of any of the representations or warranties made
by the Buyer (a "Buyer Indemnifying Party") in Article IV of this Agreement or
any other document contemplated hereby, or in any document related hereto or
thereto, then, in each case, provided that the Sellers Representative makes a
written claim for indemnification against such Buyer Indemnifying Party, such
Buyer Indemnifying Party agrees (subject to the limitations set forth in this
Section 7.3), to, severally on behalf of itself only and not jointly indemnify
the Sellers and each of their respective Affiliates, directors, officers,
partners, trustees, employees, stockholders, members, representatives, and
agents from and against, and agrees to hold the Sellers or any of the foregoing
persons harmless from, any and all Adverse Consequences incurred or suffered by
the Sellers or any of the foregoing persons resulting from, arising out of,
relating to, in the nature of, or caused by any breach of, or any inaccuracy in,
any representation or warranty made by such Buyer Indemnifying Party pursuant to
this Agreement, any agreement or instrument contemplated hereby, or in any
document relating hereto or thereto; provided, however, that such Buyer
Indemnifying Party's obligation to indemnify such persons from and against the
entirety of any Adverse Consequences resulting from, arising out of, or relating
to the items identified in this Article VII shall not exceed the portion of the
Purchase Price paid by such Buyer Indemnifying party pursuant to this Agreement.
SECTION 7.4. THIRD-PARTY CLAIMS.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Article VII, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing (the
"Claim Notice"); provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after receipt by the Indemnifying Party of the Claim Notice that the
Indemnifying Party will indemnify the Indemnified Party from and against
the entirety of any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Third Party Claim involves only money damages and does not seek
an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business interests
of the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 7.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
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(d) In the event any of the conditions in Section 7.4(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses) and (iii) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Article VII.
SECTION 7.5. OTHER INDEMNIFICATION PROVISIONS.
(a) The liability of any party under this Article VII shall be in
addition to, and not exclusive of any other liability that such Party may
have at Law or equity based on a Party's fraudulent acts or omissions. None
of the provisions of this Agreement shall be deemed a waiver of any
defenses which may be available in respect of actions or claims for fraud,
including but not limited to, defenses of statutes of limitations or
limitations of damages.
(b) Indemnification claims shall be reduced, by and to the extent,
that an Indemnified Party shall receive proceeds under insurance policies,
risk sharing pools or similar arrangements specifically as a result of, and
in compensation for, the subject matter of an indemnification claim by such
Indemnified Party, net of any increased premiums or similar costs arising
out of the making of such claims against such arrangements; provided,
however, that an Indemnifying Party shall not be liable to the extent that
the Indemnified Party did not make commercially reasonable efforts to
pursue such insurance claims.
ARTICLE VIII
TERMINATION
SECTION 8.1. TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(a) the Buyer and the Sellers Representative may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice to
the Sellers Representative at any time prior to the Closing if the Closing
shall not have occurred on or before February 2, 2001, by reason of the
failure of any condition precedent under Article V hereof (unless the
failure results primarily from the Buyer breaching any representation or
warranty contained in this Agreement); and
(c) the Sellers Representative (with the consent of the Sellers
holding a majority of the Company Securities may terminate this Agreement
by giving written notice to the Buyer at any time prior to the Closing if
the Closing shall not have occurred on or before February 2, 2001, by
reason of the failure of any condition precedent under Article VI hereof
(unless the failure results primarily from a Seller breaching any
representation, warranty or covenant contained in this Agreement).
SECTION 8.2. EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(other than the provisions of Section 9.1, which shall remain in full force and
effect).
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES. The Company shall pay all of the reasonable and
documented expenses (including reasonable and documented out-of-pocket expenses)
incurred by the Buyer and the Sellers in connection with the transactions
contemplated hereby; provided, that the Company shall not be obligated to pay
the expenses of the Buyer if the Closing does not occur due to Buyer failing to
satisfy the conditions to Closing set forth in Article VI (other than Sections
6.3 and 6.5), provided, further, that no Party shall be entitled to
reimbursement unless it has provided to the other Party and the Company, within
10 days after the Closing, its best written estimate of the amount of expenses
to be reimbursed. The Sellers shall be responsible for all fees and expenses
payable to Merrill Lynch & Co. and TJC Management Corp. and such amounts shall
be deducted from the Purchase Price as provided in Section 2.2.
SECTION 9.2. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the Buyer and the
Sellers Representative; provided, however, that any Party may make any public
disclosure that it believes in good faith is required by applicable Law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its best efforts to advise the other Parties
prior to making the disclosure).
SECTION 9.3. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
SECTION 9.4. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or among
the Parties, whether written or oral, but Buyer is expressly relying on the
Company's filings under the Exchange Act; provided, that the Buyer acknowledges
that the Sellers make no representation or warranty with respect thereto.
SECTION 9.5. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of such Party's rights, interests or obligations hereunder without the prior
written approval of the Buyer and the Sellers Representative; provided, however,
that the Buyer may (a) assign any or all of its rights and interests hereunder
to one or more of its Affiliates or to other Persons that will qualify as
Permitted Transferees under Section 4.2(d) of the Stockholders Agreement
(whether or not the Closing has yet occurred), (b) assign any or all of its
rights and interests hereunder to any of its lenders as security for any
incurred indebtedness or (c) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases the Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 9.7. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.8. NOTICES. Any notices, requests, instruction or other document
to be given hereunder by a Party hereto shall be in writing and shall be deemed
to have been given (a) when received if given in person or by courier or a
courier service, (b) on the date of transmission if sent by facsimile (with
confirmation of receipt) or (c) five Business Days after being deposited in the
U.S. mail, certified or registered mail, postage prepaid.
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(a) If to the Sellers Representative, addressed as follows:
The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: John W. Jordan II
Telephone No.: (212) 572-0800
Facsimile No.: (212) 755-5263
with a copy to:
The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
Telephone No.: (212) 572-0800
Facsimile No.: (212) 755-5263
and a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019-5820
Attention: Martin J. Collins
Telephone No.: (212) 506-2544
Facsimile No.: (212) 262-1910
(b) If to the Buyer, addressed as follows:
Summit Capital Group, LLC
600 Travis, Suite 6110
Houston, Texas 77002
Attention: George B. Kelly
Telephone No.: (713) 332-2700
Facsimile No.: (713) 332-2701
with a copy to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2300
Houston, Texas 77002-6760
Attention: Glenn L. Pinkerton
Telephone No.: (713) 758-2222
Facsimile No.: (713) 758-2346
(c) If to the Company, addressed as follows:
Jackson Products, Inc.
2997 Clarkson Road
Chesterfield, Missouri 63017
Attention: Christopher T. Paule
Telephone No.: (636) 207-2700
Facsimile No.: (636) 207-2800
or to such other individual or address as a Party hereto may designate for
itself by notice given as herein provided.
SECTION 9.9. 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 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.
SECTION 9.10. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and Sellers Representative. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
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SECTION 9.11. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 9.12. CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
SECTION 9.13. INCORPORATION OF EXHIBITS, ANNEXES AND SECTIONS. The
Exhibits, Annexes and Sections identified in this Agreement are incorporated
herein by reference and made a part hereof.
SECTION 9.14. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in accordance with Section 9.15 below, in addition to any other
remedy to which they may be entitled, at law or in equity.
SECTION 9.15. SUBMISSION TO JURISDICTION. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in New York, New York in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on any other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 9.8.
Nothing in this Section 9.15, however, shall affect the right of any Party to
bring any action or proceeding arising out of or relating to this Agreement in
any other court or to serve legal process in any other manner permitted by Law
or at equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by Law or at equity.
SECTION 9.16. SELLERS REPRESENTATIVE.
(a) Notwithstanding any statement to the contrary contained herein,
each Seller hereby irrevocably authorizes and appoints John W. Jordan II or
his successor appointed pursuant to this Section 9.16 (the "Sellers
Representative") as its true and lawful attorney and representative with
full power and authority to take any and all actions and execute any and
all documents and agreements in such Seller's name, place and stead, with
the same effect as if such action were taken or such document or agreement
were executed by such Seller, in connection with any matter or thing
relating to this Agreement, any related agreement or any of the
transactions contemplated hereby or thereby, including (i) to negotiate and
settle any claim for indemnification by Buyer against any Seller, (ii) to
accept any funds on behalf of such Seller and (iii) to enter into
amendments of this Agreement, the Stockholders Agreement and any related
agreements. John W. Jordan II hereby accepts his appointment as the Sellers
Representative and agrees to perform all of the duties of the Sellers
Representative hereunder.
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(b) The Sellers Representative cannot resign or be removed by the
Sellers except upon delivery to the Buyer of a written instrument signed by
the successor Sellers Representative and by the Sellers (or their
successors in interest) having a majority of the ownership percentage as
set forth on Schedule II hereto, as the case may be, in which the successor
Sellers Representative agrees to serve as Sellers Representative and said
Sellers consent thereto (such instrument being referred to as a "Sellers
Representative Replacement Instrument").
(c) The signature of the Sellers Representative on behalf of the
Sellers shall be deemed to be the signature of each of the Sellers, and
they shall be bound by the terms of any documents and agreements executed
and delivered by the Sellers Representative pursuant to this Agreement as
though they were actual signatories thereto. The Buyer shall be entitled to
rely, without any investigation or inquiry by the Buyer, upon all action by
the Sellers Representative as having been taken upon the authority of the
Sellers. Any action by the Sellers Representative taken on behalf of a
Seller shall be conclusively deemed to be the action of such Seller, and
the Buyer shall not have any liability or responsibility to any Seller for
any action taken in reliance thereon.
SECTION 9.17. BINDING EFFECT. This Agreement is binding severally (and not
jointly) among the Sellers and the Buyers (if more than one Buyer) such that
each Seller or Buyer, as applicable, will be responsible for their own acts and
efforts and not those of any other Person.
SECTION 9.18. ACKNOWLEDGMENTS OF BUYER.
(a) The Buyer acknowledges that the Company Securities are not
registered under the Securities Act.
(b) The Buyer acknowledges that under the Securities Act the Company
Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration
is available, and, except as provided in the Stockholders Agreement, the
Company is under no obligation to register any such securities.
(c) The Buyer acknowledges that it has reviewed a copy of Rule 144
promulgated under the Securities Act, which permits limited public resales
of restricted securities, subject to the satisfaction of certain
conditions. The Buyer understands that before any of the Company Securities
may be sold under Rule 144, the following conditions, among others, must be
satisfied, except as otherwise described below: (i) certain public
information about the Company must be available, (ii) the sale must occur
at least one year after the later of the date the securities were sold by
the Company or the date they were sold by an affiliate of the Company,
(iii) the sale must be made in a broker's transaction and (iv) the number
of shares sold must not exceed certain volume limitations.
(d) The Buyer acknowledges that in the event the applicable
requirements of Rule 144 are not met, registration under the Securities Act
or compliance with another exemption from registration will be required for
any disposition of the Company Securities. The Buyer understands that
although Rule 144 is not exclusive, the Securities and Exchange Commission
has expressed its opinion that a person proposing to sell restricted
securities received in a private offering other than in a registered
offering or pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales and that such Persons and the brokers who participate in
the transactions do so at their own risk.
(e) The Buyer acknowledges that no public market now exists for any of
the Company Securities or any other of the equity securities issued by the
Company.
(f) The Buyer acknowledges that it has received and reviewed this
Agreement and all exhibits hereto, and the Buyer and its legal, financial,
tax and other advisors have had access to, and an opportunity to review all
documents and other materials requested of the Company and have been given
an opportunity to ask any and all questions of, and receive answers from,
the Company and its officers, directors, and key employees concerning the
terms and conditions of the Buyer's purchase of the Purchased Securities
and to obtain all information the Buyer and such advisors believe necessary
or appropriate to evaluate the suitability of purchase of the Purchased
Securities.
(g) The Buyer acknowledges that, to its knowledge, the sale of the
Company Securities was not accomplished by the publication of any
advertisement or by any general solicitation.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
JACKSON PRODUCTS, INC.
By: /s/ Christopher T. Paule
---------------------------
Name: Christopher T. Paule
Title: President
SELLERS REPRESENTATIVE:
By: /s/ John W. Jordan II
---------------------------
Name: John W. Jordan II
Title: Sellers Representative
BUYER:
SCG ACQUISITION LLC
By: /s/ George B. Kelly
---------------------------
Name: George B. Kelly
Title: Authorized Person
SELLERS:
LEUCADIA INVESTORS, INC.
By: /s/ Joseph S. Steinberg
---------------------------
Name: Joseph S. Steinberg
Title: President
JOHN W. JORDAN, II REVOCABLE TRUST
By: /s/ John W. Jordan II
---------------------------
Name: John W. Jordan II
Title: Trustee
/s/ David W. Zalaznick
---------------------------
David W. Zalaznick
/s/ Jonathan F. Boucher
---------------------------
Jonathan F. Boucher
/s/ John R. Lowden
---------------------------
John R. Lowden
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/s/ Adam E. Max
---------------------------
Adam E. Max
/s/ John M. Camp III
---------------------------
John M. Camp III
JOHN M. CAMP III PROFIT SHARING PLAN
DTD 1/1/88
By: /s/ John M. Camp III
---------------------------
Name: John M. Camp III
Title: Trustee
/s/ A. Richard Caputo, Jr.
---------------------------
A. Richard Caputo, Jr.
JAMES E. JORDAN, JR. PROFIT SHARING
PLAN AND TRUST
By: /s/ James E. Jordan, Jr.
---------------------------
Name: James E. Jordan, Jr.
Title: Trustee
/s/ Paul R. Rodzevik
---------------------------
Paul R. Rodzevik
JZ EQUITY PARTNERS PLC
By: /s/ David W. Zalaznick
---------------------------
Name: David W. Zalaznick
Title: Investment Advisor
SAFETY PARTNERS, L.P.
By: Jefferies & Company, Inc.,
its General Partner
By: /s/ Jerry M. Gluck
---------------------------
Name: Jerry M. Gluck
Title: Executive Vice President
19
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