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STOCK PURCHASE AGREEMENT
dated as of July 20, 2000
by and between
STEINWAY MUSICAL INSTRUMENTS, INC.
and
BIM HOLDING AG
with respect to all
outstanding capital stock of
UNITED MUSICAL INSTRUMENTS HOLDINGS, INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience only.
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Page
No.
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ARTICLE I SALE OF SHARES AND CLOSING ............................................................. 6
1.01 Purchase and Sale ...................................................................... 6
1.02 Purchase Price ......................................................................... 6
1.03 Closing; Escrow ........................................................................ 6
1.04 Net Retained Income Post-Closing Adjustment ............................................ 7
1.05 Further Assurances; Post-Closing Cooperation ........................................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER .............................................. 9
2.01 Organization of Seller ................................................................. 9
2.02 Authority .............................................................................. 9
2.03 Organization of the Company ............................................................ 9
2.04 Capital Stock .......................................................................... 10
2.05 Subsidiaries ........................................................................... 10
2.06 No Conflicts ........................................................................... 11
2.07 Governmental Approvals and Filings ..................................................... 12
2.08 Books and Records ...................................................................... 12
2.09 Financial Statements ................................................................... 12
2.10 Absence of Changes ..................................................................... 13
2.11 No Undisclosed Liabilities ............................................................. 15
2.12 Tax Return Filings ..................................................................... 15
2.13 Legal Proceedings ...................................................................... 18
2.14 Compliance With Laws and Orders ........................................................ 18
2.15 Benefit Plans; ERISA ................................................................... 19
2.16 Real Property .......................................................................... 21
2.17 Tangible Personal Property; Investment Assets .......................................... 23
2.18 Intellectual Property Rights ........................................................... 23
2.19 Contracts .............................................................................. 24
2.20 Licenses ............................................................................... 25
2.21 Insurance .............................................................................. 26
2.22 Affiliate Transactions ................................................................. 26
2.23 Employees; Labor Relations ............................................................. 27
2.24 Environmental Matters .................................................................. 28
2.25 Substantial Customers and Suppliers .................................................... 29
2.26 Dealers ................................................................................ 29
2.27 Bank and Brokerage Accounts; Investment Assets ......................................... 29
2.28 No Powers of Attorney .................................................................. 30
2.29 Accounts Receivable .................................................................... 30
2.30 Inventory .............................................................................. 30
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2.31 Brokers ................................................................................ 30
2.32 Disclosure ............................................................................. 31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER .......................................... 31
3.01 Organization ........................................................................... 31
3.02 Authority .............................................................................. 31
3.03 No Conflicts ........................................................................... 31
3.04 Governmental Approvals and Filings ..................................................... 32
3.05 Legal Proceedings ...................................................................... 32
3.06 Purchase for Investment ................................................................ 32
3.07 Brokers ................................................................................ 32
ARTICLE IV COVENANTS OF SELLER ................................................................... 33
4.01 Regulatory and Other Approvals ......................................................... 33
4.02 HSR Filings ............................................................................ 33
4.03 Investigation by Purchaser ............................................................. 34
4.04 No Solicitations ....................................................................... 34
4.05 Conduct of Business .................................................................... 34
4.06 Financial Statements and Reports; Filings .............................................. 35
4.07 Employee Matters ....................................................................... 36
4.08 Certain Restrictions ................................................................... 37
4.09 Affiliate Transactions ................................................................. 38
4.10 Books and Records ...................................................................... 38
4.11 Noncompetition ......................................................................... 38
4.12 Notice and Cure ........................................................................ 39
4.13 Fulfillment of Conditions .............................................................. 40
ARTICLE V COVENANTS OF PURCHASER ................................................................. 40
5.01 Regulatory and Other Approvals ......................................................... 40
5.02 HSR Filings ............................................................................ 40
5.03 Notice and Cure ........................................................................ 41
5.04 Fulfillment of Conditions .............................................................. 41
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER ................................................ 41
6.01 Representations and Warranties ......................................................... 41
6.02 Performance ............................................................................ 41
6.03 Officers'Certificates .................................................................. 42
6.04 Orders and Laws ........................................................................ 42
6.05 Regulatory Consents and Approvals ...................................................... 42
6.06 Third Party Consents ................................................................... 42
6.07 Opinions of Counsel .................................................................... 43
6.08 Resignations of Directors and Officers ................................................. 43
6.09 Escrow Agreement ....................................................................... 43
6.10 Estoppel Certificates .................................................................. 43
6.11 Environmental Survey ................................................................... 43
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6.12 Proceedings ............................................................................ 44
6.13 Financing .............................................................................. 44
6.14 Contracts .............................................................................. 44
6.15 Tax Guaranty ........................................................................... 44
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER .................................................. 44
7.01 Representations and Warranties ......................................................... 44
7.02 Performance ............................................................................ 44
7.03 Officers'Certificates .................................................................. 45
7.04 Orders and Laws ........................................................................ 45
7.05 Regulatory Consents and Approvals ...................................................... 45
7.06 Proceedings ............................................................................ 45
7.07 Satisfaction of Company and Subsidiary Loans ........................................... 45
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES .................................................. 46
8.01 Foreign Real Property Holding Corporation .............................................. 46
8.02 Tax Sharing Agreement .................................................................. 46
8.03 Transfer Taxes ......................................................................... 46
8.04 Pre-Closing Tax Returns ................................................................ 46
8.05 Tax Returns for Stub Period ............................................................ 46
8.06 Tax Cooperation ........................................................................ 46
ARTICLE IX EMPLOYEE BENEFITS MATTERS ............................................................. 47
ARTICLE X SURVIVAL; INDEMNIFICATION .............................................................. 47
10.01 Survival of Representations, Warranties, Covenants and Agreements ...................... 47
10.02 Tax Indemnification; Post-Closing Adjustments; Notification; Control; Refunds .......... 47
10.03 Other Indemnification .................................................................. 48
10.04 Method of Asserting Claims ............................................................. 49
ARTICLE XI TERMINATION ........................................................................... 52
11.01 Termination ............................................................................ 52
11.02 Effect of Termination .................................................................. 52
ARTICLE XII DEFINITIONS .......................................................................... 53
12.01 Definitions ............................................................................ 53
ARTICLE XIII MISCELLANEOUS ....................................................................... 61
13.01 Notices ................................................................................ 61
13.02 Entire Agreement ....................................................................... 62
13.03 Expenses ............................................................................... 62
13.04 Public Announcements ................................................................... 62
13.05 Confidentiality ........................................................................ 63
13.06 Waiver ................................................................................. 63
13.07 Amendment .............................................................................. 64
13.08 No Third Party Beneficiary ............................................................. 64
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13.09 No Assignment; Binding Effect .......................................................... 64
13.10 Headings ............................................................................... 64
13.11 Consent to Jurisdiction and Service of Process ......................................... 64
13.12 Invalid Provisions ..................................................................... 65
13.13 Governing Law .......................................................................... 65
13.14 Counterparts ........................................................................... 65
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EXHIBITS
EXHIBIT A [Intentionally Omitted]
EXHIBIT B Officer's Certificate of Seller
EXHIBIT C Secretary's Certificate of Seller
EXHIBIT D-1 Opinion of United States Counsel to Seller
EXHIBIT D-2 Opinion of Swiss Counsel to Seller
EXHIBIT E Officer's Certificate of Purchaser
EXHIBIT F Secretary's Certificate of Purchaser
EXHIBIT G Form of Tax Guaranty
SCHEDULES
Schedule 1.04 Year-End Statement and Calculation of Net
Retained Income
SELLER'S DISCLOSURE SCHEDULES
Section 2.03 of the Disclosure Schedule Organization of the Company
Section 2.04 of the Disclosure Schedule Capital Stock
Section 2.05 of the Disclosure Schedule Subsidiaries
Section 2.06 of the Disclosure Schedule No Conflicts
Section 2.07 of the Disclosure Schedule Governmental Approvals and
Filings
Section 2.08 of the Disclosure Schedule Books and Records
Section 2.09 of the Disclosure Schedule Financial Statements
Section 2.10 of the Disclosure Schedule Absence of Changes
Section 2.11 of the Disclosure Schedule No Undisclosed Liabilities
Section 2.12 of the Disclosure Schedule Tax Return Filings
Section 2.13 of the Disclosure Schedule Legal Proceedings
Section 2.14 of the Disclosure Schedule Compliance With Laws and
Orders
Section 2.15 of the Disclosure Schedule Benefit Plans; ERISA
Section 2.16 of the Disclosure Schedule Real Property
Section 2.17 of the Disclosure Schedule Tangible Personal Property; a
Investment Assets
Section 2.18 of the Disclosure Schedule Intellectual Property Rights
Section 2.19 of the Disclosure Schedule Contracts
Section 2.20 of the Disclosure Schedule Licenses
Section 2.21 of the Disclosure Schedule Insurance
Section 2.22 of the Disclosure Schedule Affiliate Transactions
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Section 2.23 of the Disclosure Schedule Employees; Labor Relations
Section 2.24 of the Disclosure Schedule Environmental Matters
Section 2.25 of the Disclosure Schedule Substantial Customers and
Suppliers
Section 2.26 of the Disclosure Schedule Dealers
Section 2.27 of the Disclosure Schedule Bank and Brokerage Accounts;
Investment Assets
Section 2.28 of the Disclosure Schedule No Powers of Attorney
Section 2.29 of the Disclosure Schedule Accounts Receivable
PURCHASER'S DISCLOSURE SCHEDULES
Schedule 3.03 of the Disclosure Schedule No Conflicts
Schedule 3.04 of the Disclosure Schedule Governmental Approvals and
Filings
Schedule 4.11 of the Disclosure Schedule Noncompetition
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This STOCK PURCHASE AGREEMENT dated as of July 20, 2000 (this
"AGREEMENT"), is made and entered into by and between Steinway Musical
Instruments, Inc., a Delaware corporation ("PURCHASER"), and BIM Holding AG, a
Swiss corporation ("SELLER"). Capitalized terms not otherwise defined herein
have the meanings set forth in SECTION 12.01.
WHEREAS, Seller owns ten shares (10) shares of common stock, no par
value, of United Musical Instruments Holdings, Inc., a Delaware corporation (the
"COMPANY"), constituting all issued and outstanding shares of capital stock of
the Company (such shares being referred to herein as the "SHARES"); and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
the Shares on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 PURCHASE AND SALE. Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, all of the right, title and interest
of Seller in and to the Shares at the Closing on the terms and subject to the
conditions set forth in this Agreement.
1.02 PURCHASE PRICE. The aggregate purchase price for the Shares and
for the covenant of Seller contained in SECTION 4.11 is equal to the sum of (a)
Twenty Six Million United States Dollars ($26,000,000) (the "CLOSING PAYMENT")
plus (b) the Income Payment (collectively, the "PURCHASE PRICE"), payable in
immediately available United States funds in the manner provided in SECTION 1.03
and SECTION 1.04, $250,000 of which is allocable to, and deemed to be in
consideration of, the noncompetition covenant of Seller contained in SECTION
4.11 (to be allocated $50,000 annually for five years) and the remainder of
which is allocable to, and deemed to be in consideration of, the Shares.
1.03 CLOSING; ESCROW. The Closing will take place at the offices of
Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New York
10015-1413, or at such other place as Purchaser and Seller mutually agree, at
10:00 A.M. local time, on the Closing Date. At the Closing, Purchaser will pay
the Closing Payment by wire transfer of immediately available funds to such
account as Seller may reasonably direct by written notice delivered to Purchaser
by Seller at least two (2) Business Days before the Closing Date, PROVIDED that
(i) $1,000,000 of the Closing Payment shall be delivered by Purchaser by wire
transfer of immediately available funds to an escrow agent mutually selected by
Purchaser and Seller (the "ESCROW AGENT") under an escrow agreement to be
entered into on the Closing Date by Seller, Purchaser and the Escrow Agent, the
terms of which will be consistent with the terms hereof and mutually acceptable
to the parties hereto (the "ESCROW AGREEMENT"). Simultaneously, Seller will
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assign and transfer to Purchaser all of Seller's right, title and interest in
and to the Shares by delivering to Purchaser a certificate or certificates
representing the Shares, in genuine and unaltered form, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in blank, with requisite
stock transfer tax stamps, if any, attached. At the Closing, there shall also be
delivered to Seller and Purchaser the opinions, certificates and other
Contracts, documents and instruments to be delivered under ARTICLES VI and VII.
1.04 NET RETAINED INCOME POST-CLOSING ADJUSTMENT.
(a) No later than March 15, 2001, the Purchaser shall, at its
expense, cause to be prepared, and deliver to Seller a statement of the
Company's financial position as of and for the calendar period ending on
December 31, 2000 (the "YEAR-END STATEMENT"), from which a statement shall be
derived which shall set forth the net retained income of the Company from
January 1, 2000 to the Closing Date ("NET RETAINED INCOME") calculated pursuant
to the formula and instructions attached hereto as SCHEDULE 1.04.
(b) Seller and Seller's accountants shall, within thirty (30) days
after the delivery by Purchaser of the Year-End Statement, complete their review
of the Net Retained Income as derived from the Year-End Statement. In the event
that Seller determines that Net Retained Income as derived from the Year-End
Statement has not been determined in accordance with this SECTION 1.04, Seller
shall inform Purchaser in writing (the "SELLER'S OBJECTION"), setting forth a
specific description of the basis of Seller's Objection and the adjustments to
Net Retained Income which Seller believes should be made, on or before the last
day of such 30-day period. The Purchaser shall then have 30 days to review and
respond to Seller's Objection. If Seller and Purchaser are unable to resolve all
of their disagreements with respect to the determination of the foregoing items
within 20 days following the completion of Purchaser's review of Seller's
Objection, they shall refer their remaining differences to
PricewaterhouseCoopers at its South Bend, Indiana office (the "CPA FIRM"), who
shall, acting as experts and not as arbitrators, determine which of the two Net
Retained Income calculations derived from the Year-End Statement by the Seller
and Purchaser most accurately reflects the standards set forth in this Section
and SCHEDULE 1.04. The Seller and Purchaser shall direct the CPA Firm to use its
best efforts to render its determination within 45 days. The CPA Firm's
determination shall be conclusive and binding upon Purchaser and Seller. The
fees and disbursements of the CPA Firm shall be paid by the non-prevailing party
on the items submitted for determination by the CPA Firm. Purchaser and Seller
shall make readily available to the CPA Firm all relevant nonproprietary books
and records and any work papers (including those of the parties' respective
accountants) relating to the Year-End Statement and all other items reasonably
requested by the CPA Firm. The "ADJUSTED NET RETAINED INCOME" shall be (i) the
Net Retained Income in the event that (x) no Seller's Objection is delivered to
Purchaser during the 30-day period specified above, or (y) Seller and Purchaser
so agree, (ii) the Net Retained Income, adjusted in accordance with the Seller's
Objection in the event that Purchaser does not respond to Seller's Objection
within the 30-day period following receipt by Purchaser of Seller's Objection,
or (iii) the Net Retained Income, as either (x) adjusted by the agreement of
Seller and Purchaser or (y) selected by the CPA Firm as set forth above.
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(c) The Income Payment shall equal the excess of Adjusted Net
Retained over One Million United States dollars ($1,000,000). If the Income
Payment is determined to be zero or an amount less than zero, neither Purchaser
nor Seller shall make any Income Payment to the other. If the Income Payment is
determined to be an amount greater than zero, Purchaser will pay the Income
Payment by wire transfer of immediately available funds, to the account
designated by Seller, within ten (10) days of the determination of the Adjusted
Net Retained Income.
(d) Seller shall provide Purchaser and its accountants full access to
the accounting records, any other information, including nonproprietary work
papers of its accountants, and to any employees to the extent reasonably
necessary for Purchaser to prepare the Year-End Statement. Purchaser shall
provide Seller and its accountants full access to the accounting records, any
other information, including work papers of its accountants, and to any
employees to the extent reasonably necessary for Seller to review the Year-End
Statement.
1.05 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, Seller shall
execute and deliver to Purchaser such other documents and instruments, provide
such materials and information and take such other actions as Purchaser may
reasonably request more effectively to vest title to the Shares in Purchaser
and, to the full extent permitted by Law, to put Purchaser in actual possession
of the Company and the Subsidiaries and their Assets and Properties and Books
and Records to the extent held or controlled by Seller, and otherwise to cause
Seller to fulfill its obligations under this Agreement and the Operative
Agreements to which it is a party.
(b) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data relating to the Business or Condition of
the Company in its possession with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent that such access
may be reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) compliance with the requirements of any
Governmental or Regulatory Authority, (iii) the determination or enforcement or
defense of the rights and obligations of any party to this Agreement or any of
the Operative Agreements or (iv) in connection with any actual or threatened
Action or Proceeding. Further, each party agrees for a period extending six (6)
years after the Closing Date not to destroy or otherwise dispose of any such
books, records and other data unless such party shall first offer in writing to
surrender such books, records and other data to the other party and such other
party shall not agree in writing to take possession, or accept delivery thereof
during the thirty (30) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other documents
or reports required to be filed with Governmental or Regulatory Authorities or
its financial statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information, documents or
records relating to the Business or Condition of the Company not referred to in
paragraph (b) above, and such information, documents or records are in the
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possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by such party in accordance with this paragraph shall be held
confidential by such party in accordance with SECTION 13.05.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section shall be subject to applicable rules relating
to discovery.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.01 ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the Laws of Switzerland. Seller has
full corporate power and authority to execute and deliver this Agreement and the
Operative Agreements to which it is a party and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares.
2.02 AUTHORITY. The execution and delivery by Seller of this Agreement
and the Operative Agreements to which it is a party, and the performance by
Seller of its obligations hereunder and thereunder, have been duly and validly
authorized by the Board of Directors of Seller, and, if necessary, by Seller's
stockholders. This Agreement has been duly and validly executed and delivered by
Seller and constitutes, and upon the execution and delivery by Seller of the
Operative Agreements to which it is a party, such Operative Agreements will
constitute, legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their terms.
2.03 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its Assets and
Properties. SECTION 2.03 OF THE DISCLOSURE SCHEDULE lists all lines of business
in which the Company is participating or engaged. The Company is duly qualified,
licensed or admitted to do business and is in good standing in those
jurisdictions specified in SECTION 2.03 OF THE DISCLOSURE SCHEDULE, which are
the only jurisdictions in which the ownership, use or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for those jurisdictions in which the
adverse effects of all such failures by the Company and the Subsidiaries to be
qualified, licensed or admitted and in good standing can in the aggregate be
eliminated for less than $5,000 by the Company or a Subsidiary, as the case may
be, becoming qualified or admitted and in good standing. The name of each
director and officer of the Company on the date hereof, and the position with
the Company held by each, are listed in SECTION 2.03 OF THE DISCLOSURE
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SCHEDULE. Seller has prior to the execution of this Agreement delivered to
Purchaser true and complete copies of the certificate of incorporation and
by-laws of the Company as in effect on the date hereof.
2.04 CAPITAL STOCK. The authorized capital stock of the Company
consists solely of ten (10) shares of Common Stock, of which only the Shares
have been issued. The Shares are duly authorized, validly issued, outstanding,
fully paid and nonassessable. Seller owns the Shares, beneficially and of
record, free and clear of all Liens except for Liens disclosed in SECTION 2.04
OF THE DISCLOSURE SCHEDULE which will be satisfied at the Closing upon
satisfaction of Purchaser's obligations under SECTION 7.07. Except for this
Agreement and as disclosed in SECTION 2.04 OF THE DISCLOSURE SCHEDULE, there are
no outstanding Options with respect to the Company. The delivery of a
certificate or certificates at the Closing representing the Shares in the manner
provided in SECTION 1.03 will transfer to Purchaser good and valid title to the
Shares, free and clear of all Liens except for Liens disclosed in SECTION 2.04
OF THE DISCLOSURE SCHEDULE which will be satisfied at the Closing upon
satisfaction of Purchaser's obligations under SECTION 7.07.
2.05 SUBSIDIARIES. SECTION 2.05 OF THE DISCLOSURE SCHEDULE lists the
name of each Subsidiary and all lines of business in which each Subsidiary is
participating or engaged. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation identified in SECTION 2.05 OF THE DISCLOSURE SCHEDULE, and has
full corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its Assets and Properties. Each
Subsidiary is duly qualified, licensed or admitted to do business and is in good
standing in those jurisdictions specified in SECTION 2.05 OF THE DISCLOSURE
SCHEDULE, which are the only jurisdictions in which the ownership, use or
leasing of such Subsidiary's Assets and Properties, or the conduct or nature of
its business, makes such qualification, licensing or admission necessary, except
for those jurisdictions in which the adverse effects of all such failures by the
Company and the Subsidiaries to be qualified, licensed or admitted and in good
standing can in the aggregate be eliminated without material cost or expense by
the Company or a Subsidiary, as the case may be, becoming qualified, licensed or
admitted and in good standing. SECTION 2.05 OF THE DISCLOSURE SCHEDULE lists for
each Subsidiary the amount of its authorized capital stock, the amount of its
outstanding capital stock and the record owners of such outstanding capital
stock. Except as disclosed in SECTION 2.05 OF THE DISCLOSURE SCHEDULE, all of
the outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned,
beneficially and of record, by the Company or Subsidiaries wholly owned by the
Company free and clear of all Liens. Except as disclosed in SECTION 2.05 OF THE
DISCLOSURE SCHEDULE, there are no outstanding Options with respect to any
Subsidiary. The name of each director and officer of each Subsidiary on the date
hereof, and the position with such Subsidiary held by each, are listed in
SECTION 2.05 OF THE DISCLOSURE SCHEDULE. Seller has prior to the execution of
this Agreement delivered to Purchaser true and complete copies of the
certificate or articles of incorporation and by-laws (or other comparable
corporate charter documents) of each of the Subsidiaries as in effect on the
date hereof.
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2.06 NO CONFLICTS. The execution and delivery by Seller of this
Agreement do not, and the execution and delivery by Seller of the Operative
Agreements to which it is a party, the performance by Seller of its obligations
under this Agreement and such Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or corporate
charter documents of Seller, the certificate of incorporation or by-laws of the
Company or any Subsidiary;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in SECTION 2.07 OF THE DISCLOSURE
SCHEDULE, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Seller, the Company or any
Subsidiary or any of their respective Assets and Properties; or
(c) except as disclosed in SECTION 2.06 OF THE DISCLOSURE SCHEDULE,
(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
Seller, the Company or any Subsidiary to obtain any consent, approval or action
of, make any filing with or give any notice to any Person as a result or under
the terms of, (iv) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (v) result in
or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under, or (vi) result in the
creation or imposition of any Lien upon Seller, the Company or any Subsidiary or
any of their respective Assets and Properties under, any Contract or License to
which Seller, the Company or any Subsidiary is a party or by which any of their
respective Assets and Properties is bound.
2.07 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SECTION 2.07 OF THE DISCLOSURE SCHEDULE, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Seller, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or any of the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
2.08 BOOKS AND RECORDS. The minute books and other similar records of
the Company and the Subsidiaries as made available to Purchaser prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, the boards of directors and committees of
the boards of directors of the Company and the Subsidiaries. The stock transfer
ledgers and other similar records of the Company and the Subsidiaries as made
available to Purchaser prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company and the Subsidiaries. Except as set forth in
SECTION 2.08 OF THE DISCLOSURE SCHEDULE, neither the Company nor any Subsidiary
has any of its Books and Records recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including
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all means of access thereto and therefrom) are not under the exclusive ownership
and direct control of the Company or a Subsidiary.
2.09 FINANCIAL STATEMENTS. Prior to the execution of this Agreement,
Seller has delivered to Purchaser true and complete copies of the following
financial statements:
(a) the audited balance sheets of the Company and its consolidated
subsidiaries as of December 31, 1998 and 1999, and the related audited
consolidated statements of operations, stockholders' equity and cash flows for
each of the fiscal years then ended, together with a true and correct copy of
the report on such audited information by Crowe Chizek & Company LLP, and all
letters from such accountants with respect to the results of such audits; and
(b) the unaudited balance sheets of the Company and its consolidated
subsidiaries as of May 31, 2000, and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the portion of
the fiscal year then ended.
Except as set forth in the notes thereto and as disclosed in SECTION 2.09 OF THE
DISCLOSURE SCHEDULE, all such financial statements (i) were prepared in
accordance with GAAP, (ii) fairly present the consolidated financial condition
and results of operations of the Company and its consolidated subsidiaries as of
the respective dates thereof and for the respective periods covered thereby, and
(iii) were compiled from the Books and Records of the Company and the
Subsidiaries regularly maintained by management and used to prepare the
financial statements of the Company and the Subsidiaries in accordance with the
principles stated therein. The Company and the Subsidiaries have maintained
their respective Books and Records in a manner sufficient to permit the
preparation of financial statements in accordance with GAAP. Except for those
Subsidiaries listed in SECTION 2.09 OF THE DISCLOSURE SCHEDULE, the financial
condition and results of operations of each Subsidiary are, and for all periods
referred to in this SECTION 2.09 have been, consolidated with those of the
Company.
2.10 ABSENCE OF CHANGES. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, and except as disclosed in SECTION 2.10 OF THE DISCLOSURE
SCHEDULE, there has not occurred between the Audited Financial Statement Date
and the date hereof:
(i) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any
Subsidiary not wholly owned by the Company, or any direct or indirect
redemption, purchase or other acquisition by the Company or any Subsidiary
of any such capital stock of or any Option with respect to the Company or
any Subsidiary not wholly owned by the Company;
(ii) any authorization, issuance, sale or other disposition by
the Company or any Subsidiary of any shares of capital stock of or Option
with respect to the Company or any Subsidiary, or any modification or
amendment of any right of any holder of any outstanding shares of capital
stock of or Option with respect to the Company or any Subsidiary;
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(iii) (x) any increase in the salary, wages or other compensation
of any officer, employee or consultant of the Company or any Subsidiary
whose annual salary is, or after giving effect to such change would be,
$75,000 or more; (y) any establishment or modification of (A) targets,
goals, pools or similar provisions in respect of any fiscal year under any
Benefit Plan, employment-related Contract or other employee compensation
arrangement or (B) salary ranges, increase guidelines or similar provisions
in respect of any Benefit Plan, employment-related Contract or other
employee compensation arrangement; or (z) any adoption, entering into or
becoming bound by any Benefit Plan, employment-related Contract or
collective bargaining agreement, or amendment, modification or termination
(partial or complete) of any Benefit Plan, employment-related Contract or
collective bargaining agreement, except to the extent required by
applicable Law and, in the event compliance with legal requirements
presented options, only to the extent the option which the Company or
Subsidiary reasonably believed to be the least costly was chosen;
(iv) (A) incurrences by the Company or any Subsidiary of
Indebtedness in an aggregate principal amount exceeding $56,000,000 through
July 31, 2000, or $58,000,000 thereafter (net of any amounts discharged
during such period), or (B) any voluntary purchase, cancellation,
prepayment or complete or partial discharge in advance of a scheduled
payment date with respect to, or waiver of any right of the Company or any
Subsidiary under, any Indebtedness of or owing to the Company or any
Subsidiary;
(v) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the plant, real or
personal property or equipment of the Company or any Subsidiary in an
aggregate amount exceeding $100,000;
(vi) any material change in (x) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax
practice or policy of the Company or any Subsidiary, or (y) any method of
calculating any bad debt, contingency or other reserve of the Company or
any Subsidiary for accounting, financial reporting or Tax purposes, or any
change in the fiscal year of the Company or any Subsidiary;
(vii) any write-off or write-down of or any determination to
write off or write down any of the Assets and Properties of the Company or
any Subsidiary in an aggregate amount exceeding $100,000;
(viii) any acquisition or disposition of, or incurrence of a Lien
on, any Assets and Properties of the Company or any Subsidiary, other than
in the ordinary course of business consistent with past practice;
(ix) any (x) amendment of the certificate or articles of
incorporation or by-laws (or other comparable corporate charter documents)
of the Company or any Subsidiary, (y) recapitalization, reorganization,
liquidation or dissolution of the Company or any Subsidiary or (z) merger
or other business combination involving the Company or any Subsidiary and
any other Person;
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(x) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent
with respect to (A) any Contract which is required (or had it been in
effect on the date hereof would have been required) to be disclosed in the
Disclosure Schedule pursuant to SECTION 2.19(a) or (b) any material License
held by the Company or any Subsidiary;
(xi) capital expenditures or commitments for additions to
property, plant or equipment of the Company and the Subsidiaries
constituting capital assets in an aggregate amount exceeding $100,000;
(xii) any commencement or termination by the Company or any
Subsidiary of any line of business;
(xiii) any transaction by the Company or any Subsidiary with
Seller, any officer, director or Affiliate (other than the Company or any
Subsidiary) of Seller (A) outside the ordinary course of business
consistent with past practice or (B) other than on an arm's-length basis,
other than pursuant to any Contract in effect on the Audited Financial
Statement Date and disclosed pursuant to SECTION 2.19(a)(vii) OF THE
DISCLOSURE SCHEDULE;
(xiv) any entering into of a Contract to do or engage in any of
the foregoing after the date hereof; or
(xv) any other transaction involving or development affecting
the Company or any Subsidiary outside the ordinary course of business
consistent with past practice.
2.11 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
against in the balance sheet included in the Audited Financial Statements or in
the notes thereto or as disclosed in SECTION 2.11 OF THE DISCLOSURE SCHEDULE or
any other Section of the Disclosure Schedule, there are no Liabilities against,
relating to or affecting the Company or any Subsidiary or any of their
respective Assets and Properties.
2.12 TAX RETURN FILINGS.
(a) TAX RETURN FILINGS. Except as set forth in SECTION 2.12(a) OF THE
DISCLOSURE SCHEDULE, the Company and its Subsidiaries have filed all Tax Returns
(or the Tax Returns have been filed on behalf of the Company and its
Subsidiaries) required to be filed by applicable law prior to the date of the
Disclosure Schedule. All Tax Returns were (and, as to Tax Returns not filed as
of the date hereof, will be) true, complete and correct and filed on a timely
basis. The Company and its Subsidiaries (i) have paid all Taxes that are due, or
claimed or asserted by any taxing authority to be due, from the Company and its
Subsidiaries for the periods covered by the Tax Returns or (ii) has duly and
fully provided reserves adequate to pay all Taxes in accordance with GAAP.
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(b) TAX RESERVES. Except as set forth in SECTION 2.12(b) OF THE
DISCLOSURE SCHEDULE, the Company and its Subsidiaries have established (and
until the Closing Date will maintain) on their respective books and records
reserves adequate to pay all Taxes not yet due and payable.
(c) TAX LIENS. Except as set forth in SECTION 2.12(c) OF THE
DISCLOSURE SCHEDULE, there are no Tax liens upon the assets of the Company or
its Subsidiaries except liens for Taxes not yet due.
(d) WITHHOLDING TAXES. Except as set forth in SECTION 2.12(d) OF THE
DISCLOSURE SCHEDULE, the Company and its Subsidiaries have complied (and until
the Closing Date will comply) with all applicable laws, rules, and regulations
relating to the payment and withholding of Taxes (including withholding and
reporting requirements under Code Sections 1441 through 1464, 3401 through 3406,
6041 and 6049 and similar provisions under any other laws) and has, within the
time and in the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all required amounts.
(e) EXTENSIONS OF TIME FOR FILING RETURNS. Except as set forth in
SECTION 2.12(e) OF THE DISCLOSURE SCHEDULE, neither the Company nor its
Subsidiaries has requested (and no request has been made on its behalf) any
extension of time within which to file any Tax Return.
(f) WAIVERS OF STATUTE OF LIMITATIONS. Except as set forth in SECTION
2.12(f) OF THE DISCLOSURE SCHEDULE, the Company or its Subsidiaries have not
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations for any Taxes or Tax Returns (and no
extensions have been executed on their behalf).
(g) TAX DEFICIENCIES. Except as set forth in SECTION 2.12(g) OF THE
DISCLOSURE SCHEDULE, no deficiency for any Taxes has been suggested, proposed,
asserted or assessed against the Company or any Subsidiary that has not been
resolved and paid in full, and the Company and the Subsidiaries have received no
notice of any such deficiency.
(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. Except as set forth
in SECTION 2.12(h) OF THE DISCLOSURE SCHEDULE, no audits or other administrative
proceedings or court proceedings are presently pending with regard to any Taxes
or Tax Returns of the Company or any Subsidiary.
(i) POWERS OF ATTORNEY. Except as set forth in SECTION 2.12(i) OF THE
DISCLOSURE Schedule, no power of attorney currently in force has been granted by
the Company or any Subsidiary concerning any Tax matter.
(j) TAX RULINGS. Except as set forth in SECTION 2.12(j) OF THE
DISCLOSURE SCHEDULE, the Company or any Subsidiary has not received any written
ruling of a taxing authority relating to Taxes, or any other written and legally
binding agreement with a taxing authority relating to Taxes.
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(k) AVAILABILITY OF TAX RETURNS AND ASSOCIATED WORK PAPERS. Seller
has made available (or, in the case of Tax Returns to be filed on or before the
Closing Date, will make available) to Purchaser complete and accurate copies of
all Tax Returns and associated work papers filed by or on behalf of the Company
or any Subsidiary or by any affiliate of the Company or any Subsidiary to the
extent the Tax Returns relate to the Company or any Subsidiary for all taxable
years ending on or prior to the Closing Date.
(l) TAX SHARING AGREEMENTS. Except for complete and accurate
copies of tax sharing agreements provided to Purchaser and listed on SECTION
2.12(l) OF THE DISCLOSURE SCHEDULE, no agreements relating to allocating or
sharing of Taxes exist among Seller, the Company and any Subsidiaries. Seller
shall not amend any tax sharing agreements, or other arrangements to which
the Company or any Subsidiary is a party prior to their termination.
(m) CODE Section 341(f). Except as set forth in SECTION 2.12(m) OF
THE DISCLOSURE SCHEDULE, the Company or any Subsidiary has not filed (and
will not file prior to the Closing Date) a consent pursuant to Code Section
341(f) or agreed to have Code Section 341(f)(2) apply to any disposition of a
subsection (f) asset.
(n) CODE Section 168. Except as set forth IN SECTION 2.12(n) OF
THE DISCLOSURE SCHEDULE, no property of the Company or any Subsidiary is
property that the Company, any Subsidiary or any party to this transaction is
or will be required to treat as being owned by another person pursuant to the
provisions of Code Section 168(f)(8) (as in effect prior to its amendment by
the Tax Reform Act of 1986) or is "tax-exempt use property" within the
meaning of Code Section 168.
(o) CODE Section 481 ADJUSTMENTS. Except as set forth in SECTION
2.12(o) OF THE DISCLOSURE SCHEDULE, the Company and its Subsidiaries are not
required to include in income any adjustment pursuant to Code Section 481(a)
by reason of a voluntary change in accounting method initiated by the Company
or any Subsidiary, and the Internal Revenue Service has not proposed an
adjustment or change in accounting method.
(p) CODE Section 280G. Except as set forth in SECTION 2.12(p) OF
THE DISCLOSURE SCHEDULE, the Company or any Subsidiary is not a party to any
agreement, contract, or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of Code Section 280G.
(q) CODE Sections 6661 AND 6662. All transactions that could give
rise to an understatement of federal income tax (within the meaning of Code
Section 6661 for Tax Returns filed on or before December 31, 1989, and within
the meaning of Code Section 6662 for tax returns filed after December 31,
1989) by the Company or any Subsidiary have been adequately disclosed (or,
with respect to Tax Returns filed following the Closing will be adequately
disclosed) on the Company's Tax Returns or the Subsidiaries' Tax Returns in
accordance with Code Section 6661(b)(2)(B) for Tax Returns filed on or prior
to December 31, 1989, and in accordance with Code Section 6662(d)(2)(B) for
Tax Returns filed after December 31, 1989.
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(r) REAL PROPERTY HOLDING CORPORATION. Neither the Company nor any of
its Subsidiaries is (or through the Closing will become) a real property holding
corporation within the meaning of Code Section 897(c)(2).
2.13 LEGAL PROCEEDINGS. Except as disclosed in SECTION 2.13 OF THE
DISCLOSURE SCHEDULE (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the Knowledge
of Seller, threatened against, relating to or affecting Seller, the Company or
any Subsidiary or any of their respective Assets and Properties which (i) could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Purchaser,
or (ii) if determined adversely to Seller, the Company or a Subsidiary, could
reasonably be expected to result in (x) any injunction or other equitable relief
against the Company or any Subsidiary that would interfere in any material
respect with its business or operations or (y) Losses by the Company or any
Subsidiary, individually or in the aggregate with Losses in respect of other
such Actions or Proceedings, exceeding $50,000;
(b) there are no facts or circumstances Known to Seller that could
reasonably be expected to give rise to any Action or Proceeding that would be
required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against the Company or any
Subsidiary.
Prior to the execution of this Agreement, Seller has delivered to Purchaser all
responses of counsel for the Company and the Subsidiaries to auditors' requests
for information delivered in connection with the Audited Financial Statements
(together with any updates provided by such counsel) regarding Actions or
Proceedings pending or threatened against, relating to or affecting the Company
or any Subsidiary.
2.14 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in SECTION
2.14 OF THE DISCLOSURE SCHEDULE, neither the Company nor any Subsidiary is or
has at any time within the last five (5) years been, or has received any notice
that it is or has at any time within the last five (5) years been, in violation
of or in default under, in any material respect, any Law or Order applicable to
the Company or any Subsidiary or any of their respective Assets and Properties.
2.15 BENEFIT PLANS; ERISA.
(a) SECTION 2.15(a) OF THE DISCLOSURE SCHEDULE (i) contains a true
and complete list and description of each of the Benefit Plans, (ii) identifies
each of the Benefit Plans that is a Qualified Plan, (iii) identifies each
Benefit Plan which at any time during the five-year period preceding the date of
this Agreement was a Defined Benefit Plan and (iv) lists, describes and
identifies each other Plan maintained, established, sponsored or contributed to
by an ERISA Affiliate, or any predecessor thereof, which, during the five-year
period preceding the date of
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this Agreement, was at any time a Defined Benefit Plan. Except as disclosed in
SECTION 2.15(a) OF THE DISCLOSURE SCHEDULE, neither the Company nor any
Subsidiary has scheduled or agreed upon future increases of benefit levels (or
creations of new benefits) with respect to any Benefit Plan, and no such
increases or creation of benefits have been proposed, made the subject of
representations by the Seller, Company or any Subsidiary to employees or
requested or demanded by employees under circumstances which make it reasonable
to expect that such increases will be granted. Except as disclosed in SECTION
2.15(a) OF THE DISCLOSURE SCHEDULE, no loan is outstanding between the Company
or any Subsidiary and any employee.
In addition, except as disclosed in SECTION 2.15 OF THE DISCLOSURE
SCHEDULE (with paragraph references corresponding to those set forth below):
(b) Neither the Company nor any Subsidiary maintains or is obligated
to provide benefits under any life, medical or health plan (other than as an
incidental benefit under a Qualified Plan) which provides benefits to retirees
or other terminated employees other than benefit continuation rights under the
Consolidated Omnibus Budget Reconciliation of 1985, as amended.
(c) Except as set forth in SECTION 2.15(c) OF THE DISCLOSURE
SCHEDULE, each Benefit Plan covers only employees who are employed by the
Company or a Subsidiary (or former employees or beneficiaries with respect to
service with the Company or a Subsidiary), so that the transactions contemplated
by this Agreement will require no spin-off of assets and liabilities or other
division or transfer of rights with respect to any such plan.
(d) Neither the Company, any Subsidiary, any ERISA Affiliate nor any
other corporation or organization controlled by or under common control with any
of the foregoing within the meaning of Section 4001 of ERISA has at any time
contributed to any "multiemployer plan", as that term is defined in Section 4001
of ERISA.
(e) Each of the Benefit Plans is, and its administration is and has
been since inception, in all material respects in compliance with, and neither
the Company nor any Subsidiary has received any claim or notice that any such
Benefit Plan is not in compliance with, all applicable Laws and Orders and
prohibited transactions exemptions, including the requirements of ERISA, the
Code, the Age Discrimination in Employment Act, the Equal Pay Act and Title VII
of the Civil Rights Act of 1964. Each Qualified Plan is qualified under Section
401(a) of the Code, and, if applicable, complies with the requirements of
Section 401(k) of the Code. Each Benefit Plan which is intended to provide for
the deferral of income, the reduction of salary or other compensation or to
afford other Tax benefits complies with the requirements of the applicable
provisions of the Code or other Laws required in order to provide such Tax
benefits.
(f) Neither Seller, the Company nor any Subsidiary is in default in
performing any of its contractual obligations under any of the Benefit Plans or
any related trust agreement or insurance contract. All contributions and other
payments required to be made by Seller, the Company or any Subsidiary to any
Benefit Plan with respect to any period ending before or at or including the
Closing Date have been made or reserves adequate for such contributions or other
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payments have been or will be set aside therefor and have been or will be
reflected in Financial Statements in accordance with GAAP. There are no material
outstanding liabilities of any Benefit Plan other than liabilities for benefits
to be paid to participants in such Benefit Plan and their beneficiaries in
accordance with the terms of such Benefit Plan.
(g) No event has occurred, and there exists no condition or set of
circumstances in connection with any Benefit Plan, under which the Company or
any Subsidiary, directly or indirectly (through any indemnification agreement or
otherwise), could reasonably be expected to be subject to any risk of material
liability under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA
or Section 4975 of the Code.
(h) No transaction contemplated by this Agreement will result in
liability to the PBGC under Section 302(c)(ii), 4062, 4063, 4064 or 4069 of
ERISA, or otherwise, with respect to the Company, any Subsidiary, Purchaser or
any corporation or organization controlled by or under common control with any
of the foregoing within the meaning of Section 4001 of ERISA, and no event or
condition exists or has existed which could reasonably be expected to result in
any such liability with respect to Purchaser, the Company, any Subsidiary or any
such corporation or organization. No "reportable event" within the meaning of
Section 4043 of ERISA has occurred with respect to any Defined Benefit Plan. No
termination re-establishment or spin-off re-establishment transaction has
occurred with respect to any Subject Defined Benefit Plan. No Subject Defined
Benefit Plan has incurred any accumulated funding deficiency whether or not
waived. No filing has been made and no proceeding has been commenced for the
complete or partial termination of, or withdrawal from, any Benefit Plan which
is a Pension Benefit Plan.
(i) No benefit under any Benefit Plan, including, without limitation,
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested, funded or payable by reason of any transaction
contemplated under this Agreement.
(j) There are no pending or threatened claims by or on behalf of any
Benefit Plan, by any Person covered thereby, or otherwise, which allege
violations of Law which could reasonably be expected to result in liability on
the part of Purchaser, the Company, any Subsidiary or any fiduciary of any such
Benefit Plan, nor is there any basis for such a claim.
(k) No employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan.
(l) The fair market value of the assets of each Subject Defined
Benefit Plan, as determined as of the last day of the plan year of such plan
which coincides with or first precedes the date of this Agreement, was not less
than the present value of the projected benefit obligations under such plan at
such date as established on the basis of the actuarial assumptions applicable
under such Subject Defined Benefit Plan at said date and, to the Knowledge of
Seller, there have been no material changes in such values since said date.
(m) Complete and correct copies of the following documents have been
furnished to Purchaser prior to the execution of this Agreement:
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(i) the Benefit Plans and any predecessor plans referred to
therein, any related trust agreements, and service provider agreements,
insurance contracts or agreements with investment managers, including
without limitation, all amendments thereto;
(ii) current summary Plan descriptions of each Benefit Plan
subject to ERISA, and any similar descriptions of all other Benefit Plans;
(iii) the most recent Form 5500 and Schedules thereto for each
Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the IRS with respect to the
qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit Plan
funded through a trust;
(vi) the most recent actuarial report of the qualified actuary of
any Subject Defined Benefit Plan or any other Benefit Plan with respect to
which actuarial valuations are conducted; and
(vii) all qualified domestic relations orders or other orders
governing payments from any Benefit Plan.
2.16 REAL PROPERTY.
(a) SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE contains a true and
correct list of (i) each parcel of real property owned by the Company or any
Subsidiary, (ii) each parcel of real property leased by the Company or any
Subsidiary (as lessor or lessee) and (iii) all Liens relating to or affecting
any parcel of real property referred to in clause (i).
(b) Except as disclosed in SECTION 2.16(a) OF THE DISCLOSURE
SCHEDULE, the Company or a Subsidiary has good and marketable fee simple title
to each parcel of real property owned by it, free and clear of all Liens. Except
for the real property leased to others referred to in clause (ii) of paragraph
(a) above, the Company or a Subsidiary is in possession of each parcel of real
property owned by it, together with all buildings, structures, facilities,
fixtures and other improvements thereon. The Company and the Subsidiaries have
adequate rights of ingress and egress with respect to the real property listed
in SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE and all buildings, structures,
facilities, fixtures and other improvements thereon. None of such real property,
buildings, structures, facilities, fixtures or other improvements, or the use
thereof, contravenes or violates any building, zoning, administrative,
occupational safety and health or other applicable Law in any material respect
(whether or not permitted on the basis of prior nonconforming use, waiver or
variance).
(c) The Company or a Subsidiary has a valid and subsisting leasehold
estate in and the right to quiet enjoyment of the real properties leased by it
for the full term of the lease
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thereof. Each lease referred to in clause (ii) of paragraph (a) above is a
legal, valid and binding agreement, enforceable in accordance with its terms, of
the Company or a Subsidiary and of each other Person that is a party thereto,
and except as set forth in SECTION 2.16(c) OF THE DISCLOSURE SCHEDULE, there is
no, and neither the Company nor any Subsidiary has received notice of any,
default (or any condition or event which, after notice or lapse of time or both,
would constitute a default) thereunder. Neither the Company nor any Subsidiary
owes any brokerage commissions with respect to any such leased space.
(d) Seller has delivered to Purchaser prior to the execution of this
Agreement, to the extent possessed by or under the control of Seller, Company or
any Subsidiary, or any of their respective directors, officers or agents, true
and complete copies of (i) all deeds, leases, mortgages, deeds of trust,
certificates of occupancy, title insurance policies, title reports, surveys and
similar documents, and all amendments thereof, with respect to the real property
owned by the Company and the Subsidiaries, and (ii) all leases (including any
amendments and renewal letters) and, to the extent reasonably available, all
other documents referred to in clause (i) of this paragraph (d) with respect to
the real property leased by the Company and the Subsidiaries.
(e) Except as disclosed in SECTION 2.16(e) OF THE DISCLOSURE
SCHEDULE, no tenant or other party in possession of any of the real properties
owned by the Company and the Subsidiaries, has any right to purchase, or holds
any right of first refusal to purchase, such properties.
(f) Except as disclosed in SECTION 2.16(f) OF THE DISCLOSURE
SCHEDULE, the improvements on the real property identified in SECTION 2.16(a) OF
THE DISCLOSURE SCHEDULE are in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
Knowledge of Seller, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
2.17 TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS.
The Company or a Subsidiary is in possession of and has good title to,
or has valid leasehold interests in or valid rights under Contract to use, all
tangible personal property used in or reasonably necessary for the conduct of
their business, including all tangible personal property reflected on the
balance sheet included in the Unaudited Financial Statements and tangible
personal property acquired since the Unaudited Financial Statement Date other
than property disposed of since such date in the ordinary course of business
consistent with past practice. All such tangible personal property is free and
clear of all Liens, other than Liens disclosed in SECTION 2.17(a) OF THE
DISCLOSURE SCHEDULE, and is in good working order and condition, ordinary wear
and tear excepted, and its use complies in all material respects with all
applicable Laws.
(a) SECTION 2.17(b) OF THE DISCLOSURE SCHEDULE describes each
Investment Asset owned by the Company or any Subsidiary on the date hereof.
Except as disclosed in SECTION 2.17(b) OF THE DISCLOSURE SCHEDULE, all such
Investment Assets are owned by the Company or a Subsidiary free and clear of all
Liens.
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2.18 INTELLECTUAL PROPERTY RIGHTS. The Company and the Subsidiaries
have interests in or use only the Intellectual Property disclosed in SECTION
2.18 OF THE DISCLOSURE SCHEDULE, each of which the Company or a Subsidiary
either has all right, title and interest in or a valid and binding rights under
Contract to use. No other Intellectual Property is used or necessary in the
conduct of the business of the Company or any Subsidiary. Except as disclosed in
SECTION 2.18 OF THE DISCLOSURE SCHEDULE, (i) the Company or a Subsidiary has the
exclusive right to use the Intellectual Property disclosed in SECTION 2.18 OF
THE DISCLOSURE SCHEDULE, (ii) all registrations with and applications to
Governmental or Regulatory Authorities in respect of such Intellectual Property
are valid and in full force and effect and are not subject to the payment of any
Taxes or maintenance fees or the taking of any other actions by the Company or a
Subsidiary to maintain their validity or effectiveness, (iii) there are no
restrictions on the direct or indirect transfer of any Contract, or any interest
therein, held by the Company or any Subsidiary in respect of such Intellectual
Property, (iv) Seller has delivered to Purchaser prior to the execution of this
Agreement documentation with respect to any invention, process, design, computer
program or other know-how or trade secret included in such Intellectual
Property, which documentation is accurate in all material respects and
reasonably sufficient in detail and content to identify and explain such
invention, process, design, computer program or other know-how or trade secret
and to facilitate its full and proper use without reliance on the special
knowledge or memory of any Person, (v) the Company and the Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of their trade secrets, (vi) neither the Company nor any Subsidiary is, or
has received any notice that it is, in default (or with the giving of notice or
lapse of time or both, would be in default) under any Contract to use such
Intellectual Property and (vii) to the Knowledge of Seller, no such Intellectual
Property is being infringed by any other Person. Neither Seller, the Company nor
any Subsidiary has received notice that the Company or any Subsidiary is
infringing any Intellectual Property of any other Person, no claim is pending
or, to the Knowledge of Seller, has been made to such effect that has not been
resolved and, to the Knowledge of Seller, neither the Company nor any Subsidiary
is infringing any Intellectual Property of any other Person.
2.19 CONTRACTS.
(a) SECTION 2.19(a) OF THE DISCLOSURE SCHEDULE (with paragraph
references corresponding to those set forth below) contains a true and complete
list of each of the following Contracts or other arrangements (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been delivered to Purchaser prior to the execution of
this Agreement), to which the Company or any Subsidiary is a party or by which
any of their respective Assets and Properties is bound:
(i) (A) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the termination of
employment, the name, position and rate of compensation of each Person
party to such a Contract and the expiration date of each such Contract; and
(B) any written or unwritten representations, commitments, promises,
communications or courses of conduct (excluding Benefit Plans
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and any such Contracts referred to in clause (A)) involving an obligation
of the Company or any Subsidiary to make payments in any year, other than
with respect to salary or incentive compensation payments in the ordinary
course of business, to any employee exceeding $25,000 or any group of
employees exceeding $50,000 in the aggregate;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company or any
Subsidiary to engage in any business activity or compete with any Person
or, except as provided in SECTION 4.11, prohibiting or limiting the ability
of any Person to compete with the Company or any Subsidiary;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or any
Subsidiary in excess of $50,000 or to preferred stock issued by the Company
or any Subsidiary;
(v) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice, and (B) any merger or other business combination;
(vii) all Contracts between or among the Company or any
Subsidiary, on the one hand, and Seller, any officer, director or Affiliate
(other than the Company or any Subsidiary) of Seller, on the other hand;
(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts that (A) limit or contain restrictions on the
ability of the Company or any Subsidiary to declare or pay dividends on, to
make any other distribution in respect of or to issue or purchase, redeem
or otherwise acquire its capital stock, to incur Indebtedness, to incur or
suffer to exist any Lien, to purchase or sell any Assets and Properties, to
change the lines of business in which it participates or engages or to
engage in any Business Combination or (B) require the Company or any
Subsidiary to maintain specified financial ratios or levels of net worth or
other indicia of financial condition; and
(x) all other Contracts (other than Benefit Plans, leases listed
in SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE and insurance policies listed
in SECTION 2.21 OF THE DISCLOSURE SCHEDULE) that (A) involve the payment or
potential payment, pursuant to the terms of any such Contract, by or to the
Company or any Subsidiary of more than $50,000 annually and (B) cannot be
terminated within thirty (30) days after giving notice
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of termination without resulting in any material cost or penalty to the
Company or any Subsidiary.
(b) Each Contract required to be disclosed in SECTION 2.19(a) OF THE
DISCLOSURE SCHEDULE is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, of each party
thereto; and except as disclosed in SECTION 2.19(b) OF THE DISCLOSURE SCHEDULE
neither the Company, any Subsidiary nor, to the Knowledge of Seller, any other
party to such Contract is, or has received notice that it is, in violation or
breach of or default under any such Contract (or with notice or lapse of time or
both, would be in violation or breach of or default under any such Contract) in
any material respect.
2.20 LICENSES. SECTION 2.20 OF THE DISCLOSURE SCHEDULE contains a true
and complete list of all Licenses used in and material, individually or in the
aggregate, to the business or operations of the Company or any Subsidiary (and
all pending applications for any such Licenses), setting forth the grantor, the
grantee, the function and the expiration and renewal date of each. Prior to the
execution of this Agreement, Seller has delivered to Purchaser true and complete
copies of all such Licenses. Except as disclosed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE:
(i) the Company and each Subsidiary owns or validly holds all
Licenses that are material, individually or in the aggregate, to its
business or operations;
(ii) each License listed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE is valid, binding and in full force and effect; and
(iii) neither the Company nor any Subsidiary is, or has received
any notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any such License.
2.21 INSURANCE. SECTION 2.21 OF THE DISCLOSURE SCHEDULE contains
a true and complete list (including the names and addresses of the insurers, the
names of the Persons to whom such Policies have been issued, the expiration
dates thereof, the annual premiums and payment terms thereof, whether it is a
"claims made" or an "occurrence" policy and a brief description of the interests
insured thereby) of all liability, property, workers' compensation, directors'
and officers' liability and other insurance policies currently in effect that
insure the business, operations or employees of the Company or any Subsidiary or
affect or relate to the ownership, use or operation of any of the Assets and
Properties of the Company or any Subsidiary and that (i) have been issued to the
Company or any Subsidiary or (ii) have been issued to any Person (other than the
Company or any Subsidiary) for the benefit of the Company or any Subsidiary. The
insurance coverage provided by any of the policies described in clause (i) above
will not terminate or lapse by reason of the transactions contemplated by this
Agreement. Each policy listed in SECTION 2.21 OF THE DISCLOSURE SCHEDULE is
valid and binding and in full force and effect, no premiums due thereunder have
not been paid and neither the Company, any Subsidiary nor the Person to whom
such policy has been issued has received any notice of cancellation or
termination in respect of any such policy or is in default thereunder. The
insurance policies listed in SECTION 2.21 OF THE DISCLOSURE SCHEDULE are placed
with
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financially sound and reputable insurers and, in light of the respective
business, operations and Assets and Properties of the Company and the
Subsidiaries, are in amounts and have coverages that are reasonable and
customary for Persons engaged in such businesses and operations and having such
Assets and Properties. Neither the Company, any Subsidiary nor the Person to
whom such policy has been issued has received notice that any insurer under any
policy referred to in this Section is denying liability with respect to a claim
thereunder or defending under a reservation of rights clause.
2.22 AFFILIATE TRANSACTIONS. Except as disclosed in SECTION
2.19(a)(vii) or SECTION 2.22(a) OF THE DISCLOSURE SCHEDULE, (i) there are no
intercompany Liabilities between the Company or any Subsidiary, on the one hand,
and Seller, any officer, director or Affiliate (other than the Company or any
Subsidiary) of Seller, on the other, (ii) neither Seller nor any such officer,
director or Affiliate provides or causes to be provided any assets, services or
facilities to the Company or any Subsidiary, (iii) neither the Company nor any
Subsidiary provides or causes to be provided any assets, services or facilities
to Seller or any such officer, director or Affiliate and (iv) neither the
Company nor any Subsidiary beneficially owns, directly or indirectly, any
Investment Assets issued by Seller or any such officer, director or Affiliate.
Except as disclosed in SECTION 2.22(b) OF THE DISCLOSURE SCHEDULE, each of the
Liabilities and transactions listed in SECTION 2.22(a) OF THE DISCLOSURE
SCHEDULE was incurred or engaged in, as the case may be, on an arm's-length
basis. Except as disclosed in SECTION 2.22(c) OF THE DISCLOSURE SCHEDULE, since
the Audited Financial Statement Date, all settlements of intercompany
Liabilities between the Company or any Subsidiary, on the one hand, and Seller
or any such officer, director or Affiliate, on the other, have been made, and
all allocations of intercompany expenses have been applied, in the ordinary
course of business consistent with past practice.
2.23 EMPLOYEES; LABOR RELATIONS.
(a) SECTION 2.23 OF THE DISCLOSURE SCHEDULE contains a list of the
name of each officer and employee of the Company and the Subsidiaries having an
annual base salary or wages of at least $50,000 at the date hereof, together
with each such person's position or function, annual base salary or wages and
any incentive or bonus arrangement with respect to such person in effect on such
date. Seller has not received any information that would lead it to believe that
a material number of such persons will or may cease to be employees, or will
refuse offers of employment from Purchaser, because of the consummation of the
transactions contemplated by this Agreement.
(b) Except as disclosed in SECTION 2.23 OF THE DISCLOSURE SCHEDULE,
(i) no employee of the Company or any Subsidiary is presently a member of a
collective bargaining unit and, to the Knowledge of Seller, there are no
threatened or contemplated attempts to organize for collective bargaining
purposes any of the employees of the Company or any Subsidiary, and (ii) no
unfair labor practice complaint or sex, age, race or other discrimination claim
has been brought during the last five (5) years against the Company or any of
the Subsidiaries before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any other Governmental or Regulatory Authority. Since
January 1, 1997, there has been no work stoppage, strike or other concerted
action by employees of the Company or
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any Subsidiary. During that period, the Company and the Subsidiaries have
complied in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation those relating to wages,
hours and collective bargaining.
2.24 ENVIRONMENTAL MATTERS. Each of the Company and the Subsidiaries
has obtained all Licenses which are required under applicable Environmental Laws
in connection with the conduct of the business or operations of the Company or
such Subsidiary. Each of such Licenses is in full force and effect and each of
the Company and the Subsidiaries is in compliance in all material respects with
the terms and conditions of all such Licenses and with any applicable
Environmental Law. In addition, except as set forth in SECTION 2.24 OF THE
DISCLOSURE SCHEDULE (with paragraph references corresponding to those set forth
below):
(a) No Order has been issued, no Environmental Claim has been filed,
no penalty has been assessed and no investigation or review is pending or, to
the Knowledge of Seller, threatened by any Governmental or Regulatory Authority
with respect to any alleged failure by the Company or any Subsidiary to have any
License required under applicable Environmental Laws in connection with the
conduct of the business or operations of the Company or any of the Subsidiaries
or with respect to any generation, treatment, storage, recycling,
transportation, discharge, disposal or Release of any Hazardous Material
generated by the Company or any Subsidiary, and to the Knowledge of Seller,
there are no facts or circumstances in existence which could reasonably be
expected to form the basis for any such Order, Environmental Claim, penalty or
investigation.
(b) Neither the Company nor any Subsidiary owns, operates or leases a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable state
or local Law; and, without limiting the foregoing, (i) no polychlorinated
biphenyl is or has been present, (ii) no asbestos or asbestos-containing
material is or has been present, (iii) there are no underground storage tanks or
surface impoundments for Hazardous Materials, active or abandoned, and (iv) no
Hazardous Material has been Released in a quantity reportable under, or in
violation of, any Environmental Law or otherwise Released, in the cases of
clauses (i) through (iv), at, on or under any site or facility now or previously
owned, operated or leased by the Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary has transported or
arranged for the transportation of any Hazardous Material to any location that
is (i) listed on the NPL under CERCLA, (ii) listed for possible inclusion on the
NPL by the Environmental Protection Agency in CERCLIS or on any similar state or
local list or (iii) the subject of enforcement actions by federal, state or
local Governmental or Regulatory Authorities that may lead to Environmental
Claims against the Company or any Subsidiary.
(d) No Hazardous Material generated by the Company or any Subsidiary
has been recycled, treated, stored, disposed of or Released by the Company or
any Subsidiary at any location.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any Subsidiary and no
site or facility now or
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previously owned, operated or leased by the Company or any Subsidiary is listed
or proposed for listing on the NPL, CERCLIS or any similar state or local list
of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Law
on any site or facility owned, operated or leased by the Company or any
Subsidiary, and no federal, state or local Governmental or Regulatory Authority
action has been taken or, to the Knowledge of Seller, is in process that could
subject any such site or facility to such Liens, and neither the Company nor any
Subsidiary would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any site or facility owned by it in any deed
to the real property on which such site or facility is located.
(g) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or that are in the possession of,
the Company or any Subsidiary in relation to any site or facility now or
previously owned, operated or leased by the Company or any Subsidiary which have
not been delivered to Purchaser prior to the execution of this Agreement.
2.25 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. SECTION 2.25(a) OF THE
DISCLOSURE SCHEDULE lists the ten (10) largest customers of the Company and the
Subsidiaries, on the basis of revenues for goods sold or services provided for
the most recently-completed fiscal year. SECTION 2.25(b) OF THE DISCLOSURE
SCHEDULE lists the ten (10) largest suppliers of the Company and the
Subsidiaries, on the basis of cost of goods or services purchased for the most
recently-completed fiscal year. Except as disclosed in SECTION 2.25(c) OF THE
DISCLOSURE SCHEDULE, no such customer or supplier has ceased or materially
reduced its purchases from, use of the services of, or sales or provision of
services to the Company and the Subsidiaries since the Audited Financial
Statement Date, or to the Knowledge of Seller, has threatened to cease or
materially reduce such purchases, use, sales or provision of services after the
date hereof. Except as disclosed in SECTION 2.25(d) OF THE DISCLOSURE SCHEDULE,
to the Knowledge of Seller, no such customer or supplier is threatened with
bankruptcy or insolvency.
2.26 DEALERS. SECTION 2.26 OF THE DISCLOSURE SCHEDULE lists all the
dealers of the Company and the Subsidiaries, on the basis of goods sold for the
most recently-completed fiscal year.
2.27 BANK AND BROKERAGE ACCOUNTS; INVESTMENT ASSETS. SECTION 2.27 OF
THE DISCLOSURE SCHEDULE sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Company or any Subsidiary has an account or safe
deposit box or maintains a banking, custodial, trading or other similar
relationship; (b) a true and complete list and description of each such account,
box and relationship, indicating in each case the account number and the names
of the respective officers, employees, agents or other similar representatives
of the Company or any Subsidiary having signatory power with respect thereto;
and (c) a list of each Investment Asset, the name of the record and beneficial
owner thereof, the location of the certificates, if any, therefor, the
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maturity date, if any, and any stock or bond powers or other authority for
transfer granted with respect thereto.
2.28 NO POWERS OF ATTORNEY. Except as set forth in SECTION 2.28 OF THE
DISCLOSURE SCHEDULE, neither the Company nor any Subsidiary has any powers of
attorney or comparable delegations of authority outstanding.
2.29 ACCOUNTS RECEIVABLE. Except as set forth in SECTION 2.29 OF THE
DISCLOSURE SCHEDULE, the accounts and notes receivable of the Company and the
Subsidiaries reflected on the balance sheet included in the Unaudited Financial
Statements, and all accounts and notes receivable arising subsequent to the
Unaudited Financial Statement Date, (i) arose from BONA FIDE sales transactions
in the ordinary course of business and are payable on ordinary trade terms, (ii)
are legal, valid and binding obligations of the respective debtors enforceable
in accordance with their terms, (iii) are not subject to any valid set-off or
counterclaim, (iv) do not represent obligations for goods sold on consignment,
on approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement, (v) are collectible in the ordinary course of business
consistent with past practice in the aggregate recorded amounts thereof, net of
any applicable reserve reflected in the balance sheet included in the Unaudited
Financial Statements, and (vi) are not the subject of any Actions or Proceedings
brought by or on behalf of the Company or any Subsidiary. SECTION 2.29 OF THE
DISCLOSURE SCHEDULE sets forth a description of any security arrangements and
collateral securing the repayment or other satisfaction of receivables of the
Company and the Subsidiaries. All steps necessary to render all such security
arrangements legal, valid, binding and enforceable, and to give and maintain for
the Company or a Subsidiary, as the case may be, a perfected security interest
in the related collateral, have been taken.
2.30 INVENTORY. All inventory of the Company and the Subsidiaries
reflected on the balance sheet included in the Unaudited Financial Statements
consisted, and all such inventory acquired since the Unaudited Financial
Statement Date consists, of inventory calculated in accordance with criteria set
forth in SCHEDULE 1.04. Except as disclosed in the notes to the Unaudited
Financial Statements, all items included in the inventory of the Company and the
Subsidiaries are the property of the Company and the Subsidiaries, free and
clear of any Lien, have not been pledged as collateral, are not held by the
Company or any Subsidiary on consignment from others and conform in all material
respects to all standards applicable to such inventory or its use or sale
imposed by Governmental or Regulatory Authorities.
2.31 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller directly with
Purchaser without the intervention of any Person on behalf of Seller in such
manner as to give rise to any valid claim by any Person against Purchaser, the
Company or any Subsidiary for a finder's fee, brokerage commission or similar
payment.
2.32 DISCLOSURE. All material facts relating to the Business or
Condition of the Company have been disclosed to Purchaser in or in connection
with this Agreement. No representation or warranty contained in this Agreement,
and no statement contained in the Disclosure Schedule or in any certificate,
list or other writing furnished to Purchaser pursuant to
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any provision of this Agreement (including without limitation the Financial
Statements), contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. Purchaser
has full corporate power and authority to execute and deliver this Agreement and
the Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
3.02 AUTHORITY. The execution and delivery by Purchaser of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the Board of Directors of Purchaser, no other
corporate action on the part of Purchaser or its stockholders being necessary.
This Agreement has been duly and validly executed and delivered by Purchaser and
constitutes, and upon the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, such Operative Agreements will constitute, a
legal, valid and binding obligations of Purchaser enforceable against Purchaser
in accordance with their terms.
3.03 NO CONFLICTS. The execution and delivery by Purchaser of this
Agreement do not, and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
(or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in SCHEDULE 3.04 hereto, conflict
with or result in a violation or breach of any term or provision of any Law or
Order applicable to Purchaser or any of its Assets and Properties; or
(c) except as disclosed in SCHEDULE 3.03 hereto, (i) conflict with or
result in a violation or breach of, (ii) constitute (with or without notice or
lapse of time or both) a default under, (iii) require Purchaser to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Purchaser or any of its Assets or Properties under,
any Contract or License to which Purchaser is a party or by which any of its
Assets and Properties is bound.
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3.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SCHEDULE 3.04 hereto, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Purchaser is required
in connection with the execution, delivery and performance of this Agreement or
the Operative Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
3.05 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending
or, to the Knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements.
3.06 PURCHASE FOR INVESTMENT. The Shares will be acquired by Purchaser
(or, if applicable, its assignee pursuant to SECTION 14.09(b)(i)) for its own
account for the purpose of investment, it being understood that the right to
dispose of such Shares shall be entirely within the discretion of Purchaser (or
such assignee, as the case may be). Purchaser (or such assignee, as the case may
be) will refrain from transferring or otherwise disposing of any of the Shares,
or any interest therein, in such manner as to cause Seller to be in violation of
the registration requirements of the Securities Act of 1933, as amended, or
applicable state securities or blue sky laws.
a) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Seller without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Seller, the
Company or any Subsidiary for a finder's fee, brokerage commission or similar
payment.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from and
after the date hereof until the Closing and, with respect to any covenant or
agreement by its terms to be performed in whole or in part after the Closing,
for the period specified therein or, if no period is specified therein,
indefinitely, Seller will comply with all covenants and provisions of this
ARTICLE IV, except to the extent Purchaser may otherwise consent in writing.
4.01 REGULATORY AND OTHER APPROVALS. Seller will, and will cause the
Company and the Subsidiaries to, as promptly as practicable (a) take all
commercially reasonable steps necessary or desirable to obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Seller,
the Company or any Subsidiary to consummate the transactions contemplated hereby
and by the Operative Agreements, including without limitation those described in
SECTIONS 2.06 AND 2.07 OF THE DISCLOSURE SCHEDULE, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as Purchaser or such Governmental or Regulatory Authorities or
other Persons may reasonably request in connection therewith and
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(c) cooperate with Purchaser in connection with the performance of its
obligations under SECTIONS 5.01 AND 5.02. Seller will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
4.02 HSR FILINGS. In addition to and not in limitation of Seller's
covenants contained in SECTION 4.01, Seller will (a) take promptly all actions
necessary to make the filings required of Seller or its Affiliates under the HSR
Act, (b) comply at the earliest practicable date with any request for additional
information received by Seller or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general.
4.03 INVESTIGATION BY PURCHASER. Seller will, and will cause the
Company and the Subsidiaries to, (a) provide Purchaser and its officers,
directors, employees, agents, counsel, accountants, investment bankers,
financial advisors, consultants and other representatives (together
"REPRESENTATIVES") with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants of the
Company and the Subsidiaries and their Assets and Properties and Books and
Records, (b) furnish Purchaser and such other Persons with all such information
and data (including without limitation copies of Contracts, Benefit Plans and
other Books and Records) concerning the business and operations of the Company
and the Subsidiaries as Purchaser or any of such other Persons reasonably may
request in connection with such investigation and (c) otherwise cooperate fully
with Purchaser and its officers, directors, employees, agents, counsel,
accountants, investment bankers, financial advisors, consultants and other
representatives with respect to Purchaser's attempts to obtain financing.
4.04 NO SOLICITATIONS. Seller will not take, nor will it permit the
Company, the Subsidiaries or any Affiliate of Seller (or authorize or permit any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of Seller, the Company, the Subsidiaries
or any such Affiliate) to take, directly or indirectly, any action to solicit,
encourage, receive, negotiate, assist or otherwise facilitate (including by
furnishing confidential information with respect to the Company or any
Subsidiary or permitting access to the Assets and Properties and Books and
Records of the Company or any Subsidiary) any offer or inquiry from any Person
concerning an Acquisition Proposal. If Seller, the Company, any Subsidiary or
any such Affiliate (or any such Person acting for or on their behalf) receives
from any Person any offer, inquiry or informational request referred to above,
Seller will promptly advise such Person, by written notice, of the terms of this
SECTION 4.04 and will promptly, orally and in writing, advise Purchaser of such
offer, inquiry or request and deliver a copy of such notice to Purchaser.
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4.05 CONDUCT OF BUSINESS. Seller will cause the Company and the
Subsidiaries to conduct business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, Seller will:
(a) cause the Company and the Subsidiaries to use commercially
reasonable efforts to (i) preserve intact the present business organization and
reputation of the Company and the Subsidiaries, (ii) keep available (subject to
dismissals and retirements in the ordinary course of business consistent with
past practice) the services of the present officers, employees and consultants
of the Company and the Subsidiaries, (iii) maintain the Assets and Properties of
the Company and the Subsidiaries in good working order and condition, ordinary
wear and tear excepted, (iv) maintain the good will of customers, suppliers,
lenders and other Persons to whom the Company or any Subsidiary sells goods or
provides services or with whom the Company or any Subsidiary otherwise has
significant business relationships, and (v) continue all current sales,
marketing and promotional activities relating to the business and operations of
the Company and the Subsidiaries;
(b) except to the extent required by applicable Law, (i) cause the
Books and Records to be maintained in the usual, regular and ordinary manner,
(ii) not permit any material change in (A) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or policy of
the Company or any Subsidiary, or (B) any method of calculating any bad debt,
contingency or other reserve of the Company or any Subsidiary for accounting,
financial reporting or Tax purposes and (iii) not permit any change in the
fiscal year of the Company or any Subsidiary;
(c) (i) use, and will cause the Company and the Subsidiaries to use,
commercially reasonable efforts to maintain in full force and effect until the
Closing substantially the same levels of coverage as the insurance afforded
under the Contracts listed in SECTION 2.21 OF THE DISCLOSURE SCHEDULE, (ii) to
the extent requested by Purchaser prior to the Closing Date, use all
commercially reasonable efforts to cause such insurance coverage held by any
Person (other than the Company or any Subsidiary) for the benefit of the Company
or any Subsidiary to continue to be provided at the expense of the Company and
the Subsidiaries for at least ninety (90) days after the Closing on
substantially the same terms and conditions as provided on the date of this
Agreement and (iii) cause any and all benefits under such Contracts paid or
payable (whether before or after the date of this Agreement) with respect to the
business, operations, employees or Assets and Properties of the Company and the
Subsidiaries to be paid to the Company and the Subsidiaries; and
(d) cause the Company and the Subsidiaries to comply, in all material
respects, with all Laws and Orders applicable to the business and operations of
the Company and the Subsidiaries, and promptly following receipt thereof to give
Purchaser copies of any notice received from any Governmental or Regulatory
Authority or other Person alleging any violation of any such Law or Order.
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4.06 FINANCIAL STATEMENTS AND REPORTS; FILINGS.
(a) As promptly as practicable and in any event no later than forty
five (45) days after the end of each fiscal quarter ending after the date hereof
and before the Closing Date (other than the fourth quarter) or ninety (90) days
after the end of each fiscal year ending after the date hereof and before the
Closing Date, as the case may be, Seller will deliver to Purchaser true and
complete copies of (in the case of any such fiscal year) the audited and (in the
case of any such fiscal quarter) the unaudited consolidated balance sheet, and
the related audited or unaudited consolidated statements of operations,
stockholders' equity and cash flows, of the Company and its consolidated
subsidiaries, in each case as of and for the fiscal year then ended or as of and
for each such fiscal quarter and the portion of the fiscal year then ended, as
the case may be, together with the notes, if any, relating thereto, which
financial statements shall be prepared on a basis consistent with the Audited
Financial Statements.
(b) As promptly as practicable, Seller will deliver to Purchaser true
and complete copies of such other financial statements, reports and analyses as
may be prepared or received by Seller, the Company or any Subsidiary relating to
the business or operations of the Company or any Subsidiary or as Purchaser may
otherwise reasonably request.
(c) As promptly as practicable, Seller will deliver copies of all
License applications and other filings made by the Company or any Subsidiary
after the date hereof and before the Closing Date with any Governmental or
Regulatory Authority (other than routine, recurring filings made in the ordinary
course of business consistent with past practice).
4.07 EMPLOYEE MATTERS. Except as may be required by Law, Seller will
refrain, and will cause the Company and the Subsidiaries to refrain, from
directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, employee or consultant of the Company or any Subsidiary concerning any
Benefit Plan, except for statements as to the rights or accrued benefits of any
officer, employee or consultant under the terms of any Benefit Plan;
(b) making any increase in the salary, wages or other compensation of
any officer, employee or consultant of the Company or any Subsidiary whose
annual salary is or, after giving effect to such change, would be $75,000 or
more;
(c) adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining agreement, or amending,
modifying or terminating (partially or completely) any Benefit Plan,
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law and, in the event compliance with legal
requirements presents options, only to the extent that the option which the
Company or Subsidiary reasonably believes to be the least costly is chosen; or
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any Benefit Plan,
employment-related Contract or other employee compensation arrangement or (ii)
salary ranges, increase guidelines or similar
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provisions in respect of any Benefit Plan, employment-related Contract or other
employee compensation arrangement.
Seller will cause the Company and the Subsidiaries to administer each Benefit
Plan, or cause the same to be so administered, in all material respects in
accordance with the applicable provisions of the Code, ERISA and all other
applicable Laws. Seller will promptly notify Purchaser in writing of each
receipt by Seller, the Company or any Subsidiary (and furnish Purchaser with
copies) of any notice of investigation or administrative proceeding by the IRS,
Department of Labor, PBGC or other Person involving any Benefit Plan.
4.08 CERTAIN RESTRICTIONS. Seller will cause the Company and the
Subsidiaries to refrain from:
(a) amending their certificates or articles of incorporation or
by-laws (or other comparable corporate charter documents) or taking any action
with respect to any such amendment or any recapitalization, reorganization,
liquidation or dissolution of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any Option with respect to the Company or any
Subsidiary, or modifying or amending any right of any holder of outstanding
shares of capital stock of or Option with respect to the Company or any
Subsidiary;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary
not wholly owned by the Company, or directly or indirectly redeeming, purchasing
or otherwise acquiring any capital stock of or any Option with respect to the
Company or any Subsidiary not wholly owned by the Company;
(d) acquiring or disposing of, or incurring any Lien on, any Assets
and Properties, other than in the ordinary course of business consistent with
past practice;
(e) (i) entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to (A)
any Contract that would, if in existence on the date of this Agreement, be
required to be disclosed in the Disclosure Schedule pursuant to SECTION 2.19(a)
or (B) any material License or (ii) granting any irrevocable powers of attorney;
(f) violating, breaching or defaulting under in any material respect,
or taking or failing to take any action that (with or without notice or lapse of
time or both) would constitute a material violation or breach of, or default
under, any term or provision of any License held or used by the Company or any
Subsidiary or any Contract to which the Company or any Subsidiary is a party or
by which any of their respective Assets and Properties is bound;
(g) (i) incurring Indebtedness in an aggregate principal amount
exceeding $56,000,000 through July 31, 2000 and $58,000,000 thereafter (net of
any amounts of
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Indebtedness discharged during such period), or (ii) voluntarily purchasing,
canceling, prepaying or otherwise providing for a complete or partial discharge
in advance of a scheduled payment date with respect to, or waiving any right of
the Company or any Subsidiary under, any Indebtedness of or owing to the Company
or any Subsidiary;
(h) engaging with any Person in any merger or other business
combination;
(i) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets in an aggregate amount
exceeding $50,000;
(j) making any change in the lines of business in which they
participate or are engaged;
(k) writing off or writing down any of their Assets and Properties
outside the ordinary course of business consistent with past practice; or
(l) entering into any Contract to do or engage in any of the
foregoing.
4.09 AFFILIATE TRANSACTIONS. Except as set forth in SECTION 4.09 OF
THE DISCLOSURE SCHEDULE, immediately prior to the Closing, all Indebtedness and
other amounts owing under Contracts between Seller, any officer, director or
Affiliate (other than the Company or any Subsidiary) of Seller, on the one hand,
and the Company or any of the Subsidiaries, on the other, will be paid in full,
and Seller will terminate and will cause any such officer, director or Affiliate
to terminate each Contract with the Company or any Subsidiary; PROVIDED,
HOWEVER, that Purchaser may designate any such Contract or Contracts, by notice
to Seller not less than five (5) days prior to the Closing, which shall not be
so terminated, and any such designated Contract(s) will continue to be
maintained through the Closing in accordance with its terms. Prior to the
Closing, neither the Company nor any Subsidiary will enter into any Contract or
amend or modify any existing Contract, and will not engage in any transaction
outside the ordinary course of business consistent with past practice or not on
an arm's-length basis (other than pursuant to Contracts disclosed pursuant to
SECTION 2.19(a)(vii) OF THE DISCLOSURE SCHEDULE), with Seller or any such
officer, director or Affiliate.
4.10 BOOKS AND RECORDS. On the Closing Date, Seller will deliver or
make available to Purchaser at the offices of the Company and the Subsidiaries
all of the Books and Records, and if at any time after the Closing Seller
discovers in its possession or under its control any other Books and Records, it
will forthwith deliver such Books and Records to Purchaser.
4.11 NONCOMPETITION. Seller will, and will cause each of its officers
and directors to, for a period of five (5) years from the Closing Date, refrain
from, either alone or in conjunction with any other Person, or directly or
indirectly through its present or future Affiliates:
(i) employing, engaging or seeking to employ or engage any
Person who within the prior twelve (12) months had been an officer or
employee of the Company or a Subsidiary, unless such officer or employee
(A) resigns voluntarily
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(without any solicitation from Seller or any of its Affiliates) or (B) is
terminated by the Company or any Subsidiary after the Closing Date;
(ii) causing or attempting to cause (A) any client, customer or
supplier of the Company or any Subsidiary to terminate or materially reduce
its business with the Company and the Subsidiaries or (B) any officer,
employee or consultant of the Company or any Subsidiary to resign or sever
a relationship with the Company or a Subsidiary;
(iii) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to the
Company or any of the Subsidiaries or any of their respective clients,
customers or suppliers; or
(iv) participating or engaging in (other than through the
ownership of five percent (5%) or less of any class of securities
registered under the Securities Exchange Act of 1934, as amended), or
otherwise lending assistance (financial or otherwise) to any Person
participating or engaged in, any of the lines of business in which the
Company or any of the Subsidiaries is participating or engaged on the
Closing Date in any jurisdiction listed in SCHEDULE 4.11 OF THE DISCLOSURE
SCHEDULE, which are all of the jurisdictions in which the Company or a
Subsidiary participates or engages in such line of business on the Closing
Date.
(b) The parties hereto recognize that the Laws and public policies of
the various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section. It is
the intention of the parties that the provisions of this Section be enforced to
the fullest extent permissible under the Laws and policies of each jurisdiction
in which enforcement may be sought, and that the unenforceability (or the
modification to conform to such Laws or policies) of any provisions of this
Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law
for any breach of the provisions of this Section would be inadequate, and Seller
hereby consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
4.12 NOTICE AND CURE. Seller will notify Purchaser in writing (where
appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Purchaser with true and complete copies of any
and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes Known to Seller, occurring
after the date of this Agreement that causes or will cause any covenant or
agreement of Seller under this Agreement to be breached or that renders or will
render untrue any representation or warranty of
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Seller contained in this Agreement as if the same were made on or as of the date
of such event, transaction or circumstance. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit Purchaser's right to
seek indemnity under ARTICLE XI.
4.13 FULFILLMENT OF CONDITIONS. Seller will execute and deliver at the
Closing each Operative Agreement that Seller is required hereby to execute and
deliver as a condition to the Closing, will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of Purchaser contained in this Agreement
and will not, and will not permit the Company or any Subsidiary to, take or fail
to take any action that could reasonably be expected to result in the
nonfulfillment of any such condition.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times from and
after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this ARTICLE V, except to the extent Seller may
otherwise consent in writing.
5.01 REGULATORY AND OTHER APPROVALS. Purchaser will as promptly as
practicable (a) take all commercially reasonable steps necessary or desirable to
obtain all consents, approvals or actions of, make all filings with and give all
notices to Governmental or Regulatory Authorities or any other Person required
of Purchaser to consummate the transactions contemplated hereby and by the
Operative Agreements, including without limitation those described in SCHEDULES
3.03 AND 3.04 hereto, (b) provide such other information and communications to
such Governmental or Regulatory Authorities or other Persons as Seller or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Seller, the Company and the
Subsidiaries in connection with the performance of their obligations under
SECTIONS 4.01 AND 4.02. Purchaser will provide prompt notification to Seller
when any such consent, approval, action, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will advise
Seller of any communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
5.02 HSR FILINGS. In addition to and without limiting Purchaser's
covenants contained in SECTION 5.01, Purchaser will (i) take promptly all
actions necessary to make the filings required of Purchaser or its Affiliates
under the HSR Act, including paying any required fees associated therewith, (ii)
comply at the earliest practicable date with any request for additional
information received by Purchaser or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and
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(iii) cooperate with Seller in connection with Seller's filing under the HSR Act
and in connection with resolving any investigation or other regulatory inquiry
concerning the transactions contemplated by this Agreement commenced by either
the Federal Trade Commission or the Antitrust Division of the Department of
Justice or state attorneys general.
5.03 NOTICE AND CURE. Purchaser will notify Seller in writing of,
and contemporaneously will provide Seller with true and complete copies of
any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it becomes known to
Purchaser, occurring after the date of this Agreement that causes or will
cause any covenant or agreement of Purchaser under this Agreement to be
breached or that renders or will render untrue any representation or warranty
of Purchaser contained in this Agreement as if the same were made on or as of
the date of such event, transaction or circumstance. No notice given pursuant
to this Section shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein or shall in any
way limit Seller's right to seek indemnity under ARTICLE XI.
5.04 FULFILLMENT OF CONDITIONS. Purchaser will execute and deliver
at the Closing each Operative Agreement that Purchaser is hereby required to
execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each other condition to the obligations of Seller contained
in this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Purchaser
in its sole discretion):
6.01 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Seller in this Agreement (other than those made as of a
specified date earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct in all material respects on and as of such earlier date.
6.02 PERFORMANCE. Seller shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Seller at or before the
Closing.
6.03 OFFICERS' CERTIFICATES. Seller shall have delivered to Purchaser
a certificate, dated the Closing Date and executed in the name and on behalf of
Seller by the Chairman of the Board, the President or any Executive Vice
President of Seller, substantially in
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the form and to the effect of EXHIBIT B hereto, and a certificate, dated the
Closing Date and executed by the Secretary or any Assistant Secretary of Seller,
substantially in the form and to the effect of EXHIBIT C hereto.
6.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to Purchaser, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Purchaser,
the Company, any Subsidiary or the transactions contemplated by this Agreement
or any of the Operative Agreements of any such Law.
6.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Seller to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall be in form and substance reasonably satisfactory to Purchaser,
(c) shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements, including under the
HSR Act, shall have occurred.
6.06 THIRD PARTY CONSENTS. The consents (or in lieu thereof waivers)
(i) listed in SECTION 6.06 OF THE DISCLOSURE SCHEDULE, and (ii) all other
consents (or in lieu thereof waivers) to the performance by Purchaser and Seller
of their obligations under this Agreement and the Operative Agreements or to the
consummation of the transactions contemplated hereby and thereby as are required
under any Contract to which Purchaser, Seller, the Company or any Subsidiary is
a party or by which any of their respective Assets and Properties are bound (a)
shall have been obtained, (b) shall be in form and substance reasonably
satisfactory to Purchaser, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, except (in the case of clause (ii) above) where the failure to
obtain any such consent (or in lieu thereof waiver) could not reasonably be
expected, individually or in the aggregate with other such failures, to
materially adversely affect Purchaser or the Business or Condition of the
Company or otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement and the Operative Agreements to
Purchaser.
6.07 OPINIONS OF COUNSEL. Purchaser shall have received the opinion of
BDS Consulting, AG, Switzerland counsel to Seller, and the opinion of Barnes &
Thornburg, United States counsel to Seller and the Company, dated the Closing
Date, substantially in the form and to the effect of EXHIBIT D-1 and EXHIBIT D-2
hereto, respectively.
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6.08 RESIGNATIONS OF DIRECTORS AND OFFICERS. Such members of the
boards of directors and such officers of the Company and the Subsidiaries as are
designated in a written notice delivered at least five (5) Business Days prior
to the Closing Date by Purchaser to Seller shall have tendered, effective at the
Closing, their resignations as such directors and officers.
6.09 ESCROW AGREEMENT. Seller and the Escrow Agent shall have entered
into the Escrow Agreement.
6.10 ESTOPPEL CERTIFICATES. Purchaser shall have received Estoppel
Certificates with respect to the real property leases listed in SECTION 6.10(b)
OF THE DISCLOSURE SCHEDULE.
6.11 ENVIRONMENTAL SURVEY. Purchaser shall have received Phase I
Environmental Reports or an environmental survey and assessment in form and
substance reasonably satisfactory to Purchaser prepared at Purchaser's cost by a
firm of licensed engineers (familiar with the identification of Hazardous
Materials) reasonably satisfactory to Purchaser, such Phase I Environmental
Reports or environmental surveys and assessments to be based upon physical
on-site inspections by such firm of each of the existing sites and facilities
owned, operated and leased by the Company and the Subsidiaries, as well as a
historical review of the uses of such sites and facilities and of the business
and operations of the Company and the Subsidiaries (including any former
Subsidiaries or divisions of the Company or any Subsidiary which have been
disposed of prior to the date of such survey and assessment and with respect to
which the Company or any Subsidiary may have retained liability for
environmental matters). The substance of such Phase I Environmental Reports or
environmental surveys and assessments shall be deemed "reasonably satisfactory
to Purchaser" if (i) they do not identify any material changes in items, issues
or concerns disclosed on or identified in documents referred to on SECTION 2.24
OF THE DISCLOSURE SCHEDULE and (ii) they do not identify any material items,
issues or concerns not disclosed on or identified in documents referred to on
SECTION 2.24 OF THE DISCLOSURE SCHEDULE.
6.12 PROCEEDINGS. All proceedings to be taken on the part of Seller in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.13 FINANCING. Purchaser shall have raised financing resulting in
gross proceeds to Purchaser of an amount not less than $80,000,000.
6.14 CONTRACTS. Seller shall have caused the Company to terminate all
Contracts or other arrangements to which the Company or any Subsidiary, on the
one hand, and the Seller or an Affiliate of the Seller, on the other hand, are
parties, except as otherwise designated by Purchaser in accordance with SECTION
4.09.
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6.15 TAX GUARANTY. Seller shall have delivered to Purchaser evidence
from Bank Leu, substantially in the form attached as EXHIBIT G of Seller's
ability to make available to Purchaser until June 30, 2004 not less than
$3,000,000 to cover claims under SECTION 10.02.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Shares are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.01 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date.
7.02 PERFORMANCE. Purchaser shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 OFFICERS' CERTIFICATES. Purchaser shall have delivered to Seller
a certificate, dated the Closing Date and executed in the name and on behalf of
Purchaser by the Chairman of the Board, the President or any Executive Vice
President of Purchaser, substantially in the form and to the effect of EXHIBIT E
hereto, and a certificate, dated the Closing Date and executed by the Secretary
or any Assistant Secretary of Purchaser, substantially in the form and to the
effect of EXHIBIT F hereto.
7.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date
any Order or Law that became effective after the date of this Agreement
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
7.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Seller and Purchaser to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made or
given, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements, including under the
HSR Act, shall have occurred.
7.06 PROCEEDINGS. All proceedings to be taken on the part of Purchaser
in connection with the transactions contemplated by this Agreement and all
documents incident
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thereto shall be reasonably satisfactory in form and substance to Seller, and
Seller shall have received copies of all such documents and other evidences as
Seller may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
7.07 SATISFACTION OF COMPANY AND SUBSIDIARY LOANS. Purchaser shall
have satisfied or provided funding to satisfy Company's and Subsidiary's loans
from Swedbank Forenigns Sparbanken AB, Bank One National Association and Seller,
in an aggregate principal amount not to exceed the amount permitted pursuant to
SECTION 4.08(g)(i).
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 FOREIGN REAL PROPERTY HOLDING CORPORATION. Seller shall cause the
Company to furnish to Purchaser and to the Internal Revenue Service, a statement
complying with the requirements of Treasury Regulations Sections 1.897-2(h) and
1.1445-2(c)(3) (the "STATEMENT") certifying that the Company is not a real
property holding corporation within the meaning of Code Section 897(h)(2). The
Statement delivered by the Company shall be dated not more than thirty (30) days
prior to the Closing Date, shall be signed by a responsible corporate officer
and include the name, address and identifying number of Company, the name,
address and identifying number (if any) of Seller, and a certification that the
Company is not and has not been a United States real property holding
corporation at any time during the previous five years (or the period in which
the interest was held by its present holder, if shorter).
8.02 TAX SHARING AGREEMENT. Any tax sharing agreements, tax settlement
agreements, arrangements, policies or guidelines, formal or informal, express or
implied that may exist between the Company and Seller or any affiliate of Seller
(other than the Company) (a "TAX SHARING AGREEMENT") shall terminate as of the
Closing Date and, except as specifically provided herein, any obligation to make
payments under any Tax Sharing Agreement shall be cancelled as of the Closing
Date.
8.03 TRANSFER TAXES. Seller shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("TRANSFER TAXES"), including without limitation Transfer Taxes arising out
of or in connection with the transactions effected pursuant to this Agreement,
and shall indemnify, defend and hold harmless Purchaser and the Company on an
after-Tax basis with respect to such Transfer Taxes. Seller shall file all
necessary documentation and Returns with respect to such Transfer Taxes.
8.04 PRE-CLOSING TAX RETURNS. Seller shall cause the Company to timely
prepare and file all Tax Returns for periods ending on or before the Closing
Date ("PRE-CLOSING TAX RETURNS"). Seller shall cause the Company to prepare all
Pre-Closing Tax Returns in accordance with the tax accruals on the books and
records of the Company and will not permit Company to amend any Tax Return
without the written approval of Purchaser, which consent shall not be
unreasonably withheld.
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8.05 TAX RETURNS FOR STUB PERIOD. Seller and Purchaser will, to the
extent permitted by applicable law, elect with the relevant taxing authorities
to close the taxable period of the Company on the Closing Date. In any case
where applicable law does not permit the Company to close its taxable year on
the Closing Date, Purchaser will be responsible for and will cause to be
prepared and duly filed all Tax Returns relating to Taxes of the Company for any
taxable period which includes and ends after the Closing Date (the "STUB
PERIOD").
8.06 TAX COOPERATION. After the Closing Date, Seller will cooperate in
the preparation of all Tax Returns and will provide (or cause to be provided)
any records and other information Purchaser reasonably requests, and will
provide access to, and the cooperation of, its auditors. Seller will cooperate
reasonably with Purchaser in connection with any Tax investigation, audit or
other proceeding.
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
[INTENTIONALLY LEFT BLANK]
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the affairs of the Company and the Subsidiaries or any right of any
party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement,
Seller and Purchaser have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements of Seller and
Purchaser contained in this Agreement will survive the Closing.
10.02 TAX INDEMNIFICATION; POST-CLOSING ADJUSTMENTS; NOTIFICATION;
CONTROL; REFUNDS.
(a) After the Closing Date and until thirty (30) days after the
expiration of the Applicable Statutes of Limitations for (and computed based on
the actual filing dates of) the respective Pre-Closing Tax Returns as to such
Pre-Closing Tax Returns, and until thirty (30) days after the expiration of the
Applicable Statutes of Limitations for (and computed based on the actual filing
dates of) Seller's Stub Period Taxes (as defined below), taking into account
only extensions and/or stays at the request of the IRS or any other taxing
authority or any agent or representative thereof consented to by Seller in
accordance with Section 10.02(b), Seller will indemnify and hold harmless
Purchaser from and against any and all claims, actions, causes of action,
liabilities, losses, damages, and reasonable out-of-pocket expenses and costs
resulting from, arising out of or relating to (i) Taxes required to be shown on
Pre-Closing Tax Returns, including, without limitation, any Tax liability that
arises by reason of the Company or any
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Subsidiary being liable for any Taxes of Seller or any Affiliates of Seller
other than the Company, and any Tax liability incurred in connection with the
transactions contemplated by this Agreement, including the sale of the Shares
and (ii) Taxes for the taxable periods including the Closing Date in an amount
equal to the Tax liability that would have resulted had the last day of the
period been the Closing Date and had the books of the Company been closed on
that date, with the taxable income being determined under the principles of
appropriate law ("SELLER'S STUB PERIOD TAXES"), to the extent such Taxes exceed
the amount reserved for Taxes (current or deferred) on the financial statements
for the corresponding period. For purposes of computing Seller's Stub Period
Taxes, Taxes other than income Taxes for which the last day of the taxable
period is not the Closing Date will be allocated pro rata per day between the
period ending on the Closing Date, and the period commencing after the Closing
Date. A Claim Notice or Indemnity Notice will be timely if given prior to thirty
(30) days after the expiration of the Applicable Statute of Limitations, even if
the related claim, action, cause of action, liability, loss or damage is not
resolved until after such date.
(b) To the extent that an Event (as defined below) or proposed Event
could result in liability for Seller pursuant to this Agreement, Purchaser shall
notify Seller of such Event or proposed Event as promptly as practicable and
shall consult with, and use commercially reasonable efforts to cooperate with,
Seller with respect to the resolution of any issue relating to Taxes arising as
a result of or in connection with such Event or proposed Event. Purchaser shall
have the right to control any audit or examination relating to Taxes by any
taxing authority, initiate any claim for refund, file any amended return,
contest, resolve and defend against any assessment, notice of deficiency or
other adjustment or proposed adjustment relating or with respect to any Taxes of
the Company or any Subsidiary for all taxable periods including periods prior to
or including the Closing Date (an "EVENT"), and shall be entitled to all refunds
with respect to such taxable periods. In the event that the IRS or any other
taxing authority requests an extension or stay of any applicable statute of
limitation referred to in SECTION 10.02(A), Purchaser shall notify Seller of
such request (for purposes of this provision, Purchaser shall take all
commercially reasonable measures to provide for actual receipt of notice by
Seller, SECTION 13.01 notwithstanding), and Seller shall, within thirty (30)
days of such notice, either (i) consent to a corresponding extension of the
indemnification period for claims based on the Taxes which are the subject of
such request or (ii) decline to give such consent, which Seller shall not do
unreasonably; PROVIDED, that Seller's failure to respond within thirty (30) days
as required by this sentence shall constitute Seller's consent to such
extension; PROVIDED, HOWEVER, that if either the remaining time of the
applicable statute of limitations or the period for responding to such request
by the IRS or another taxing authority is less than thirty (30) days, Seller
shall respond not later than the day preceding the end of such period.
10.03 OTHER INDEMNIFICATION.
(a) After the Closing and subject to paragraph (c) of this Section
and the other Sections of this ARTICLE X, Seller shall indemnify the Purchaser
Indemnified Parties in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of (i) or
relating to any breach of representation or warranty or nonfulfillment of or
failure to
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perform any covenant or agreement on the part of Seller contained in this
Agreement or (ii) any arrangement, understanding or discussions between Seller
(or any of its Affiliates) and any third party relating to the transactions
contemplated hereby or any Acquisition Proposal.
(b) After the Closing and subject to the other Sections of this
Article X, Purchaser shall indemnify the Seller Indemnified Parties in respect
of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to any breach of
representation or warranty or nonfulfillment of or failure to perform any
covenant or agreement on the part of Purchaser contained in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, after the Closing (i) the sole and exclusive remedy of the Purchaser
Indemnified Parties for any claims based on, relating to or arising out of this
Agreement or any Operative Agreement, or the transactions contemplated hereby or
thereby, under any theory whatsoever (legal, equitable or statutory), including
but not limited to claims for any breach of representation or warranty on the
part of Seller contained in Article II of this Agreement after the Closing
(other than Seller's representations in SECTION 2.04 and the fourth, fifth and
sixth sentences of SECTION 2.05 regarding ownership of the Company and
Subsidiaries, SECTION 4.11 regarding noncompetition, SECTION 13.04 regarding
public announcements, SECTION 13.05 regarding confidentiality, and common law
fraud consisting of intentional actions or failures to act or knowing
misrepresentations or omissions (collectively, "EXCLUDED MATTERS"), and provided
that subparts (B) and (C) below do not apply to and include Losses relating to
Taxes under SECTION 10.02) shall be a claim against the $1,000,000 portion of
the Closing Payment (and interest) held in escrow pursuant to the Escrow
Agreement; and (ii) no amounts of indemnity shall be payable as a result of any
claim by a Purchaser Indemnified Party under SECTION 10.03(a) for breach of
representation or warranty on the part of Seller contained in Article II of this
Agreement after the Closing (other than EXCLUDED MATTERS), and provided that
subparts (B) and (C) below do not apply to and include Losses relating to Taxes
under SECTION 10.02):
(A) unless, until and then only to the extent that the
Purchaser Indemnified Parties have suffered, incurred, sustained or become
subject to Losses subject to indemnification under SECTION 10.03 in excess
of $250,000 in the aggregate;
(B) unless the Indemnified Party has given the Indemnifying
Party a Claim Notice or Indemnity Notice, as applicable with respect to
such claim, prior to the first anniversary of the Closing Date; and
(C) if the Purchaser had actual Knowledge of such breach
prior to the Closing and such breach was not Known by the Seller prior to
the Closing.
10.04 METHOD OF ASSERTING CLAIMS. All claims for indemnification by
any Indemnified Party under SECTION 10.02 or SECTION 10.03 will be asserted and
resolved as follows:
(a) The Indemnified Party shall deliver a Claim Notice to the
Indemnifying Party of any claim by a third party which may give rise to a claim
by the Indemnified Party
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against the Indemnifying Party (a "THIRD PARTY CLAIM") under SECTION 10.02 or
SECTION 10.03, stating the nature and basis of such claims and the estimated
amount, to the extent known, of the Loss arising out of such Third Party Claim.
The Indemnified Party's failure or delay to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim will not constitute a waiver of the Indemnified Party's rights,
unless and only to the extent that the Indemnifying Party's ability to defend
has been prejudiced by such failure or delay of the Indemnified Party. The
Indemnified Party shall give written notice to the Indemnifying Party of legally
served claims of third parties within twenty (20) days after receipt, but
failure to give or delay in giving such notice shall not affect any rights of
the Indemnified Party unless and only to the extent that the Indemnifying Party
is prejudiced by such failure or delay of the Indemnified Party.
(i) If, within thirty (30) days after receipt of such notice,
the Indemnifying Party advises the Indemnified Party that the Indemnifying
Party will defend such Third Party Claim at its expense, then as long as
such defense is being conducted, the Indemnified Party shall not settle
such Third Party Claim and shall afford the Indemnifying Party and its
counsel commercially reasonable assistance in defending against the Third
Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to
defend the Third Party Claim pursuant to SECTION 10.04(a), or if the
Indemnifying Party gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, then the Indemnified Party will
have the right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim by all appropriate proceedings, which
proceedings will be prosecuted by the Indemnified Party in good faith or
will be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be unreasonably
withheld). The Indemnified Party will have full control of such defense and
proceedings, including (except as provided in the immediately preceding
sentence) any settlement thereof; PROVIDED, HOWEVER, that if requested by
the Indemnified Party, the Indemnifying Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this clause (ii), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying Party
disputes its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party will reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation. The Indemnifying Party may retain
separate counsel to represent it in, but not control, any defense or
settlement controlled by the Indemnified Party
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pursuant to this clause (ii), and the Indemnifying Party will bear its own
costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability to the Indemnified Party with
respect to the Third Party Claim under SECTION 10.03 or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third
Party Claim, the Loss arising from such Third Party Claim will be
conclusively deemed a liability of the Indemnifying Party under SECTION
10.03 and the Indemnifying Party shall pay the amount of such Loss to the
Indemnified Party on demand following the final determination thereof. If
the Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will proceed
in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such dispute
shall be resolved by arbitration in accordance with paragraph (c) of this
SECTION 10.04.
(b) In the event any Indemnified Party should have a claim under
SECTION 10.03 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity Notice or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss arising from the claim specified in such Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under SECTION 10.03
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration in
accordance with paragraph (c) of this SECTION 10.04.
(c) Any dispute submitted to arbitration pursuant to this SECTION
10.04 shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3) members (hereinafter sometimes called the
"BOARD OF ARBITRATION") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one (1) member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty (20)
days after their selection, such third member shall thereafter be selected by
the American Arbitration Association upon application made to it for a third
member possessing expertise or experience appropriate to the dispute jointly by
the Indemnified Party and the Indemnifying Party. The Board of Arbitration shall
meet in Indianapolis, Indiana or such other place as a majority of the members
of the Board of Arbitration determines more appropriate, and shall reach and
render a decision in writing (concurred in by a majority of the members of the
Board of Arbitration) with respect to the
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amount, if any, which the Indemnifying Party is required to pay to the
Indemnified Party in respect of a claim filed by the Indemnified Party. In
connection with rendering its decisions, the Board of Arbitration shall adopt
and follow such rules and procedures as a majority of the members of the Board
of Arbitration deems necessary or appropriate, PROVIDED that the Board of
Arbitration adheres to the provisions of this Agreement. To the extent
practical, decisions of the Board of Arbitration shall be rendered no more than
thirty (30) days following commencement of proceedings with respect thereto. The
Board of Arbitration shall cause its written decision to be delivered to the
Indemnified Party and the Indemnifying Party. Any decision made by the Board of
Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the Indemnified
Party and the Indemnifying Party and entitled to be enforced to the fullest
extent permitted by law and entered in any court of competent jurisdiction. Each
party to any arbitration shall bear its own expense in relation thereto,
including but not limited to such party's attorneys' fees, if any, and the
expenses and fees of the Board of Arbitration shall be divided between the
Indemnifying Party and the Indemnified Party in the same proportion as the
portion of the related claim determined by the Board of Arbitration to be
payable to the Indemnified Party bears to the portion of such claim determined
not to be so payable.
ARTICLE XI
TERMINATION
11.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Seller and Purchaser;
(b) at any time before the Closing, by Seller or Purchaser, in the
event (i) of a material breach hereof by the non-terminating party if such
non-terminating party fails to cure such breach within five (5) Business Days
following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after the later of (i) fifteen (15) days after all
necessary clearances pursuant to the HSR Act shall have been obtained or (ii)
September 30, 2000, by Seller or Purchaser upon notification of the
non-terminating party by the terminating party if the Closing shall not have
occurred on or before such date and such failure to consummate is not caused by
a breach of this Agreement by the terminating party.
11.02 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to SECTION 11.01, this Agreement will forthwith become null and void,
and there will be no liability
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or obligation on the part of Seller or Purchaser (or any of their respective
officers, directors, employees, agents or other representatives or Affiliates),
except as provided in this SECTION 11.02 and except that the provisions with
respect to expenses in SECTION 13.03 and confidentiality in SECTION 13.05 will
continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary: (a) if the Closing does not occur,
due to the failure of the condition set forth in SECTION 6.13 to be satisfied,
then Purchaser shall be obligated to pay to Seller Two Million Dollars
($2,000,000) as liquidated damages, due and payable upon termination of this
Agreement pursuant to SECTION 11.01; (b) if the Closing does not occur, due to
Seller not using good faith efforts to satisfy Seller's conditions to Closing,
then Seller shall be obligated to pay to Purchaser One Million Dollars
($1,000,000) as liquidated damages, due and payable upon such termination; and
(c) if the Closing does not occur due to a material breach by either party not
covered in (a) or (b) above, then each party shall be entitled to such
compensatory damages for out of pocket expenses incurred after the date of this
Agreement, or such equitable relief as may be appropriate in the circumstances;
PROVIDED that, in the case of (c) above, (i) no party will be entitled to such
compensatory damages unless, until and then only to the extent such party has
incurred such compensatory damages in excess of $250,000 in the aggregate, and
(ii) no party will be entitled to such compensatory damages in excess of
$1,000,000 in the aggregate. The parties agree that the damages for failing to
close are or may be difficult to ascertain and that the foregoing amounts
specified as liquidated damages are reasonable and do not constitute a penalty.
ARTICLE XII
DEFINITIONS
12.01 DEFINITIONS.
(a) DEFINED TERMS. As used in this Agreement, the following defined
terms have the meanings indicated below:
"ACQUISITION PROPOSAL" means any proposal for a merger or other
business combination to which the Company or any Subsidiary is a party or the
direct or indirect acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary, other than (i) the
transactions contemplated by this Agreement and (ii) any merger or other
business combination or sale of equity interests or assets to which Seller or
any Affiliate of Seller is a party and which indirectly involves the Company or
a Subsidiary, PROVIDED that the Person making such proposal expressly recognizes
the rights of Purchaser hereunder in a written instrument reasonably
satisfactory to Purchaser.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"AFFILIATE" means any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or
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otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"APPLICABLE STATUTES OF LIMITATIONS" shall mean for federal taxes the
general three (3) year statute of limitations as set forth in Section 6501(a) of
the Code and for all state taxes the analogous statutes of limitations for the
applicable state.
"AGREEMENT" means this Stock Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with SECTIONS 6.03 and 7.03, as the same shall be amended from time
to time.
"ASSETS AND PROPERTIES" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"AUDITED FINANCIAL STATEMENT DATE" means the last day of the most
recent fiscal year of the Company for which Financial Statements are delivered
to Purchaser pursuant to SECTION 2.09.
"AUDITED FINANCIAL STATEMENTS" means the Financial Statements for the
most recent fiscal year of the Company delivered to Purchaser pursuant to
SECTION 2.09.
"BENEFIT PLAN" means any Plan established by the Company or any
Subsidiary, or any predecessor or Affiliate of any of the foregoing, existing at
the Closing Date or prior thereto, to which the Company or any Subsidiary
contributes or has contributed, or under which any employee, former employee or
director of the Company or any Subsidiary or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights.
"BOARD OF ARBITRATION" has the meaning ascribed to it in SECTION
10.04(c).
"BOOKS AND RECORDS" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
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"BUSINESS OR CONDITION OF THE COMPANY" means the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of the Company and the Subsidiaries taken as a whole.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. Section 300.5.
"CLAIM NOTICE" means written notification pursuant to SECTION 10.04(a)
of a Third Party Claim as to which indemnity under SECTION 10.02 or SECTION
10.03 is sought by an Indemnified Party, enclosing a copy of all papers served,
if any, and specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party's claim against the Indemnifying Party under SECTION
10.02 or SECTION 10.03, together with the amount or, if not then reasonably
determinable, the estimated amount, determined in good faith, of the Loss
arising from such Third Party Claim.
"CLOSING" means the closing of the transactions contemplated by
SECTION 1.03.
"CLOSING DATE" means (a) the fifth Business Day after the day on which
the last of the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in SECTIONS 6.04
through 6.07 and SECTIONS 7.04 and 7.05 has been obtained, made or given or has
expired, as applicable, or (b) such other date as Purchaser and Seller mutually
agree upon in writing.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMON STOCK" means the common stock, no par value, of the Company.
"COMPANY" has the meaning ascribed to it in the forepart of this
Agreement.
"CONTRACT" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"DEFINED BENEFIT PLAN" means each Benefit Plan which is subject to
Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA.
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser by
Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Seller pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
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"ENVIRONMENTAL CLAIM" means, with respect to any Person, any written
or oral notice, claim, demand or other communication (collectively, a "CLAIM")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, Governmental or Regulatory Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence, or Release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
Governmental or Regulatory Authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any Law or Order relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is in the same controlled group
of corporations or who is under common control with Seller or, before the
Closing, the Company or any Subsidiary (within the meaning of Section 414 of the
Code).
"ESCROW AGENT" and "ESCROW AGREEMENT" have the respective meanings
ascribed to them in SECTION 1.03.
"ESTOPPEL CERTIFICATE" means the written certification, issued not
more than thirty (30) days prior to the Closing Date by a lessor, sublessor or
other party to a lease or occupancy agreement, stating (a) that such lease or
occupancy agreement is (i) in full force and effect and (ii) has not been
modified or amended except as described therein, (b) the date to which rental
has been paid, (c) that no default or event of default exists thereunder and (d)
that to the best of the knowledge of the issuer thereof, no event has occurred
which, with the giving of notice or lapse of time or both, would be a default or
event of default thereunder.
"FINANCIAL STATEMENTS" means the consolidated financial statements of
the Company and its consolidated Subsidiaries delivered to Purchaser pursuant to
SECTION 2.09 or 4.06.
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"GAAP" means generally accepted accounting principles in the United
States, consistently applied throughout the specified period and in the
immediately prior comparable period.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law; and (C) any other
chemical or other material or substance, exposure to which is prohibited,
limited or regulated by any Governmental or Regulatory Authority under any
Environmental Law.
"HSR ACT" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"INCOME PAYMENT" shall have the meaning ascribed to it in SECTION
1.04.
"INDEBTEDNESS" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under
any provision of ARTICLE X.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE X.
"INDEMNITY NOTICE" means written notification pursuant to SECTION
10.04(b) of a claim for indemnity under ARTICLE X by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such claim.
"INTELLECTUAL PROPERTY" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets,
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industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights.
"INVESTMENT ASSETS" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
any Subsidiary and issued by any Person other than the Company or any Subsidiary
(other than trade receivables generated in the ordinary course of business of
the Company and the Subsidiaries).
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF PURCHASER" or other reference to Purchaser's knowledge
or awareness means the actual knowledge of any officer or director of Purchaser
or any subsidiary of or entity affiliated with Purchaser.
"KNOWLEDGE OF SELLER" or "KNOWN TO SELLER" or other reference to
Seller's knowledge means the actual knowledge of any officer or director of
Seller, the Company or any Subsidiary.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, Switzerland,
any foreign country or any domestic or foreign state, canton, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"LOSS" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
"NPL" means the National Priorities List under CERCLA.
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"OPERATIVE AGREEMENTS" means the Escrow Agreement and any support or
other agreements to be entered into in connection with the transaction.
"OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of such
Person or the manner in which any shares of capital stock of such Person are
voted.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"PENSION BENEFIT PLAN" means each Benefit Plan which is a pension
benefit plan within the meaning of Section 3(2) of ERISA.
"PERSON" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or Regulatory
Authority.
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.02.
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER INDEMNIFIED PARTIES" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"QUALIFIED PLAN" means each Benefit Plan which is intended to qualify
under Section 401 of the Code.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment,
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including, without limitation, the movement of Hazardous Materials through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION 4.03.
"RESOLUTION PERIOD" means the period ending thirty (30) days following
receipt by an Indemnified Party of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a claim set forth in a Claim
Notice or an Indemnity Notice.
"SELLER" has the meaning ascribed to it in the forepart of this
Agreement.
"SELLER INDEMNIFIED PARTIES" means Seller and its officers, directors,
employees, agents and Affiliates.
"SHARES" has the meaning ascribed to it in the forepart of this
Agreement.
"SUBJECT DEFINED BENEFIT PLAN" means each Defined Benefit Plan listed
and described in SECTION 2.15(a) OF THE DISCLOSURE SCHEDULE.
"SUBSIDIARY" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.
"TAX RETURN" means a report, return or other information (including
any amendments) required to be supplied to a governmental entity by the Company
or any Subsidiary with respect to Taxes including, where permitted or required,
combined or consolidated returns for any group of entities that includes the
Company or any Subsidiary.
"TAXES" means any federal, state, county, local or foreign taxes,
charges, fees, levies, other assessments, or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any taxes and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability.
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION
10.04(a).
"UNAUDITED FINANCIAL STATEMENT DATE" means the last day of the most
recent fiscal quarter of the Company for which Financial Statements are
delivered to Purchaser pursuant to SECTION 2.09.
"UNAUDITED FINANCIAL STATEMENTS" means the Financial Statements for
the most recent fiscal quarter of the Company delivered to Purchaser pursuant to
SECTION 2.09.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively;
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(iii) the terms "hereof," "herein," "hereby" and derivative or similar words
refer to this entire Agreement; (iv) the terms "Article" or "Section" refer to
the specified Article or Section of this Agreement; and (v) the phrases
"ordinary course of business" and "ordinary course of business consistent with
past practice" refer to the business and practice of the Company or a
Subsidiary. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified. All accounting
terms used herein and not expressly defined herein shall have the meanings given
to them under GAAP.
ARTICLE XIII
MISCELLANEOUS
13.01 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
Steinway Musical Instruments, Inc.
800 South Street, Suite 425
Waltham, Massachusetts 02453
Facsimile No.: (781) 894-9770
Attn: Dennis M. Hanson
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
601 S. Figueroa Street, 30th Floor
Los Angeles, California 90017
Facsimile No.: (213) 892-4710
Attn: Neil J Wertlieb
If to Seller, to:
BIM Holding AG
Im Haus Moosente
CH-8201 Schaffhausen
Switzerland
Attn: Bernhard Muskantor
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with a copy to:
Barnes & Thornburg
121 West Franklin Street, Suite 200
Elkhart, Indiana 46516
Facsimile No.: (219) 296-2535
Attn: J. Scott Troeger
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
13.02 ENTIRE AGREEMENT. This Agreement and the Operative Agreements
supersedes all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof, including without limitation that
certain letter of intent between the parties dated May 11, 2000, and
confidentiality agreement between the parties dated May 17, 2000, and contain
the sole and entire agreement between the parties hereto with respect to the
subject matter hereof and thereof.
13.03 EXPENSES. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in SECTION 11.02), whether
or not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses, and Seller shall pay the costs and expenses of the
Company and the Subsidiaries, incurred in connection with the negotiation,
execution and closing of this Agreement and the Operative Agreements and the
transactions contemplated hereby and thereby; provided, however, that Seller
shall not be required to bear expenses incurred in the ordinary course of
business of the Company or the Subsidiaries notwithstanding that this Agreement
requires conducting the business of the Company and the Subsidiaries in the
ordinary course of business.
13.04 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing,
Seller and Purchaser will not issue or make any reports, statements or releases
to the public or generally to the employees, customers, suppliers or other
Persons to whom the Company and the Subsidiaries sell goods or provide services
or with whom the Company and the Subsidiaries otherwise have significant
business relationships with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, which consent shall not be
unreasonably withheld. If either party is unable to obtain the approval of its
public report, statement or release from the other party and such report,
statement or release is, in the opinion of legal counsel to such party, required
by Law in order to discharge such party's disclosure obligations, then such
party may make or issue the legally required report, statement or release and
promptly furnish the other
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party with a copy thereof. Seller and Purchaser will also obtain the other
party's prior approval of any press release to be issued immediately following
the Closing announcing the consummation of the transactions contemplated by this
Agreement.
13.05 CONFIDENTIALITY. Each party hereto will hold, and will use its
best efforts to cause its Affiliates and their respective Representatives to
hold, in strict confidence from any Person (other than any such Affiliate or
Representative), unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law or (ii)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates furnished to it
by the other party or such other party's Representatives in connection with this
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (a) previously known by
the party receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential; PROVIDED that following the Closing the
foregoing restrictions will not apply to Purchaser's use of documents and
information concerning the Company and the Subsidiaries furnished by Seller
hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates and their respective Representatives to, promptly (and
in no event later than five (5) Business Days after such request) redeliver or
cause to be redelivered all copies of documents and information furnished by the
other party in connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes, memoranda, summaries,
analyses, compilations and other writings related thereto or based thereon
prepared by the party furnished such documents and information or its
Representatives.
13.06 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
13.07 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.08 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under ARTICLE X.
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13.09 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchaser may assign any or all of its rights, interests and
obligations hereunder (including without limitation its rights under ARTICLE XI)
to (i) a wholly-owned subsidiary, provided that any such subsidiary agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein, (ii) any post-Closing purchaser of all of the issued and outstanding
stock of the Company or a substantial part of its assets or (iii) any financial
institution providing purchase money or other financing to Purchaser or the
Company from time to time as collateral security for such financing, but no such
assignment referred to in clause (i), (ii) or (iii) shall relieve Purchaser of
its obligations hereunder. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
13.10 HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
13.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Seller hereby
irrevocably appoints Jack Westheimer, 5720 RFD, Long Grove, Illinois 60047, and
Purchaser hereby irrevocably appoints Dennis M. Hanson, at the offices specified
in SECTION 13.01, its lawful agent and attorney to accept and acknowledge
service of any and all process against it in any action, suit or proceeding
arising out of or relating to this Agreement or any of the Operative Agreements
or any of the transactions contemplated hereby or thereby and upon whom such
process may be served, with the same effect as if such party were a resident of
the State of Indiana and had been lawfully served with such process in such
jurisdiction, and waives all claims of error by reason of such service, PROVIDED
that in the case of any service upon such agent and attorney, the party
effecting such service shall also deliver a copy thereof to the other party at
the address and in the manner specified in SECTION 14.01. Seller and Purchaser
will enter into such agreements with such agents as may be necessary to
constitute and continue the appointment of such agents hereunder. In the event
that such agent and attorney resigns or otherwise becomes incapable of acting as
such, such party will appoint a successor agent and attorney in the United
States, reasonably satisfactory to the other party, with like powers. Each party
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Northern District of Indiana or any court of the State of
Indiana in any such action, suit or proceeding arising out of or relating to
this Agreement or any of the Operative Agreements or any of the transactions
contemplated hereby or thereby, and agrees that any such action, suit or
proceeding shall be brought only in such court, PROVIDED, HOWEVER, that such
consent to jurisdiction is solely for the purpose referred to in this SECTION
13.11 and shall not be deemed to be a general submission to the jurisdiction of
said courts or in the State of Indiana other than for such purpose. Each party
hereby irrevocably waives, to the fullest extent permitted by Law, any objection
that it may now or hereafter have to the laying of the venue of any such action,
suit or proceeding brought in such a court and any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by Law or to commence legal proceedings or otherwise
proceed against the other in any other jurisdiction.
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13.12 INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
13.13 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Indiana applicable to a Contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
STEINWAY MUSICAL INSTRUMENTS, INC.
By: /s/ Dana D. Messina
----------------------------------
Name: Dana D. Messina
Title: President and CEO
BIM HOLDING AG
By: /s/ Bernhard Muskantor
----------------------------------
Name: Bernhard Muskantor
Title: Chairman and CEO
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