SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported) JULY 30, 1999
MARKER INTERNATIONAL
(Exact Name of Registrant as Specified in Charter)
UTAH 0-24556 87-037275
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(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) ile Number) Identification No.)
1070 WEST 2300 SOUTH, SALT LAKE CITY, UTAH 84119
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code: (801) 972-2100
N/A
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 30, 1999, Marker International (the "Company") entered into an
asset purchase agreement (the "Purchase Agreement") with Marker International
GmbH ("Newco"), providing for the sale by the Company of substantially all of
its assets (including the equity securities of its subsidiaries) to Newco. In
exchange, Newco will assume certain liabilities of the Company and the Company
will receive a 15% equity interest in Newco. The remaining 85% equity interest
in Newco will be held by CT Sports Holding AG ("CT"), a newly formed joint
venture between Tecnica S.p.A. and H.D. Cleven, the principal shareholder of the
Volkl Group.
Pursuant to the terms of the Purchase Agreement, CT will contribute
$15,000,000 in cash (subject to reduction by $1,025,501 as a result of the
consummation of the sale of the 66.66% equity interest in Marker Canada, Ltd.)
to Newco in consideration for an 85% equity interest in Newco. Newco is a GmbH
organized under the laws of Switzerland and is currently a wholly-owned
subsidiary of CT. In connection with the Purchase Agreement, the Company and CT
will enter into an operating agreement which, among other things, will provide
that CT will be granted an option (the "Option") to purchase the Company's 15%
equity interest in Newco at any time on or after the second anniversary of the
consummation date of the plan of reorganization at the then fair market value,
subject to certain adjustments. The proceeds of the exercise of the Option will
then be distributed to the shareholders of the Company in liquidation.
The Purchase Agreement provides for the consummation of the sale to be
effected through a pre-negotiated Chapter 11 bankruptcy proceeding and requires
the Company to commence that bankruptcy proceeding by August 20, 1999. In
connection therewith, the Company is preparing to file its petition for
reorganization, obtain approval of its disclosure statement and commence its
post-bankruptcy solicitation process. The Company has reached
agreements-in-principle regarding the restructuring of its debt with certain of
its creditors who are impaired under the plan of reorganization.
The closing of the sale is expected to be consummated in the Company's
third quarter subject to, among other things, the U.S. Bankruptcy Court's
approval of the proposed sale and the court's confirmation of the Company's
pre-negotiated bankruptcy plan of reorganization and the issuance of consents or
waivers by various third parties.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS.
None.
(b) PRO FORMA FINANCIAL INFORMATION.
None.
(c) EXHIBITS.
2.1 Asset Purchase Agreement dated as of July 30, 1999 by and between Marker
International, as seller, and Marker International GmbH, as buyer (without
exhibits or schedules).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARKER INTERNATIONAL
By: /S/ KEVIN HARDY
-------------------------------
Name: Kevin Hardy
Title: Chief Financial Officer
Dated: August 6, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
2.1 Asset Purchase Agreement dated as of July 30, 1999 by and between
Marker International, as seller, and Marker International GmbH, as
buyer (without exhibits or schedules).
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED AS OF
JULY 30, 1999
BETWEEN
MARKER INTERNATIONAL, AS SELLER
AND
MARKER INTERNATIONAL GMBH, AS BUYER
<PAGE>
TABLE OF CONTENTS
PAGE
R E C I T A L S
ARTICLE I
DEFINITIONS
1.1 Definitions...........................................................2
ARTICLE II
SALE OF ASSETS, ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets..........................................15
2.2 ASSUMPTION OF CERTAIN LIABILITIES....................................17
2.3 Purchase Price.......................................................19
2.4 Capitalization.......................................................19
ARTICLE III
CLOSING
3.1 Closing..............................................................19
3.2 Items to be Delivered at the Closing By Seller.......................20
3.3 Items to be Delivered at the Closing by Buyer........................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Related Matters; Investment Act.....................21
4.2 Equity Securities....................................................22
4.3 Financial Statements; Changes; Contingencies.........................22
4.4 Tax and Other Returns and Reports....................................24
4.5 Material Contracts TC................................................25
4.6 Condition of Property; Leases........................................25
4.7 Intangible Property..................................................27
4.8 Authorization; No Conflicts..........................................28
4.9 Legal Proceedings and Certain Labor Matters..........................28
4.10 Minute Books.........................................................29
4.11 Accounting Records; Internal Controls................................29
4.12 Insurance............................................................30
4.13 Permits..............................................................30
4.14 Compliance with Law..................................................30
4.15 Dividends and Other Distributions....................................31
4.16 Employee Benefits....................................................31
4.17 Certain Interests....................................................34
4.18 Intercompany Transactions............................................34
4.19 No Brokers or Finders................................................34
4.20 Accuracy of Information..............................................35
4.21 Inventories..........................................................35
4.22 Accounts Receivables.................................................36
4.23 Customers and Suppliers..............................................36
4.24 Environmental Compliance.............................................36
4.25 Powers of Attorney...................................................37
4.26 Restructuring Documents..............................................37
4.27 Equity Lockup Agreement..............................................37
4.28 Year 2000 Problems...................................................37
4.29 Government Filings...................................................38
4.30 SEC Filings..........................................................38
ARTICLE V
5.1 Organization and Related Matters.....................................38
5.2 Authorization........................................................39
5.3 No Conflicts.........................................................39
5.4 No Brokers or Finders................................................39
5.5 Legal Proceedings....................................................39
5.6 Capitalization of Buyer..............................................39
ARTICLE VI
COVENANTS WITH RESPECT TO CONDUCT OF SELLER
6.1 Access................................................................40
6.2 Material Adverse Changes; Reports; Financial Statements...............41
6.3 Conduct of Business...................................................41
6.4 Notification of Certain Matters.......................................44
6.5 Permits, Orders and Approvals.........................................44
6.6 Preservation of Business Prior to Closing Date........................45
6.7 Government Filings....................................................45
6.8 Chapter 11 Case.......................................................45
6.9 Inconsistent Agreements...............................................46
6.10 Employee Benefit Plans................................................47
6.11 Repair of Damage; Condemnation........................................47
6.12 Corporate Name........................................................48
6.13 Post Signing Lockup Documents.........................................48
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS
7.1 Tax Matters...........................................................48
7.2 Employment Matters....................................................49
7.3 Certain Notices.......................................................49
7.4 Investment Act Covenants..............................................49
7.5 Tax Cooperation (Buyer)...............................................50
7.6 Insurance.............................................................50
7.7 Tax Election..........................................................51
7.8 Certain Advances......................................................51
7.9 Operating Agreement...................................................52
ARTICLE VIII
CONDITIONS OF PURCHASE
8.1 General Conditions....................................................52
8.2 Conditions to Obligations of Buyer....................................52
8.3 Conditions to Obligations of Seller...................................58
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 Termination of Agreement..............................................59
9.2 Effect of Termination.................................................60
9.3 Survival of Representations and Warranties............................61
ARTICLE X
INDEMNIFICATION
10.1 Obligations of Seller.................................................61
10.2 Obligations of Buyer..................................................62
10.3 Limitations on Seller's Indemnification Obligations...................62
10.4 Procedure.............................................................64
10.5 Survival..............................................................67
10.6 Notice by Seller......................................................67
ARTICLE XI
GENERAL
11.1 Amendments; Waivers...................................................67
11.2 Schedules; Exhibits; Integration......................................67
11.3 Best Efforts; Further Assurances......................................68
11.4 Governing Law.........................................................68
11.5 No Assignment.........................................................69
11.6 Headings..............................................................69
11.7 Counterparts..........................................................69
11.8 Publicity and Reports.................................................69
11.9 Confidentiality.......................................................70
11.10 Investment Representation.............................................70
11.11 Parties in Interest...................................................70
11.12 Performance by Subsidiaries...........................................70
11.13 Notices...............................................................71
11.14 Expenses..............................................................72
11.15 Remedies; Waiver......................................................73
11.16 Knowledge Convention..................................................73
11.17 Representation By Counsel; Interpretation.............................73
11.18 Specific Performance..................................................73
11.19 Severability..........................................................74
11.20 No Consequential Damages..............................................74
11.21 Effectiveness.........................................................74
<PAGE>
EXHIBITS
Exhibit A Form of Bill of Sale and Assignment and Assumption Agreement
Exhibit B [Intentionally Omitted]
Exhibit C Form of Operating Agreement
Exhibit D Form of Stroock & Stroock & Lavan LLP Opinion
Exhibit D-1 Form of Prince, Yeates & Geldzahler, P.C. Opinion
Exhibit E Form of O'Melveny & Myers LLP Opinion
Exhibit E-1 Form of Swiss Counsel Opinion
Exhibit F-1 Form of Equity Lockup Agreement
Exhibit F-2 Form of German Bank Lockup Agreement
Exhibit F-3 Form of Isomura Lockup Agreement
Exhibit F-4 Form of Zion Lockup Agreement
Exhibit F-5 Form of First Security Lockup Agreement
Exhibit F-6 Form of FX Lockup Agreement
Exhibit G [Intentionally Omitted]
Exhibit H Form of No Enforcement Request
<PAGE>
SCHEDULES
Schedule 1.1C Claims Schedule
Schedule 1.1P(i) Permitted Encumbrances
Schedule 1.1P(ii) Permitted Exceptions
Schedule 1.1P(iii) Products
Schedule 2.1(a) Purchased Assets
Schedule 2.1(a)(viii) Payments; Distributions
Schedule 2.1(b) Excluded Assets
Schedule 2.2(b)(iii) Certain Assumed Liabilities
Schedule 2.2(b)(iv) Administrative Expenses
Schedule 4.1 Subsidiaries, Directors and Officers
Schedule 4.3(c) Material Adverse Changes
Schedule 4.3(d) Certain Liabilities
Schedule 4.4 Taxes
Schedule 4.5 Material Contracts
Schedule 4.6(a) Encumbrances on Assets
Schedule 4.6(b) Real Property
Schedule 4.6(c) Leasehold Interests
Schedule 4.7(a)(i) Seller Patents
Schedule 4.7(a)(ii) Seller Trademarks
Schedule 4.7(b) Patent and Trademark Licenses
Schedule 4.7(c) Inventors
Schedule 4.7(d) Orders, Actions and other Infringement of
Intellectual Property
Schedule 4.8(a) Conflicts
Schedule 4.8(b) Permits and Approvals
Schedule 4.9 Orders, Actions and Labor Matters
Schedule 4.12 Insurance Policies and Bonds
Schedule 4.15 Dividends and other Distributions
Schedule 4.16A Employee Benefit Plans; Collective Bargaining;
Employment
and Severance Agreements
Schedule 4.16B Employee Pension Plans
Schedule 4.16G Employee Obligations
Schedule 4.17 Certain Interests
Schedule 4.18 Intercompany Transactions
Schedule 4.21 Inventory
Schedule 4.23 Contracts-Customers and Suppliers
Schedule 4.24 Environmental Compliance
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of July 30, 1999,
between Marker International GmbH, a GmbH organized under the laws of
Switzerland ("Buyer"), and Marker International, a Utah corporation ("Seller").
R E C I T A L S
WHEREAS, each of Seller, DNR North America, Inc., a Delaware
corporation and a Subsidiary of Seller, and DNR USA, Inc., a Delaware
corporation and a Subsidiary of Seller, desires to file a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (such term and other capitalized
terms used in these recitals without definition have the meanings set forth in
Section 1.1 of this Agreement) with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") (such proceedings which shall be
jointly administered are hereinafter referred to as the "Chapter 11 Case"). Each
of Seller, DNR North America, Inc. and DNR USA, Inc. desires to operate its
business and manage its properties during the Chapter 11 Case as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, contemporaneous with the filing of the voluntary petitions
for relief under the Bankruptcy Code, Seller, DNR North America, Inc. and DNR
USA, Inc. will file the Plan pursuant to which Seller desires to sell to Buyer,
among other things, the Seller's Business and certain of Seller's assets
(including, without limitation, all of the Equity Securities of its Subsidiaries
and Marker Canada, Ltd.), whether real, personal, mixed tangible or intangible,
all as more particularly described herein and in the Plan;
WHEREAS, in consideration for the assets sold to Buyer, Buyer will (i)
assume the liabilities of Seller more particularly described herein and in the
Plan and (ii) issue certain Equity Securities to Seller, as more particularly
described herein and in the Plan;
WHEREAS, Buyer is a wholly owned subsidiary of CT Sports Holding AG, a
corporation organized under the laws of Switzerland ("CT"); and
WHEREAS, immediately following the consummation of the transactions
contemplated by this Agreement and the Plan, Seller will own a 15% interest in
Buyer and CT will own a 85% interest in Buyer.
AGREEMENT
In consideration of the mutual promises contained herein and intending
to be legally bound, the parties agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided,
(a) the terms defined in this Article I have the meanings assigned to
them in this Article I and include the plural as well as the singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under GAAP,
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"Accounts Receivable" means all accounts receivable of Seller and the
Subsidiaries as of the date hereof, together with any additions thereto and
subject to any reductions therefrom received or incurred by Seller and the
Subsidiaries in operating the Business after the date hereof through the Closing
Date.
"Action" means any action, motion, application, complaint,
investigation, petition, suit or other proceeding, whether civil or criminal, in
law or in equity, or before any arbitrator or Governmental Entity, including,
without limitation, any motion, application, adversary proceeding, complaint or
other proceeding filed in the Bankruptcy Court or any appeal of any Order
entered therein.
"Advance" has the meaning assigned to that term in Section 7.8(a).
"Advance Request" has the meaning assigned to that term in Section
7.8(c).
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person (it being understood and agreed that for purposes of
this Agreement, Tecnica S.p.A., Volkl International AG and Mr. Hans-Dieter
Cleven shall be deemed to be Affiliates of Buyer and CT). For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" means this Agreement by and between Buyer and Seller as
amended, supplemented or otherwise modified from time to time, together with all
Exhibits and Schedules attached hereto or incorporated herein by reference.
"Alternative Sale" has the meaning assigned to that term in Section
11.14(a).
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person and the term
"Approval" shall include, without limitation, the No Enforcement Letter and any
other "no action" and "no enforcement" letters from any Governmental Entity.
"Associate" of a Person means:
(a) a corporation or organization (other than a party to this
Agreement) of which such Person is a director, an officer, a partner or a member
or is, directly or indirectly, the beneficial owner of 10% or more of any class
of Equity Securities;
(b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
capacity; and
(c) any immediate family member or spouse of such Person.
(d) "Assumed Contracts" has the meaning assigned to that term in
Section 2.1(a)(v).
"Assumed Liabilities" has the meaning assigned to that term in Section
2.2(b).
"Assumption Order" means an Order of the Bankruptcy Court approving,
pursuant to Section 365(a) of the Bankruptcy Code, the assumption of the
Distribution Agreement dated as of June 1, 1999 by and between Seller and Marker
Canada, Ltd., as amended by the Amendment Agreement dated as of June 1, 1999 by
and among Seller, Marker Canada, Ltd., Tecnica S.p.A. and Volkl International
AG, which Order shall be in form and substance reasonably satisfactory to Buyer
and shall be entered by the Bankruptcy Court no later than thirty (30) days
after the Petition Date.
"Auditors" means Arthur Andersen LLP, independent public accountants
to Seller.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"Bankruptcy Court" has the meaning assigned to that term in the
recital clauses hereof.
"Breakup Fee" has the meaning assigned to that term in Section
11.14(a).
"Breakup Fee Order" means an Order of the Bankruptcy Court granting
Buyer and its Affiliates, among other things, a super-priority claim under
Bankruptcy Code Section 364(c)(1) for the Breakup Fee, the Reimbursement
Expenses and reimbursement and indemnification obligations under Section
11.14(c) and approving the payment thereof to Buyer and its Affiliates, which
Order shall be in form and substance reasonably satisfactory to Buyer and its
Affiliates and shall be entered by the Bankruptcy Court no later than fifteen
(15) business days after the Petition Date.
"Business" means the worldwide business of Seller and the Subsidiaries
taken as a whole/or any Subsidiary of designing, developing, manufacturing,
distributing, marketing, licensing and selling alpine ski bindings, apparel for
adults and children and luggage products for skiing and other recreational
activities and the acquisition, as owner or licensee, of rights to design,
develop, manufacture, distribute, market and sell such items and shall be deemed
to include each or any of the following incidents of such business: income, cash
flow, operations, condition (financial or other), Purchased Assets and other
assets and properties, anticipated revenues/income, prospects, Assumed
Liabilities and personnel/ management.
"Buyer" has the meaning assigned to that term in the introduction to
this Agreement.
"Canadian Stockholders Agreement" means the Shareholders Agreement
dated as of June 18, 1999 among CT (acting for and on behalf of Buyer), Seller,
Marker Canada, Ltd. and LaPointe Rosenstein, as escrow agent, together with each
of the distribution agreements attached thereto and made a part thereof, as the
same may be amended, supplemented or otherwise modified from time to time.
"Chapter 11 Case" has the meaning assigned to that term in the recital
clauses hereof.
"Claims Schedule" means a schedule of Seller's liabilities which shall
include the liabilities set forth on proofs of claim filed in the Chapter 11
Case prior to the bar date fixed by the Bankruptcy Court pursuant to Federal
Rule of Bankruptcy Procedure 3003(c)(3). After Seller delivers to Buyer the
Claims Schedule pursuant to Section 8.2(f), it shall be annexed hereto as
Schedule 1.1C.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Date" means the business day (other than a Saturday, Sunday
or legal holiday) on which the conditions to the obligations of the parties to
this Agreement shall have been satisfied or waived but no later than November
30, 1999, or such other time set by the parties in writing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confirmation Order" means an Order of the Bankruptcy Court approving,
among other things, the Plan and authorizing the consummation of the
transactions contemplated thereby and by this Agreement, which Order shall be in
form and substance reasonably satisfactory to Buyer and shall be entered by the
Bankruptcy Court no later than fifty-five (55) days after the Petition Date.
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CT" has the meaning assigned to that term in the recital clauses
hereof.
"Disclosure Statement" means the joint disclosure statement to be
filed by Seller, DNR North America, Inc. and DNR USA, Inc. on the Petition Date
pursuant to Section 1125 of the Bankruptcy Code (with such modifications as
Buyer may in its reasonable judgment consent to in writing from time to time),
which joint disclosure statement relates to the Plan, is approved by the
Bankruptcy Court pursuant to the Disclosure Statement Order and is in form and
substance reasonably satisfactory to Buyer.
"Disclosure Statement Order" means an Order of the Bankruptcy Court
approving, among other things, the Disclosure Statement, the voting procedures
with respect to the Plan, and the deadline for voting on the Plan, which Order
shall be in form and substance reasonably satisfactory to Buyer and shall be
entered by the Bankruptcy Court no later than thirty (30) days after the
Petition Date.
"Disputed Amount" has the meaning assigned to that term in Section
10.3(iii)(B).
"DNR North America, Inc." means DNR North America, Inc., a Delaware
corporation and a Subsidiary of Seller.
"DNR USA, Inc." means DNR USA, Inc., a Delaware corporation and a
Subsidiary of Seller.
"Employment Agreements" means, collectively, the employment agreement
by and between Peter Weaver and the Buyer and the employment agreement by and
between Eiichi Isomura and the Buyer, each fully executed and delivered to Buyer
on or before the Closing Date.
"Employment Plans" has the meaning assigned to that term in Section
4.16(a)(i).
"Encumbrance" means any claim (as defined under Section 101 of the
Bankruptcy Code), charge, lease, covenant, easement, encumbrance, security
interest, lien, option, pledge, rights of others, or restriction (whether on
voting, sale, transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions generally
arising under any applicable federal, foreign or state securities law.
"Equity Consideration" has the meaning assigned to that term in
Section 2.3.
"Equity Lockup Agreement" means the agreement dated as of or before
the date hereof among Buyer and/or CT and not less than 51% of the holders (with
the power to vote as of the date hereof and which holders shall have the power
to vote on the record date for voting on the Plan) of Seller's Equity Securities
(which holders shall include all senior officers, directors and other senior
management shareholders of Seller), in the form of Exhibit F-1 annexed hereto.
"Equity Securities" means any stock, shares, partnership interests,
membership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations and published interpretations.
"ERISA Affiliate" means (i) any corporation which is a member of a
group of corporations of which Seller is a member and which is a controlled
group of corporations within the meaning of Section 414(b) of the Code; (ii) any
trade or business (whether or not incorporated) which is a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code of which Seller is a member; and (iii) a member of an affiliated
service group within the meaning of Section 414(m) or (o) of the Code of which
Seller, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" has the meaning assigned to that term in Section
2.1(a).
"Excluded Liabilities" has the meaning assigned to that term in
Section 2.2 (a).
"First Security Lockup Agreement" means the agreement dated as of or
before the date hereof between Buyer and/or Seller, the U.S. Subsidiaries,
Marker Deutschland GmbH and First Security Bank, N.A., in the form of Exhibit
F-5 annexed hereto.
"FX Lockup Agreement" means one or more agreements dated as of or
after the date hereof between Buyer and/or CT and/or Seller and Manufacturers
and Traders Trust Company and KeyBank, in the form of Exhibit F-6 annexed
hereto.
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"German Bank Lockup Agreement" means one or more agreements dated as
of or after the date hereof between Buyer and/or CT and/or Seller and Hypo
Vereinsbank, Deutsche Bank and BFG, in the form of Exhibit F-2 annexed hereto.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court (including, without limitation, the Bankruptcy Court),
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Substance" means (but shall not be limited to) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Laws as "hazardous substances," "hazardous materials," "hazardous
wastes," "pollutant," "contaminant" or "toxic substances," or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitibility, corrosivity, reactivity,
radioactivity, carcinogenicity, reproductive toxicity or "EP toxicity," asbestos
and asbestos-containing materials, PCBs, urea formaldehyde foam insulation,
petroleum and drilling fluids, produced waters and other wastes associated with
the exploration, development, or production of crude oil, natural gas or
geothermal energy.
"Indemnifiable Claim" means any Loss for or against which any party is
entitled to indemnification under this Agreement; "Indemnified Party" means the
party entitled to indemnity hereunder; and "Indemnifying Party" means the party
obligated to provide indemnification hereunder.
"Intangible Property" means Intellectual Property and computer
firmware and software (existing in any form), marketing rights, contractual
rights and all related agreements and documentation.
"Intellectual Property" means: (i) patents, patent applications,
patent disclosures, industrial designs and inventions (whether or not
patentable); (ii) Marks and all good will associated therewith, copyrights,
licenses, and sales materials; (iii) registrations, applications and renewals of
any of the foregoing; (iv) Trade Secrets; and (v) Know-How.
"Inventory" means all inventory of usable goods, including all
merchandise, raw materials, work in progress, finished products and other
tangible personal property held for sale or used in connection with the Business
as of the date hereof, together with any additions thereto and subject to any
reductions therefrom received or incurred by Seller and the Subsidiaries
operating the Business after the date hereof through the Closing Date.
"Investment Act" means the Investment Company Act of 1940, as amended,
and the related regulations and published interpretations.
"Investment Act Breach" means the occurrence of either of the
following conditions or events:
(x) Breach of Investment Act Covenant:
(i) Seller shall fail to perform or comply with any term or covenant
contained in Section 7.4; and
(ii) such failure to perform or comply shall adversely affect (as
determined in the reasonable judgment of Buyer or CT) any of Buyer's or CT's
rights under the Operating Agreement; or
(y) Failure to Give Notice:
(i) Seller or any of its Affiliates shall fail to promptly deliver to
Buyer after receipt thereof (which in no event shall be later than three
business days after receipt of any oral or written communication, as the case
may be):
(A) a copy of any and all written communications (including,
without limitation, all demands, statements or notices) received
from any Person, including, without limitation, any Governmental
Entity, that alleges Seller failed or is failing to comply with
the Investment Act or the assumptions and intentions set forth in
the No Enforcement Request; or
(B) a written summary of any oral communication from any
Person, including, without limitation, any Governmental Entity,
that alleges Seller failed or is failing to comply with the
Investment Act or the assumptions and intentions set forth in the
No Enforcement Request; and
(ii) the failure to comply with either clause (A) or (B) above shall
adversely affect (as determined in the reasonable judgment of Buyer or CT) any
of Buyer's or CT's rights under the Operating Agreement.
"IRS" means the Internal Revenue Service or any successor entity.
"Isomura Lockup Agreement" means the Agreement of Understanding dated
as of March 26, 1999 among CT, Isomura Sangyo, as holder of all of Seller's
Series A Bonds ("Isomura"), and Eiichi Isomura, as guarantor of certain of
Seller's and/or Marker Japan Co., Ltd.'s obligations under certain credit
facilities ("Eiichi"), as amended to the date hereof and in the form of Exhibit
F-3 annexed hereto.
"Know How" means any information, including, but not limited to,
invention records, research and development records and reports, experimental
and engineering reports, computer programs and other computer software, pilot
designs, production designs, production specifications, raw material
specifications, quality control reports and specifications, drawings,
photographs, models, tools, parts, algorithms, processes, methods, market and
competitive analysis, or other information possessed by Seller or any of its
Subsidiaries, whether or not considered proprietary or a Trade Secret.
"Labor Matters" has the meaning assigned to that term in Section 4.9.
"Law" means any foreign or domestic constitutional provision, statute
or other law (including the common law), ordinance, rule, regulation, or
interpretation of any Governmental Entity and any Order.
"Lease" has the meaning assigned to that term in Section 4.6(c)(ii).
"Litigation Costs" means all costs, fees and expenses (including,
without limitation, attorney's fees and the fees of other professionals)
incurred in connection with or relating to the defense of any Action in which
Buyer itself is the Indemnified Party, as more particularly described in Section
10.4(b).
"Lockup Documents" means, collectively, the Equity Lockup Agreement,
the Tauber Lockup Agreement, the German Bank Lockup Agreement, the FX Lockup
Agreement, the Isomura Lockup Agreement, the Zion Lockup Agreement and the First
Security Lockup Agreement.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified Person.
"Mark" means any corporate name, brand name, logo, domain name,
service mark, trademark and tradename, whether registered or based on common-law
use, and whether based on United States or international use.
"Material Adverse Change" has the meaning assigned to that term in
Section 4.3(c).
"Material Contract" means any Contract to which Seller or any
Subsidiary is a party or to which Seller, any Subsidiary or any of their
respective properties is subject or by which Seller or any Subsidiary is bound
that is a Contract upon which the Business is substantially dependent or which
is otherwise material to the Business of Seller or such Subsidiary as of or
after the date hereof and includes but is not limited to the Assumed Contracts.
"Maximum Liability" has the meaning assigned to that term in Section
10.3(ii).
"Net Tax Benefit" has the meaning assigned to that term in Section
10.4(c)(ii).
"New Financing Facility" means a new credit facility to be provided to
Buyer or the Subsidiaries on or before the Closing Date by one or more financial
institutions in order to provide Buyer and such Subsidiaries with working
capital following the Closing in amounts and pursuant to terms and conditions
reasonably satisfactory to Buyer.
"No Enforcement Request" means that certain undated letter in draft
form delivered by Seller's counsel to a member of the SEC staff by facsimile on
May 26, 1999 requesting such staff member or the SEC to determine that Seller
will not be required to register under the Investment Act based upon the facts
and the intentions of Seller set forth therein, the form of which letter is
annexed hereto as Exhibit H.
"Operating Agreement" means that certain agreement by and among Buyer,
CT and Seller dated as of or before the Closing Date, together with the protocol
annexed thereto, in the form of Exhibit C annexed hereto, as amended,
supplemented or otherwise modified from time to time.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ, including, without limitation, any order entered by the
Bankruptcy Court in the Chapter 11 Case (including, without limitation, the
Confirmation Order, the Disclosure Statement Order, the Assumption Order and the
Breakup Fee Order).
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Permitted Encumbrances" means the following types of Encumbrances:
(i) with respect to each of Seller, DNR North America, Inc.
and DNR USA, Inc., all Encumbrances which shall be released and
satisfied pursuant to the Plan (or any Order of the Bankruptcy
Court) or which shall receive such other treatment under the Plan
(or any Order of the Bankruptcy Court) as Buyer may consent to;
(ii) with respect to each other Subsidiary, statutory
Encumbrances of landlords, statutory Encumbrances of banks and
rights of set-off, statutory Encumbrances of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and
other Encumbrances imposed by Law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that are being contested in
good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made for any such contested
amounts, and (2) a negative resolution of such contest
proceedings shall not have a material adverse effect on such
Subsidiary;
(iii) with respect to each other Subsidiary, Encumbrances
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, trade contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced with respect to any
portion of the assets and properties of such Subsidiary on
account thereof;
(iv) with respect to each other Subsidiary, Leases or
subleases granted to third parties (true, accurate and complete
copies of which have been delivered to Buyer prior to the date
hereof) which do not interfere in any material respect with the
ordinary conduct of the business of such Subsidiary or result in
a material diminution in the value of any assets and properties
of such Subsidiary;
(v) with respect to each other Subsidiary, easements,
rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and
will not interfere in any material respect with the ordinary
conduct of the business of such Subsidiary or result in a
material diminution in the value of any assets and properties of
such Subsidiary;
(vi) with respect to each other Subsidiary, any (a) interest
or title of a lessor or sublessor under any Lease, (b)
restriction or Encumbrance that the interest or title of such
lessor or sublessor may be subject to, or (c) subordination of
the interest of the lessee or sublessee under such Lease to any
restriction or Encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or Encumbrance
agrees to recognize the rights of such lessee or sublessee under
such Lease;
(vii) with respect to each other Subsidiary, Encumbrances in
favor of customs and revenue authorities arising as a matter of
Law to secure payment of customs duties in connection with the
importation of goods;
(viii) with respect to each other Subsidiary, any zoning or
similar law or right reserved to or vested in any Governmental
Entity to control or regulate the use of any Real Property;
(ix) with respect to each other Subsidiary, Encumbrances
securing obligations (other than obligations representing
indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary
course of business of such Subsidiary;
(x) with respect to each other Subsidiary, licenses of
patents, trademarks and other rights to Intellectual Property
granted by such Subsidiary in the ordinary course of business and
not interfering in any material respect with the ordinary conduct
of the business of such Subsidiary; and
(xi) with respect to each other Subsidiary, the Encumbrances
listed on Schedule 1.1P(i) granted by such Subsidiary to secure
obligations for borrowed money prior to the date hereof.
"Permitted Exceptions" means Taxes of Seller or its Subsidiaries (a)
not yet delinquent or (b) the validity of which are being contested in good
faith by appropriate actions and which are described on Schedule 1.1P(ii)
hereto.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, GmbH's, AGs, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and Governmental
Entities.
"Petition Date" means the date on which Seller, DNR North America,
Inc. and DNR USA, Inc. file their respective voluntary petitions under Chapter
11 of the Bankruptcy Code and commence the Chapter 11 Case in the Bankruptcy
Court, which in no event shall be prior to the date hereof and no later than the
fourteenth (14th) day after the effective date hereof pursuant to Section 11.21.
"Plan" means the joint plan of reorganization to be filed in the
Bankruptcy Court by Seller, DNR North America, Inc. and DNR USA, Inc. on the
Petition Date (with such modifications as Buyer may in its reasonable discretion
consent to in writing from time to time), which plan of reorganization shall be
in form and substance reasonably satisfactory to Buyer.
"Pro Forma Balance Sheets" means, collectively, the pro forma
consolidated and consolidating balance sheets of Seller and the Subsidiaries as
of June 30, 1999; provided, however, if the Closing Date is postponed upon the
mutual agreement of the parties hereto, pursuant to the terms hereof, the pro
forma consolidated and consolidating balance sheets of Seller and the
Subsidiaries shall be as of the later of (x) June 30, 1999 and (y) the month
ending at least one month prior, but not more than two months prior to the new,
mutually agreed upon Closing Date. The Pro Forma Balance Sheets shall be
prepared in accordance with GAAP applied on a consistent basis and shall reflect
the consummation of the transactions contemplated by each of the Restructuring
Documents.
"Products" means products, technology and services, sold, licensed or
otherwise exploited by Seller or any Subsidiary in connection with the Business
as described on Schedule 1.1P(iii).
"Property of the Estate" means property of the estate as more fully
set forth in Section 541(a) of the Bankruptcy Code.
"Purchase Price" has the meaning assigned to that term in Section 2.3.
"Purchased Assets" has the meaning assigned to that term in Section
2.1(a).
"Real Property" means all land, all improvements thereon and thereto,
all fixtures, all tenements, easements, right-of-way and rights appurtenant
thereto, all air space, all minerals, gravel, hydrocarbons, substances, water
and water rights, all rights in connection therewith, any other real property,
and any interest therein, including, without limitation, leasehold estates, of
Seller and its Subsidiaries, including, without limitation, all Purchased Assets
consisting of such "Real Property".
"Redemption Payment" means the net aggregate amount payable to Seller
by Buyer, CT or any other Person from time to time or at any time under and
pursuant to the terms of the Operating Agreement (but without giving effect to
the setoff provisions set forth in Section 10.3(iii) hereof).
"Reimbursement Expenses" has the meaning assigned to that term in
Section 11.14(b).
"Restructuring Documents" means, collectively, the Lockup Documents
and all documents, certificates, instruments and other agreements executed from
time to time in connection with Seller's or any Subsidiary's agreement with (x)
Hypo Vereinsbank, Deutsche Bank and BFG with respect to restructuring Marker
Deutschland GmbH's obligations to such banks and (y) Manufacturers and Traders
Trust Company and KeyBank, all of which documents, certificates, instruments and
other agreements executed from time to time in connection with the foregoing
(including, without limitation, the definitive documents executed in connection
with the Lockup Documents) shall be in form and substance satisfactory to Buyer,
as determined by Buyer in its sole and absolute discretion.
"SEC" means the Securities and Exchange Commission or any successor
entity.
"SEC Reports" has the meaning assigned to that term in Section 4.30.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning assigned to that term in the introduction to
this Agreement.
"Seller Patents" has the meaning assigned to that term in Section
4.7(a).
"Seller Trademarks" has the meaning assigned to that term in Section
4.7(a).
"Seller's Indemnification Obligation" means the amount that is due and
payable by Seller under or pursuant to Section 10.1, as determined by the mutual
agreement of the parties hereto or by a final and non-appealable judgment of a
court of competent jurisdiction.
"Subsequent Contract" has the meaning assigned to that term in Section
6.5(c).
"Subsidiary" means any Person in which Seller has a direct or indirect
equity or ownership interest of 50% or more, all of which Persons are listed on
Schedule 4.1. Notwithstanding anything herein to the contrary, for purposes of
Article IV hereof and any definitions relating thereto, "Subsidiary" shall
include Marker Canada, Ltd.
"Tauber Lockup Agreement" means the agreement dated as of or before
the date hereof between CT and/or Buyer and Henry E. Tauber, in the form of
Schedule B to the Equity Lockup Agreement.
"Tax" means any and all taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind imposed by any Governmental Entity, including but
not limited to any foreign, federal, state, county or local income, sales and
use, excise, franchise, real and personal property, transfer, gross receipt,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding tax, any interest and penalties (civil or
criminal) related thereto or to the nonpayment thereof, and any Loss in
connection with the determination, settlement or litigation of any Tax
liability.
"Tax Return" means any report, declaration, claim for refund, return
or other information required to be supplied to a Governmental Entity with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes any Subsidiary.
"Trade Secrets" means formulas, patterns, devices or compilations of
information that are used in connection with or relating to the Business and
that provide an opportunity to obtain an advantage over competitors that do not
possess or use it, including, but not limited to, formulas for chemical
compounds, a process of manufacturing, treating or preserving materials, a
pattern for a machine or any forms, plans, drawings, specifications, customer
lists, marketing and competition analysis and project management, inventory and
cost control systems and techniques.
"U.S. Subsidiary" means any one of the following Subsidiaries: DNR
North America, Inc., DNR USA, Inc., Marker Ltd. and Marker USA, and "U.S.
Subsidiaries" means all such Subsidiaries, collectively.
"Year 2000 Problems" means limitations in the capacity or readiness to
handle date information for the Year 1999 or years beginning January 1, 2000 of
any of the hardware, firmware or software systems ("Systems") associated with
information processing and delivery, operations or services (e.g., security and
alarms, elevators, communications, and HVAC) operated by, provided to or
otherwise reasonably necessary to the business or operations of the subject
Person.
"Zion Lockup Agreement" means the agreement between Seller and Zion
Capital Corporation, as amended to the date hereof and in the form of Exhibit
F-4 annexed hereto.
ARTICLE II
SALE OF ASSETS, ASSUMPTION OF LIABILITIES
AND RELATED TRANSACTIONS
2.1 PURCHASE AND SALE OF ASSETS.
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement and in accordance with the terms of the Plan and the Confirmation
Order, on the Closing Date Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, all
Property of the Estate of Seller, including all of the assets, properties,
rights, privileges, claims and contracts of every kind and nature, real and
personal, tangible and intangible, absolute or contingent, wherever located,
owned by Seller or used in connection with the Business (the "Purchased
Assets"), except the assets specifically identified in Section 2.1(b) (the
"Excluded Assets"). The Purchased Assets shall include, but shall not be limited
to, the items set forth on Schedule 2.1(a), attached hereto and incorporated
herein by reference, except as changed by assets acquired or disposed of in the
ordinary course of business of Seller after the date hereof through the Closing
Date, and also shall include the following:
(i) All leasehold interests in Real Property held by Seller.
(ii) Except as set forth on Schedule 2.1(b), all machinery,
apparatus, furniture and fixtures, materials, supplies, motor
vehicles and other equipment of every type owned or leased by
Seller.
(iii) All of Seller's Accounts Receivable.
(iv) All of Seller's Inventory.
(v) All of Seller's rights and interests arising under or in
connection with all Contracts assumed pursuant to the Assumption
Order, the Plan and Section 365 of the Bankruptcy Code
(collectively, the "Assumed Contracts") and all insurance
policies relating to the Business (other than any insurance
policy that covers directors and officers of Seller and is
identified on Schedule 2.1(b)) or pursuant to which the Business
is a beneficiary (including, without limitation, the insurance
policies relating to the Employment Plans, except to the extent
such policies are assumed by Marker USA pursuant to Section 6.10)
and other documents relating to the Business.
(vi) Seller's prepaid expenses and deposits (including, but
not limited to deposits of the Seller held by utilities or under
Assumed Contracts) as of the date hereof, together with any
additions thereto and subject to any reductions therefrom made or
accrued by Seller in operating the Business in the ordinary
course and in compliance with Section 6.3 after the date hereof
through the Closing Date.
(vii) Information services systems and software.
(viii) All cash and cash equivalents, except to the extent
required to make payments or distributions under the Plan as set
forth on Schedule 2.1(a)(viii) which shall be delivered to Buyer
pursuant to Section 8.2(f).
(ix) Sales data, customer lists, information relating to
customers, suppliers' names, mailing lists, advertising matters
and internet addresses, and all rights thereto relating to the
Business.
(x) All of Seller's Intangible Property, and corporate and
trade names (including, without limitation, the name "Marker")
and all rights therein and all Marks in any location in the
United States or in any foreign country and all goodwill
associated with the Business; all of Seller's books and records
relating to the Business and employees; transferable Permits;
unemployment compensation, workers' compensation and other
credits, reserves or deposits with applicable Governmental
Entities relating to Seller's employees who become employees of
Buyer; all orders, backlog, outstanding proposals, manufacturing
standards and procedures and customer lists.
(xi) All causes of action (whether or not asserted as of the
Closing Date) relating to the Purchased Assets or the Business or
Seller's operations or any of the foregoing, including, without
limitation, all causes of action arising under Sections 510, 544
through 546, 548 through 550 and 553 of the Bankruptcy Code or
under similar state laws and all other causes of action of a
trustee and a debtor-in-possession under the Bankruptcy Code.
(xii) All Equity Securities legally or beneficially owned by
Seller, including, without limitation, all Equity Securities of
the Subsidiaries as more particularly set forth in Schedule 4.1.
(b) Excluded Assets. The assets that constitute Excluded Assets shall
include only:
(i) The Equity Consideration delivered to Seller pursuant to
this Agreement, any rights of Seller under this Agreement and any
instrument or document executed by Seller in connection with
transactions contemplated hereby.
(ii) Seller's articles of incorporation, corporate seals,
minute books, stock books and other corporate records having to
do with the corporate organization and capitalization of Seller
and all income tax records and nontransferable Permits (if any);
provided, however, that copies of such corporate and tax records
and nontransferable Permits shall be provided to Buyer at the
Closing (or to the extent not provided shall be made available to
Buyer in accordance with Section 7.1).
(iii) Any shares of the capital stock of Seller held as
treasury shares.
(iv) The items set forth on Schedule 2.1(b).
2.2 ASSUMPTION OF CERTAIN LIABILITIES.
(a) Liabilities Not Assumed. Except for the liabilities and
obligations specifically assumed pursuant to and identified in the Plan and in
Section 2.2(b) below, Buyer shall not assume, shall not take subject to, shall
not be liable for and shall not perform, discharge or pay (x) any liabilities or
obligations of Seller that are discharged pursuant to Section 1141(d)(1) of the
Bankruptcy Code or any Order of the Bankruptcy Court (including, without
limitation, the Confirmation Order), (y) any liabilities or obligations of
Seller the collection of which has been permanently enjoined by an Order of the
Bankruptcy Court or by any applicable provision of the Bankruptcy Code
(including, without limitation, Section 524 of the Bankruptcy Code) and (z) the
following liabilities and obligations of Seller (collectively, the "Excluded
Liabilities"):
(i) All fees and expenses of Seller in connection with the
transactions contemplated herein.
(ii) All fees and expenses, if any, of Seller in connection
with the dissolution and liquidation of Seller and withdrawal
from business by Seller.
(iii) Any liabilities or obligations of Seller incurred,
arising from or out of or in connection with this Agreement, the
Operating Agreement or any other agreement, document, instrument,
certificate or report executed by Seller in connection herewith.
(iv) Any liabilities or obligations of Seller incurred,
arising from or out of or in connection with Seller's default in
the performance of or compliance with any provision of any Order.
(b) Assumed Liabilities. Notwithstanding Section 2.2(a), on the
Closing Date Buyer shall assume (collectively, the "Assumed Liabilities"):
(i) all amounts payable after the Closing Date under the
Assumed Contracts for goods and/or services rendered to Buyer
after the Closing Date;
(ii) all liabilities and obligations of Seller set forth on
the Claims Schedule that constitute "Allowed Claims" under the
Plan (including payment of Seller's obligations under the
Restructuring Documents, pre-petition Tax and employee benefits
liabilities (subject, in the case of employee benefit
liabilities, to Section 6.10), pre- and post-petition product
warranty and product liability claims (to the extent covered by
insurance and any deductibles therefor) and employee retention
payments that accrued prior to the Petition Date) in the classes
set forth in the Plan;
(iii) without duplication of clause (ii) or (iv), all
liabilities and obligations of Seller identified on Schedule
2.2(b)(iii) which shall be delivered to Buyer pursuant to Section
8.2(f); and
(iv) the liabilities or obligations of Seller constituting
expenses of administration under Section 503(b)(1) of the
Bankruptcy Code and (to the extent not consisting of ordinary
course trade payables) specifically identified on Schedule
2.2(b)(iv) which shall be delivered to Buyer pursuant to Section
8.2(f) (including post-petition Tax and employee benefits
liabilities and employee retention payments that accrued after
the Petition Date).
(c) Liabilities and Obligations. Buyer shall have no liability for and
shall not be deemed to have assumed liability for any obligations, including any
of the following obligations, to the extent such obligations do not constitute
Assumed Liabilities under Section 2.2(b):
(i) Any liabilities or obligations incurred, arising from or
out of, in connection with or as a result of Seller's operations
(including liabilities, obligations or claims relating to or
arising under any environmental Law), the condition of its assets
or places of business, its ownership of the Purchased Assets, or
the issuance, sale, repayment or repurchase of any of its Equity
Securities, in each case whether before or after the Closing
Date.
(ii) Any liabilities or obligations incurred, arising from
or out of, in connection with or as a result of claims made by or
against Seller (including any claims of existing or former
employees) whether before or after the Closing Date that arise
out of events prior to the Closing Date.
(iii) Any liabilities or obligations (to the extent not
covered by insurance or any deductible therefor under any
insurance policy) incurred, arising from or out of, in connection
with or as a result of any alleged or actual defect in any
product or in connection with any alleged or actual breach of
warranty (whether express or implied) in relation to any product
sold, manufactured or designed by Seller whether before or after
the Closing Date.
(iv) Subject to the provisions of Article X, any liabilities
or obligations (whether assessed or unassessed) of Seller for any
Taxes, including any Taxes arising by reason of the transactions
contemplated herein, as of, or for any taxable period (or portion
thereof) ending on or prior to, the Closing Date (or ending after
the Closing Date to the extent allocable to the portion of such
period ending on the Closing Date).
(v) Any liabilities or obligations to stockholders or former
stockholders of Seller in their capacity as stockholder or former
stockholder.
(vi) Any liabilities or obligations of Seller incurred,
arising from or out of, in connection with or as a result of
claims made against Seller in connection with Seller's violation
of any Law relating to employment and labor matters, including,
without limitation, the provisions of Title VII or the Civil
Rights Act of 1964 (race, color, religion, sex, and national
origin discrimination), 42 U.S.C. ss.ss. 621-634 (the Age
Discrimination in Employment Act), 29 U.S.C. ss. 206 (equal pay),
Executive Order 11246 (race, color, religion, sex and national
origin discrimination), Executive Order 11141 (age
discrimination), ss. 503 of the Rehabilitation Act of 1973
(handicap discrimination), 42 U.S.C. ss.ss. 12101-12213
(Americans with Disabilities Act), 29 U.S.C. 2001-2654 (Family
and Medical Leave Act), 29 U.S.C. ss.ss. 651-678 (occupational
safety and health) and requirements relating to the documentation
of the nationality of employees.
Other than the Excluded Liabilities described in Section
2.2(a)(i)-(iv), nothing in this Section 2.2 shall be deemed a waiver or
modification of Seller's discharge under Section 1141 of the Bankruptcy Code of
any Excluded Liability.
2.3 PURCHASE PRICE.
The total purchase price (the "Purchase Price") to be paid to Seller
by Buyer at the Closing for the Purchased Assets shall be (i) the assumption of
the Assumed Liabilities, plus (ii) the issuance of Equity Securities of Buyer
representing 15% of all of Buyer's outstanding Equity Securities on a fully
diluted basis on the Closing Date (the "Equity Consideration"), which Equity
Securities shall be subject to certain restrictions on assignment and transfer
and shall be subject to certain antidilution protections and call options, all
as more particularly described in the Operating Agreement.
2.4 CAPITALIZATION.
On the Closing Date, Buyer shall take such action as is required under
applicable Law to evidence Seller's ownership of the Equity Consideration and
CT's 85% ownership interest in Buyer. Immediately following the consummation of
the transaction contemplated hereby and by the Plan and the Confirmation Order,
on the Closing Date CT will own a 85% interest in Buyer and Seller will own a
15% interest in Buyer.
<PAGE>
ARTICLE III
CLOSING
3.1 CLOSING. Upon the terms and subject to the conditions set forth in
this Agreement, the Closing will take place on the Closing Date at the offices
of O'Melveny & Myers LLP, 153 East 53rd Street, New York, New York. Time is of
the essence with respect to the performance of the covenants, terms and
conditions set forth in this Agreement and in the consummation of the
transactions contemplated hereby.
3.2 ITEMS TO BE DELIVERED AT THE CLOSING BY SELLER. At the Closing,
Seller shall deliver or cause to be delivered to Buyer:
(a) A Bill of Sale and Assignment and Assumption Agreement, in
substantially the form of Exhibit A.
(b) General warranty deeds, properly executed and acknowledged,
conforming to and conveying the agreed state of title for all Real Property and
interests in Real Property owned by Seller.
(c) Such other instruments of transfer necessary or appropriate to
transfer to and vest in Buyer all of Seller's right, title and interest in and
to the Purchased Assets. Without limiting the generality of the foregoing, Buyer
shall receive at the Closing, to the extent the Subsidiaries have issued
certificated securities (as such term is defined in Section 8-102(a)(4) of the
Uniform Commercial Code as in effect on the date hereof in the State of New
York), certificates representing the number of shares of Equity Securities to be
purchased and sold pursuant to Section 2.1(a)(xii), properly endorsed for
transfer to or accompanied by a duly executed stock power in favor of Buyer and
otherwise in a form acceptable for transfer on the books and under the local
Laws of the applicable Subsidiary.
(d) All documentation required to exempt Seller from the withholding
requirement of Section 1445 of the Code, consisting of (a) an affidavit from
Seller to Buyer stating under penalty of perjury that Seller is not a foreign
person and providing Seller's U.S. taxpayer identification number, or (b) a
sworn affidavit of Seller that it is not a "U.S. real property holding
corporation," as defined in Section 897 of the Code or (c) a "qualifying
statement" obtained by Seller from the Internal Revenue Service.
(e) A certified copy of the Confirmation Order.
(f) Duly executed originals of each of the Restructuring Documents,
the effectiveness of which shall be conditioned solely upon the consummation of
the purchase and sale contemplated by this Agreement.
(g) The opinions, certificates, consents, Orders and other documents
referred to herein as then deliverable by Seller.
3.3 ITEMS TO BE DELIVERED AT THE CLOSING BY BUYER. At the Closing,
Buyer shall deliver to Seller the opinions, certificates, consents and other
documents referred to herein as then deliverable by Buyer, together with a copy
of the share register and a notarized copy of the Commercial Register as
evidence of Seller's capital contribution to Buyer and its ownership of the
Equity Consideration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants and agrees as follows:
4.1 ORGANIZATION AND RELATED MATTERS; INVESTMENT ACT.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of Utah, the jurisdiction of its incorporation.
Seller and each Subsidiary has all necessary corporate power and authority to
execute, deliver and perform this Agreement, the Restructuring Documents, the
Operating Agreement and any related agreements to which it is a party. Schedule
4.1 lists all Subsidiaries of Seller and correctly sets forth as of the date
hereof the capitalization of each Subsidiary, the jurisdiction in which Seller
and each Subsidiary was organized, each jurisdiction in which Seller and each
Subsidiary is and is required to be qualified or licensed to do business as a
foreign Person and a brief summary of such Subsidiary's assets, liabilities and
Business. Each Subsidiary is duly organized, validly existing and, where such
concept is applicable, in good standing under the laws of the jurisdiction of
its organization. Seller and its Subsidiaries have all necessary power and
authority to own their respective properties and assets and to carry on their
respective businesses as now conducted and, where such concept is applicable,
are duly qualified or licensed to do business as foreign corporations in good
standing in all jurisdictions in which the character or the location of the
assets owned or leased by any of them or the nature of the business conducted by
any of them requires licensing or qualification. Schedule 4.1 correctly lists
the directors and executive officers of Seller and of each Subsidiary as of the
date hereof. True, correct and complete copies of the respective charter
documents of Seller and the Subsidiaries as in effect on the date hereof have
been delivered to Buyer.
(b) Seller represents and warrants that neither the SEC nor any member
of its staff has made any demand or statement (orally or in writing) or has
given any notice or recommendation (orally or in writing) at any time to Seller,
its counsel or any other representative of Seller that would lead a prudent
Person to conclude that the SEC or such staff member may recommend enforcement
action under the Investment Act if Seller consummates the transactions
contemplated hereby or that the SEC or such staff member does not believe that
Seller may rely on Section 7(a) of the Investment Act upon the consummation of
the transactions contemplated hereby.
(c) Seller is not and, subject to Seller's compliance with the
assumptions and facts set forth in the No Enforcement Request, which Seller
hereby represents and warrants it shall comply with, Seller will not be upon the
consummation of the transactions contemplated hereby (i) an "investment company"
that is not subject to the exceptions set forth in Section 7(a) of the
Investment Act for transactions which are merely incidental to the dissolution
of an investment company, (ii) a company required to be registered under the
Investment Act, (iii) a registered company under the Investment Act or (iv) an
entity "controlled" by an "investment company" as such terms are defined in the
Investment Act.
(d) No Subsidiary is (i) a registered company under the Investment
Act, (ii) an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Act or (iii) a company
required to be registered under the Investment Act.
4.2 EQUITY SECURITIES.
Except as described in Schedule 4.1:
Seller owns all of the outstanding Equity Securities of each of the
Subsidiaries, beneficially and of record. All of such Equity Securities of the
Subsidiaries are owned free and clear of any Encumbrance. At the Closing, Buyer
will acquire title to and complete ownership of all of the issued and
outstanding Equity Security of each Subsidiary, free of any Encumbrance. There
are no outstanding Contracts or other rights to subscribe for or purchase, or
Contracts or other obligations to issue or grant any rights to acquire, any
Equity Securities of any Subsidiary, or to restructure or recapitalize any
Subsidiary. There are no outstanding Contracts of Seller or any Subsidiary to
repurchase, redeem or otherwise acquire any Equity Securities of any of such
entities. All Equity Securities of the Subsidiaries are duly authorized, validly
issued and outstanding and are fully paid and nonassessable and were issued in
conformity with applicable Laws. There are no preemptive rights in respect of
any Equity Securities of any Subsidiary. Any Equity Securities of any Subsidiary
which were issued and reacquired by any of such entities were so reacquired
(and, if reissued, so reissued) in compliance with all applicable Laws, and
neither Seller nor any Subsidiary has any outstanding obligation or liability
with respect thereto. Seller does not own (beneficially or of record) or have
any other interest in any Equity Securities except as set forth on Schedule 4.1
and Schedule 4.1 correctly sets forth Seller's ownership interest in each
Subsidiary and any other interest of Seller or of any other Person in such
Subsidiary. Without limiting the generality of the preceding sentence, except as
set forth on Schedule 4.1 neither Seller nor any one or more of the Subsidiaries
(or any combination thereof) has 50% or more of the total voting power of shares
of stock or other ownership interest entitled (without regard to the occurrence
of any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
of any other Person.
4.3 FINANCIAL STATEMENTS; CHANGES; CONTINGENCIES.
(a) Audited Financial Statements. Seller has delivered to Buyer
audited consolidated and unaudited consolidating balance sheets for Seller and
its Subsidiaries at March 31, 1999 and the related audited consolidated and
unaudited consolidating statements of operations, changes in stockholder's
equity and changes in financial position or cash flow for the periods then
ended. All such consolidated financial statements have been examined by the
Auditors whose reports on the consolidated financial statements are included
therewith. All such financial statements (consolidated and consolidating) have
been prepared in conformity with GAAP applied on a consistent basis. Such
statements of operations and cash flow present fairly the results of operations
and cash flows of Seller and its Subsidiaries for the respective periods
covered, and the balance sheets present fairly the financial condition of Seller
and its Subsidiaries as of their respective dates. Seller has delivered or
caused to be delivered to Buyer copies of each management letter or other letter
delivered to Seller by Auditors in connection with such financial statements or
relating to any review by Auditors of the internal controls of Seller during the
five-year period ended March 31, 1999 or thereafter. Since March 31, 1999, there
has been no change in any of the significant accounting policies, practices or
procedures of Seller and/or the Subsidiaries.
(b) Pro Forma Balance Sheets. The Pro Forma Balance Sheets delivered
to Buyer on or before the Closing Date have been prepared in accordance with
GAAP applied on a consistent basis and reflect the consummation of the
transactions contemplated by each of the Restructuring Documents, and such Pro
Forma Balance Sheets have been certified by the chief financial officers of
Seller and its Subsidiaries.
(c) No Material Adverse Changes. Except as set forth on Schedule
4.3(c) and in the SEC Reports, the relevant portions of which are attached
hereto as part of Schedule 4.3(c), since March 31, 1999, whether or not in the
ordinary course of business, there has not been, occurred or arisen (any one of
the following being hereinafter referred to as a "Material Adverse Change"):
(i) any change in or event affecting (x) Seller, any
Subsidiary or the Business or (y) the operations, the properties
or assets (including, without limitation, the Purchased Assets),
the Assumed Liabilities or the condition of Seller or any
Subsidiary, that has had or may reasonably be expected to have a
material adverse effect on Seller and its Subsidiaries taken as a
whole or the Business or the operations, the properties or assets
(including, without limitation, the Purchased Assets), the
Assumed Liabilities or the condition of Seller and its
Subsidiaries taken as a whole, or
(ii) any strike or other material labor dispute with respect
to Seller or any Subsidiary, or
(iii) any casualty, condemnation, loss, damage or
destruction (whether or not covered by insurance) of any of the
Purchased Assets or of any property of any Subsidiary that has
involved or is reasonably likely to involve a loss to Seller or
such Subsidiary of more than $300,000 in any specific case or
$600,000 in the aggregate.
The filing of a voluntary petition by Seller, DNR North America, Inc.
and DNR USA, Inc. under Chapter 11 of the Bankruptcy Code shall be deemed to not
be material for purposes of Section 4.3(c)(i); provided, however, that it is
acknowledged and agreed by the parties hereto that the fact that the filing of a
voluntary petition by Seller, DNR North America, Inc. and DNR USA, Inc. under
Chapter 11 of the Bankruptcy Code has been deemed to not be material for
purposes of Section 4.3(c)(i) shall have no effect whatsoever on any
determination, judgment or other action taken by Buyer or otherwise concerning
whether any other event or occurrence (whether or not such event or occurrence
arises during the Chapter 11 Case) constitutes a Material Adverse Change.
(d) No Other Liabilities or Contingencies. As of the Closing Date,
after giving effect to the transactions contemplated by the Restructuring
Documents, neither Seller nor any Subsidiary shall have any liabilities of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, probable of assertion or not, except liabilities that (i) are
reflected or disclosed in the Claims Schedule (in amounts not in excess of the
aggregate amount of such liabilities set forth in the Claims Schedule plus
agreed upon reserves to cover disputed claims), (ii) constitute Assumed
Liabilities under Section 2.2(b) hereof, (iii) are reflected or disclosed in the
Pro Forma Balance Sheets, (iv) constitute liabilities incurred by Seller's
Subsidiaries in the ordinary course after the date of the Pro Forma Balance
Sheets or (v) are set forth in Schedule 4.3(d).
<PAGE>
4.4 TAX AND OTHER RETURNS AND REPORTS.
(a) Seller and each Subsidiary has timely filed or will timely file
(or, where permitted or required, its respective direct or indirect parents have
timely filed or will timely file) all Tax Returns required to be filed by Seller
and each Subsidiary (other than with respect to Tax Returns which claim a
refund) and has paid or will have paid all Taxes due (whether or not shown on
any such Tax Return) for all periods ending on or before the Closing Date.
Adequate provision has been made in the books and records of Seller and each
Subsidiary, and to the extent required by GAAP in the financial statements
(including, without limitation, the Pro Forma Balance Sheets) referred to in
Section 4.3 above or delivered to Buyer, for all Taxes whether or not due and
payable and whether or not disputed. Neither Seller nor any Subsidiary has
elected to be treated as a consenting corporation under Section 341(f) of the
Code. Schedule 4.4 lists the date or dates through which the IRS and any other
Governmental Entity have examined the United States federal income tax returns
and any other Tax Returns of Seller and its Subsidiaries. All Tax Returns
required to be filed by Seller and each Subsidiary, including amendments to
date, have been prepared in good faith without negligence or willful
misrepresentation and are complete and accurate in all material respects. Except
as set forth in Schedule 4.4, no Governmental Entity has, during the past three
years, examined or is in the process of examining any Tax Returns of Seller or
any Subsidiary. Except as set forth on Schedule 4.4, no Governmental Entity has,
during the past three years, asserted or assessed or, to the best knowledge of
Seller, threatened to assert, any deficiency, assessment or claim for Taxes of
Seller or any Subsidiary and to the best knowledge of Seller there would be no
basis for any such delinquency, assessment or claim. Except as set forth on
Schedule 4.4, neither Seller nor any Subsidiary has requested any extension of
time within which to file any Tax Return in respect of any taxable year, which
Tax Return has not since been filed.
(b) Neither Seller nor any Subsidiary is presently or has been a
"foreign investment company" as such term is defined in Section 1246(b) of the
Code.
(c) To the best knowledge of Seller, neither Seller nor any Subsidiary
is presently or has been a "passive foreign investment company" as such term is
defined in Section 1297(a) of the Code.
4.5 MATERIAL CONTRACTS TC.
Part One of Schedule 4.5 lists each Material Contract of Seller and
the Subsidiaries. Unless otherwise so noted in Part One of Schedule 4.5, no
Material Contract (a) obligates Seller or any Subsidiary to pay an amount of
$35,000 or more, (b) has an unexpired term in excess of 6 months and is
cancelable with less than 6 months notice, (c) was entered into other than in
the ordinary course of business and on arms length terms, (d) provides for an
extension of credit other than consistent with normal credit terms, (e) limits
or restricts the ability of Seller or any Subsidiary to compete or otherwise to
conduct the Business in any manner or place, (f) provides for a guaranty or
indemnity by Seller or any Subsidiary, (g) grants a power of attorney, agency or
similar authority to another Person, (h) contains a right of first refusal, (i)
contains a right or obligation other than in the ordinary course of business of
any Affiliate, officer or director or any Associate, of Seller or any
Subsidiary, or (j) requires Seller or its Subsidiaries to buy or sell goods or
services with respect to which there will be material losses or will be costs
and expenses materially in excess of expected receipts (other than as provided
for or otherwise reserved against on the most recent balance sheets referred to
in Section 4.3). True, correct and complete copies of the Material Contracts
appearing on Part One of Schedule 4.5, including all amendments and supplements,
have been delivered to Buyer. Part Two of Schedule 4.5 lists each Assumed
Contract that will be assumed by Seller and assigned to Buyer pursuant to
Section 365(a) of the Bankruptcy Code and the Plan. Each Material Contract is
valid and subsisting and, except as set forth on Schedule 4.5, no breach or
default, alleged breach or default, or event which would (with the passage of
time, notice or both) constitute a breach or default thereunder by Seller or its
Subsidiary, as the case may be, or, to the best knowledge of Seller, any other
party or obligor with respect thereto, has occurred or as a result of this
Agreement or performance thereof will occur (other than a breach or default
resulting solely from the commencement of the Chapter 11 Case). Except as set
forth on Part One of Schedule 4.5, consummation of the transactions contemplated
by this Agreement will not (and will not give any Person a right to) terminate
or modify any rights of, or accelerate or augment any obligation of, Seller or
any Subsidiary under any of the Material Contracts.
4.6 CONDITION OF PROPERTY; LEASES.
(a) Except as set forth on Schedule 4.6(a), Seller and each Subsidiary
has good and marketable title to each of their assets and properties, free and
clear of any Encumbrances except Permitted Encumbrances. Seller has all rights,
power and authority to sell, convey, assign, transfer and deliver the Purchased
Assets to Buyer in accordance with the terms of this Agreement, the Plan and the
Confirmation Order. At the Closing, Seller shall deliver the Purchased Assets to
Buyer, free and clear of any Encumbrances except for Permitted Encumbrances or
Permitted Exceptions and as set forth in the Plan. The assets and properties of
Seller and each Subsidiary have been regularly and appropriately maintained,
repaired and replaced, are not materially defective except for ordinary wear and
tear and are adequate for use in the Business. The use, occupancy and operation
of the assets and properties (including, without limitation, the Purchased
Assets) of Seller and each Subsidiary comply in all material respects with all
applicable Laws material to the Business.
(b) The Real Property of Seller and its Subsidiaries listed on
Schedule 4.6(b) consists of all real property and leasehold interests used by
Seller and its Subsidiaries in the conduct of the Business. Neither Seller nor
any Subsidiary has received any notice of any proposed special assessments,
expropriation or any proposed material changes in property tax or land use or
environmental Laws affecting any Real Property.
(c) (i) All material leasehold properties (including, without
limitation, all leasehold properties that constitute part of the Purchased
Assets) held by Seller or any Subsidiary as lessee are held under valid, binding
and enforceable leases, subject only to such exceptions as are not, individually
or in the aggregate, material to the Business.
(ii) Seller has heretofore delivered to Buyer a true,
correct and complete copy of the lease creating each leasehold
interest (including, without limitation, leasehold interests
comprising a portion of the Purchased Assets) of Seller and its
Subsidiaries, together with all amendments, modifications,
alterations, and other changes thereto (each, a "Lease" and
collectively, the "Leases").
(iii) The Leases constitute the entire agreement to which
Seller or any Subsidiary is a party with respect to the
properties which are demised pursuant thereto.
(iv) The term of each Lease is accurately set forth on
Schedule 4.6(b). Seller or one of its Subsidiaries has accepted
possession of the property demised pursuant to each Lease and is
in actual possession thereof and has not sublet, assigned or
hypothecated its leasehold interest except as set forth on
Schedule 4.6(c).
(v) As of the date hereof, all conditions precedent to the
enforceability of each Lease have been satisfied and there exists
no breach or default, nor state of facts which, with the passage
of time, notice, or both, would result in a breach or default on
the part of either Seller, its Subsidiaries or, to the best
knowledge of Seller, the lessor thereunder (other than a breach
or default resulting solely from the commencement of the Chapter
11 Case).
(vi) Neither Seller nor any of its Subsidiaries has received
notice of non-compliance with any restriction encumbering any
leased property, nor has Seller or any Subsidiary received notice
of any zoning violations affecting any leased property.
(vii) There is no pending or, to the best knowledge of
Seller, threatened Action that would materially interfere with
the quiet enjoyment of any such leasehold by Seller or its
Subsidiaries or, after the Closing, by Buyer.
(d) All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required by Law for the present use and
operation of the Real Property are installed across public property or valid
easements to the boundary lines of the Real Property, and are connected pursuant
to valid permits, and such facilities are adequate to service the Real Property.
<PAGE>
4.7 INTANGIBLE PROPERTY.
(a) Seller and/or its Subsidiaries own all right, title and interest
to the patents and patent applications listed on Schedule 4.7(a)(i) (except as
otherwise noted on such Schedule) ("Seller Patents"), and the trademarks and
trademark applications listed in Schedule 4.7(a)(ii) (except as otherwise noted
on such Schedule) ("Seller Trademarks"). Seller represents and warrants that
Schedules 4.7(a)(i) and 4.7(a)(ii) represent true, correct, complete and
accurate listings of all of Seller's and its Subsidiary's patents and trademarks
based on a review of internal and public records.
(b) Except as listed in Schedule 4.7(b), Seller and its Subsidiaries
have not granted any license under the Seller Patents or Seller Trademarks to
any Person and are under no obligation to grant any license.
(c) Except as listed in Schedule 4.7(c), each inventor of any Seller
Patents has assigned his or her entire right, title and interest in such Seller
Patents to the Seller or its Subsidiaries.
(d) Except as set forth on Schedule 4.7(d), there is no Order or
Action pending or, to the best knowledge of Seller, threatened, relating to the
ownership, validity and/or infringement of patents, trademarks, trade secrets,
or other proprietary information or materials of Seller or its Subsidiaries.
(e) Notwithstanding Schedule 4.7(d), to the best knowledge of Seller,
neither Seller nor any Subsidiary is infringing or otherwise violating any
patent, trademark or other proprietary rights of others.
(f) To the best knowledge of Seller, there are no infringements by
others of any of the Seller's patent, trademark or other proprietary rights that
could materially affect the use thereof by Buyer or the Subsidiaries.
(g) To the best knowledge of Seller, no patent, trademark or other
proprietary rights are owned by third parties that would prevent the Seller or
its Subsidiaries from conducting the research, development and/or business now
being conducted or proposed to be conducted by the Seller and its Subsidiaries.
(h) The Products, in all material respects, perform the functions and
operations, have the technical capabilities and meet or exceed the
specifications appearing in internal documentation of Seller and its
Subsidiaries and in the technical and marketing literature disseminated by
Seller and its Subsidiaries.
4.8 AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance of this Agreement, the
Restructuring Documents, the Operating Agreement, the Canadian Stockholders
Agreement and any related agreements to which Seller or any Subsidiary is a
party to has been (or, as the case may be, will be prior to the Closing Date)
duly and validly authorized by the board of directors of Seller or such
Subsidiary and by all other necessary corporate action on the part of Seller and
such Subsidiary. This Agreement, the Restructuring Documents, the Operating
Agreement, the Canadian Stockholders Agreement and any related agreements
constitute (or, as the case may be, will constitute) the legally valid and
binding obligation of Seller and any Subsidiary party thereto, enforceable
against Seller or such Subsidiary in accordance with its terms. Except as
described in Schedule 4.8(a), the execution, delivery and performance of this
Agreement by Seller and the execution, delivery and performance of each of the
Restructuring Documents, the Operating Agreement, the Canadian Stockholders
Agreement and any related agreements or contemplated transactions by Seller or
any Subsidiary will not (or, as the case may be, does not) violate, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) under, the charter documents or by-laws of any
of such entities or any Contract of any of such entities (other than a breach,
violation or default resulting solely from the commencement of the Chapter 11
Case), result in the imposition of any Encumbrance against any assets or
properties of Seller or any Subsidiary (other than the super-priority claim of
Buyer under the Breakup Fee Order and Section 364(c)(1) of the Bankruptcy Code
with respect to the Breakup Fee and Reimbursement Expense, the Buyer's hypothec
and security interest granted under Section 10.5 of the Canadian Stockholders
Agreement and such Encumbrances that constitute Permitted Encumbrances), or
violate any Law. Schedule 4.8(b) lists all Permits and Approvals (other than
Orders of the Bankruptcy Court) required to be obtained by Seller or any
Subsidiary from any U.S. Governmental Entity to consummate the transactions
contemplated by this Agreement. Except for matters identified in Schedule 4.8(b)
as requiring that certain actions be taken by or with respect to a third party
or Governmental Entity, the execution and delivery of this Agreement, the
Restructuring Documents, the Operating Agreement, the Canadian Stockholders
Agreement and any related agreements to which Seller or any Subsidiary is a
party (or, as the case may be, will be a party to) and the performance of this
Agreement, the Restructuring Documents, the Operating Agreement, the Canadian
Stockholders Agreement and any related agreements and any related or
contemplated transactions by Seller or any Subsidiary will not require filing or
registration with, or the issuance of any Permit by, any other third party or
U.S. Governmental Entity.
4.9 LEGAL PROCEEDINGS AND CERTAIN LABOR MATTERS.
Except as set forth on Schedule 4.9, there is no Order or Action
pending, or, to the best knowledge of Seller, threatened, against or affecting
Seller or any Subsidiary or any of their respective properties or assets that
individually or when aggregated with one or more other Orders or Actions that
has or if determined adversely to the interest of Seller or Buyer might
reasonably be expected to have a material adverse effect on (x) Seller or any
Subsidiary, the Business, the Purchased Assets (or the use, operation or value
thereof), the Assumed Liabilities, the Seller's ability to perform this
Agreement or (y) on any material aspect of the transactions contemplated by this
Agreement. There is no organized labor strike, dispute, slowdown or stoppage, or
collective bargaining or unfair labor practice claim (collectively, "Labor
Matters"), pending or threatened, against or affecting Seller or any Subsidiary
or the Business. Schedule 4.9 lists each Order, Action and Labor Matter that
involves a claim or potential claim (whether or not such claim is insured
against) of aggregate liability in excess of $35,000 against, or that enjoins or
compels or seeks to enjoin or to compel any activity by, Seller or any
Subsidiary. There is no matter as to which Seller or any Subsidiary has received
any notice, claim or assertion, or, to the best knowledge of Seller, which
otherwise has been threatened, against or affecting any director, officer,
employee, agent or representative of Seller or any Subsidiary or any other
Person in connection with which any such Person has or may reasonably be
expected to have any right to be indemnified by Seller or any Subsidiary.
4.10 MINUTE BOOKS.
The minute books of Seller and its Subsidiaries (copies of which have
been made available to Buyer) accurately reflect all actions and proceedings
taken to date by the respective shareholders, boards of directors and committees
of Seller and its Subsidiaries, and such minute books contain true and complete
copies of the charter documents of Seller and its Subsidiaries and all related
amendments. The stock record books (or any other books and records functionally
equivalent to a stock record book) of Seller and each Subsidiary reflect
accurately all transactions in their respective capital stock of all classes.
4.11 ACCOUNTING RECORDS; INTERNAL CONTROLS.
(a) Accounting Records. Seller and its Subsidiaries have records that
accurately and validly reflect their respective transactions, and accounting
controls sufficient to insure that such transactions are (i) executed in
accordance with management's general or specific authorization and (ii) recorded
in conformity with GAAP so as to maintain accountability for assets.
(b) Data Processing; Access. Such records, to the extent they contain
important information that is not easily and readily available elsewhere, have
been duplicated, and such duplicates are stored safely and securely pursuant to
procedures and techniques utilized by companies of comparable size in similar
lines of business. The data processing equipment, data transmission equipment,
related peripheral equipment and software used by Seller and its Subsidiaries in
the operation of the Business (including any disaster recovery facility) to
generate and retrieve such records are comparable in performance, condition and
capacity with those utilized by companies of comparable size in similar lines of
business.
<PAGE>
4.12 INSURANCE.
All of the insurance policies (including, without limitation,
insurance policies related to the Employment Plans) and bonds maintained by
Seller and its Subsidiaries (copies of all of which have been delivered to
Buyer) are in full force and effect and will remain in full force and effect in
favor of Buyer or the Subsidiaries following the consummation of the
transactions contemplated by this Agreement (subject to such entities'
continuing compliance with the applicable terms thereof). Schedule 4.12 lists
all insurance policies and bonds that are material to the Business. Neither
Seller nor any Subsidiary is in default under any insurance policy or bond and
no premium is past due thereon. Seller and its Subsidiaries have timely filed
claims and/or notices with their respective insurers with respect to all matters
and occurrences for which they believe they have coverage (including, without
limitation, timely notices relating to products liability and warranty claims).
Seller and its Subsidiaries have received no notice or other indication from any
insurer or agent of any intent to cancel or not so renew any of such insurance
policies, and have not received any notice relating to a refusal of coverage or
that a defense will be afforded with a reservation of rights. Without limiting
the generality of the preceding sentence, each of the product liability claims
set forth on Schedule 4.9 is an insured against claim and neither Seller nor any
Subsidiary has received notice of a refusal of coverage with respect to such
claim or has reason to believe that Seller or such Subsidiary do not have
coverage in accordance with the terms of the applicable insurance policy with
respect to such claim. Seller and its Subsidiaries have complied with and
implemented all outstanding (i) requirements of any insurance company that has
issued a policy with respect to any of the properties and assets (including,
without limitation, the Purchased Assets) of Seller or any Subsidiary and (ii)
requirements of Board of Fire Underwriters or other body exercising similar
functions or any Governmental Entity with respect to any such insurance policy.
4.13 PERMITS.
Seller and its Subsidiaries hold all Permits that are required by any
Governmental Entity to permit each of them to conduct their respective
businesses as now conducted and operate any of their assets owned or used by
them as they are now operated, and as of the date hereof all such Permits
material to the Business are valid and in full force and effect, and as of the
Closing Date all such Permits shall be, valid and subsisting and in full force
and effect. All such Permits of Seller are Purchased Assets. No suspension,
cancellation or termination of any of such Permits is threatened or pending.
4.14 COMPLIANCE WITH LAW.
(a) Seller and its Subsidiaries are organized and have conducted their
respective businesses in accordance in all material respects with applicable
Laws, and the forms, procedures and practices of Seller and its Subsidiaries are
in compliance in all material respects with all such Laws.
(b) The Seller's and its Subsidiaries' use and operation of their
respective assets (including, without limitation, the Purchased Assets) are in
compliance in all material respects with all applicable Laws, and there are no
violations of any such Laws.
4.15 DIVIDENDS AND OTHER DISTRIBUTIONS.
Except as set forth in Schedule 4.15, subsequent to the date of the
most recent financial statements described in Section 4.3, there has been no (i)
dividend or other distribution of assets or Equity Securities whether consisting
of money, property or any other thing of value, declared, issued or paid to or
for the benefit of any Person owning (beneficially or of record) any Equity
Securities of Seller or any Equity Securities of the Subsidiaries and (ii)
redemption, conversion, retirement, sinking fund or similar payment, purchase or
other acquisition for value of any Equity Securities of Seller or any Equity
Securities of the Subsidiaries.
4.16 EMPLOYEE BENEFITS.
(a) Employee Benefit Plans, Collective Bargaining and Employee
Agreements, and Similar Arrangements.
(i) Schedule 4.16A lists all employee benefit plans and
collective bargaining, employment or severance agreements or
other similar arrangements to which Seller or any U.S. Subsidiary
is a party by which any of them is bound, legally or otherwise or
with respect to which Seller or any U.S. Subsidiary could
continue to have any liability (collectively, "Employment
Plans"), including, without limitation, (w) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, (x) any plan, agreement
or arrangement providing for "fringe benefits" or perquisites to
employees, officers, directors or agents, including but not
limited to benefits relating to Seller automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, medical,
dental, hospitalization, life insurance and other types of
insurance, (y) any employment agreement not terminable on thirty
(30) days (or less) written notice, or (z) any other "employee
benefit plan" (within the meaning of Section 3(3) of ERISA)
whether or not such plan is subject to Title I of ERISA.
(ii) Schedule 4.16A identifies for each Employment Plan the
U.S. Subsidiary of Seller that is a party thereto or has any
employees covered by such Plan.
(iii) Seller has delivered or caused to be delivered to
Buyer true and complete copies of all documents and summary plan
descriptions with respect to such plans, agreements and
arrangements, or summary descriptions of any such plans,
agreements or arrangements not otherwise in writing.
(iv) Except as contemplated by Section 6.10, there are no
negotiations, demands or proposals that are pending or have been
made which concern matters now covered, or that would be covered,
by plans, agreements or arrangements of the type described in
this Section.
(v) Seller and its U.S. Subsidiaries are in compliance in
all material respects with the applicable provisions of ERISA,
the regulations and published authorities thereunder, and all
other Laws applicable with respect to all such employee benefit
plans, agreements and arrangements. Seller and its U.S.
Subsidiaries have performed all of their obligations under all
such plans, agreements and arrangements. To the best knowledge of
Seller, there are no Actions (other than routine claims for
benefits) pending or threatened against such plans or their
assets, or arising out of such plans, agreements or arrangements,
and all such plans, agreements and arrangements have been
operated in compliance with their terms. To the best knowledge of
Seller, no facts exist which could give rise to any such Actions.
(vi) Except as specified in Schedule 4.16A, each of the
plans, agreements or arrangements can be terminated by Seller or
by one of the U.S. Subsidiaries within a period of thirty (30)
days following the Closing Date, without payment of any
additional compensation or amount or the additional vesting or
acceleration of any such benefits.
(vii) Except with respect to the obligations of Seller and
Marker USA (as set forth on Schedule 4.17) arising under or
relating to the employee retention incentive program adopted by
Seller and Marker USA (a copy of which program and/or the
resolutions of the board of directors authorizing the same has
been delivered to Buyer), all obligations of the Seller and its
U.S. Subsidiaries under each such plan agreement and arrangement
(x) that are due prior to the Closing Date have been paid or will
be paid prior to that date, and (y) that have accrued prior to
the Closing Date have been or will be paid or properly accrued at
that time.
(b) Qualified Plans.
(i) Schedule 4.16B lists all "employee pension benefit
plans" (within the meaning of Section 3(2) of ERISA) in Schedule
4.16A that are also stock bonus, pension or profit-sharing plans
within the meaning of Section 401(a) of the Code.
(ii) Each such plan has been duly authorized by the
appropriate board of directors of Seller and each participating
Subsidiary. Each such plan is qualified in form and operation
under Section 401(a) of the Code and each trust under each such
plan is exempt from tax under Section 501(a) of the Code. To the
best knowledge of Seller, no event has occurred that will or
could give rise to disqualification or loss of tax-exempt status
of any such plan or trust under such sections. No event has
occurred that will or could subject any such plans to tax under
Section 511 of the Code. To the best knowledge of Seller, no
prohibited transaction (within the meaning of Section 4975 of the
Code) or party-in-interest transaction (within the meaning of
Section 406 of ERISA) for which an exemption is not available has
occurred with respect to any of such plans.
(iii) Seller has delivered to Buyer for each such plan
copies of the following documents, to the extent applicable to
any such plan: (A) the Form 5500 filed in each of the most recent
three plan years, including but not limited to all schedules
thereto and financial statements with attached opinions of
independent accountants, (B) the most recent determination letter
from the IRS (which may be a letter issued to the prototype
sponsor of any such sponsor of any such plan which is a prototype
plan), (C) the consolidated statement of assets and liabilities
of such plan as of its most recent valuation date, and (D) the
statement of changes in fund balance and in financial position or
the statement of changes in net assets available for benefits
under such plan for the most recently ended plan year. The
financial statements so delivered fairly present the financial
condition and the results of operations of each of such plans as
of such dates, in accordance with GAAP.
(c) Title IV Plans.
(i) None of the Employment Plans in Schedules 4.16A and
4.16B is subject to Title IV of ERISA. No ERISA Affiliate
participates or has participated in any plan subject to Title IV
of ERISA.
(d) Multiemployer Plans.
None of the Employment Plans in Schedules 4.16A and 4.16B is
a multiemployer plan within the meaning of Section 3(37) of ERISA
and no ERISA Affiliate participates or has participated in any
such multiemployer plan.
(e) Health Plans. All group health plans of Seller, any Subsidiary and
any ERISA Affiliate have been operated in compliance in all material respects
with the group health plan continuation coverage requirements of Sections 601 to
609 of ERISA and Section 4980B of the Code to the extent such requirements are
applicable.
(f) Fines and Penalties. There has been no act or omission by Seller
or any U.S. Subsidiary or any ERISA Affiliate that has given rise to or may give
rise to material fines, penalties, taxes, or related charges under Section
502(c) or (k) or Section 4071 of ERISA or Chapter 43 of the Code.
(g) Employee Benefit Obligations. Schedule 4.16G lists all of Seller's
unpaid obligations to its employees as of the Closing Date for compensation,
wages, bonuses, severance pay, vacation time, pay in lieu of vacation and, to
the best knowledge of Seller as of the Closing Date, uninsured against sickness
and accident benefits and leaves of absence.
4.17 CERTAIN INTERESTS.
Except as set forth on Schedule 4.17, no Affiliate of Seller or any
Subsidiary nor any officer or director of any thereof, nor Associate of any such
individual, has any material interest in any of the Purchased Assets, the
Assumed Liabilities or any property used in or pertaining to the Business; no
such Person is indebted or otherwise obligated to Seller or any Subsidiary; and
neither Seller nor any Subsidiary is indebted or otherwise obligated to any such
Person, except for amounts due under normal arrangements applicable to all
employees generally as to salary or reimbursement of ordinary business expenses
not unusual in amount or significance. Except as set forth on Schedule 4.17, the
consummation of the transactions contemplated by this Agreement and the Plan
will not (either alone, or upon the occurrence of any act or event, or with the
lapse of time, or both) result in any benefit or payment (severance or other)
arising or becoming due from Seller or any Subsidiary or the successor or assign
of any thereof to any Person.
4.18 INTERCOMPANY TRANSACTIONS.
(i) As of the Closing Date, no Subsidiary of Seller shall owe any
liabilities or obligations to Seller and, except as set forth on Part One of
Schedule 4.18, no Subsidiary shall owe any liabilities or obligations to any
Affiliate of Seller and none of such Affiliates shall have any obligation to
Seller or any Subsidiary. (ii) As of the Closing Date, except as set forth on
Part One of Schedule 4.18, neither Seller nor any of its Subsidiaries shall have
any continuing commitment, obligation or liability of any kind with respect to
any and all loans, or other extensions of credit made or guaranteed by Seller or
any Subsidiary to or for the benefit of any director, officer, or employee of
Seller or any Subsidiary or any of their Associates. Except as set forth on Part
Two of Schedule 4.18, the consummation of the transactions contemplated by this
Agreement and the Plan will not (either alone, or upon the occurrence of any act
or event, or with the lapse of time, or both) result in any payment arising or
becoming due from any Subsidiary or the successor or assign of any thereof to
Seller or any Affiliate of Seller or to any director, officer or employee of
Seller or any Subsidiary.
4.19 NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker, or other
Person or firm engaged by or acting on behalf of Seller or any Subsidiary or any
of their respective Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement or such transactions.
4.20 ACCURACY OF INFORMATION.
None of the information supplied or to be supplied by or on behalf of
Seller or any Subsidiary (a) to any Person for inclusion in any document or
application filed with or to be issued by any Governmental Entity having
jurisdiction over or in connection with the transactions contemplated by this
Agreement (including, without limitation, the No Enforcement Request and any
other information made available to the SEC or any member of its staff in
connection with determining that Seller will not be required to register under
the Investment Act after consummating the transactions contemplated hereby) or
(b) to Buyer, its agents or representatives in connection with Seller, any
Subsidiary, the Business, the Purchased Assets, the Assumed Liabilities, the
Excluded Liabilities, this Agreement, the negotiations leading up to this
Agreement or the transactions contemplated hereby did contain, or at the
respective times such information is or was delivered, will contain any untrue
statement of a material fact, or omitted or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If any of such information at any time subsequent to delivery and
prior to Closing becomes untrue or misleading, in any material respect, Seller
will promptly notify Buyer in writing of such fact and the reason for such
change. All documents required to be filed by Seller or any Subsidiary with any
Governmental Entity in connection with this Agreement or the transactions
contemplated by this Agreement will comply in all material respects with the
provisions of applicable Law.
4.21 INVENTORIES.
Except as set forth on Schedule 4.21, all Inventory of Seller and each
Subsidiary are of good merchantable quality, reasonably in balance, and readily
salable (in the case of Inventory held for sale) or currently usable (in the
case of other Inventory) in the ordinary course of business. The value of
obsolete, damaged or excess Inventory and of Inventory below standard quality
has been written down on the most recent balance sheet delivered to Buyer
pursuant to Section 4.3 or, with respect to Inventories purchased since such
balance sheet date, on the books and records of Seller, to ascertainable market
value, or adequate reserves described on such balance sheet have been provided
therefor, and the value at which inventories are carried reflects the customary
Inventory valuation policy of Seller and its Subsidiaries (which fairly reflects
the value of obsolete, spoiled or excess Inventory) for stating Inventory, in
accordance with GAAP consistently applied. Seller has delivered to Buyer a true,
correct and complete copy of a perpetual Inventory report for the week ending
immediately prior to the date hereof and shall have delivered on or before the
Closing Date to Buyer a true, correct and complete copy of a perpetual Inventory
report for the week ending immediately prior to the Closing Date, together, in
each case, with a certificate of the chief financial officer of Seller
certifying the accuracy of such reports to the best of his knowledge. Each such
Inventory report shall be prepared based upon the books and records of Seller
and its Subsidiaries (and not a physical inventory) and shall set forth an
Inventory list of Seller and each Subsidiary and specify the amount, kinds,
pricing and location of the Inventory covered thereby.
4.22 ACCOUNTS RECEIVABLES.
All Accounts Receivable of Seller and its Subsidiaries (other than
intercompany Accounts Receivable), whether reflected on the most recent balance
sheet delivered to Buyer or on the accounting records of Seller and the
Subsidiaries as of the Closing Date, represent sales actually made in the
ordinary course of business, and are current and, without guarantying the
creditworthiness of the account debtors, are fully collectible net of any
reserves shown on such balance sheet or on such accounting records (which
reserves are adequate and were calculated on a basis consistent with GAAP and
past practices and taking into account current circumstances relating to the
Business) in accordance with their terms. Seller has delivered to Buyer a
complete and accurate aging list of all Accounts Receivable of Seller and each
Subsidiary as of the week ending immediately prior to the date hereof and Seller
shall deliver to Buyer on or before the Closing Date a complete and accurate
aging list of all Accounts Receivable of Seller and each Subsidiary as of the
week ending immediately prior to the Closing Date, together, in each case, with
a certificate of the chief financial officer of Seller certifying the accuracy
of such aging lists.
4.23 CUSTOMERS AND SUPPLIERS.
Schedule 4.23 lists the names of and describes all Contracts with and
the appropriate percentage of Business attributable to, the twenty (20) largest
customers of and most significant suppliers (other than any customer or supplier
that is an Affiliate of Buyer or that is a Subsidiary of Seller) of the Business
of Seller and Marker USA, Marker Deutschland GmbH and Marker Japan Co., Ltd. at
the date of this Agreement and any sole-source suppliers of significant goods or
services (other than electricity, gas, telephone or water) to Seller or any
Subsidiary with respect to which alternative sources of supply are not readily
available on comparable terms and conditions. Neither Seller nor any Subsidiary
has any information (whether in writing or otherwise) indicating that any of the
customers or suppliers listed on Schedule 4.23 intend to cease doing business
with Seller or any of its Subsidiaries or materially alter the amount of
business they are presently doing with Seller and/or its Subsidiaries. Except as
set forth in Schedule 4.23, since March 31, 1999, there has not been (i) any
material change in the business relationship of Seller and/or its Subsidiaries
with any customer or supplier named in Schedule 4.23 or (ii) any change in any
material term (including credit terms) of the sales and other related agreements
or supply and other related agreements with any such customer or supplier.
4.24 ENVIRONMENTAL COMPLIANCE.
Except as set forth in Schedule 4.24, (i) neither Seller nor any
Subsidiary has generated, used, transported, treated, stored, released or
disposed of, or has suffered or permitted anyone else to generate, use,
transport, treat, store, release or dispose of any Hazardous Substance in
violation of any Laws; (ii) there has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the Business of the Seller or any
Subsidiary or the use of any property or facility of the Seller of any
Subsidiary or any nearby or adjacent properties or facilities, which has created
or might reasonably be expected to create any liability under any Laws or which
would require reporting to or notification of any Governmental Entity or which
has given rise to or might reasonably be expected to give rise to any obligation
to remediate such Hazardous Substance; (iii) no asbestos or polychlorinated
biphenyl or underground storage tank is contained in or located at any facility
or Real Property of the Seller or any Subsidiary in violation of any Laws; and
(iv) any Hazardous Substance handled or dealt with in any way in connection with
the businesses of the Seller or any Subsidiary, whether before or during
Seller's ownership, has been and is being handled or dealt with in all respects
in compliance with applicable Laws.
4.25 POWERS OF ATTORNEY.
Except as set forth on Part One of Schedule 4.5, Seller and the
Subsidiaries have not given any power of attorney (irrevocable or otherwise) to
any Person for any purpose relating to the Business, Purchased Assets or Assumed
Liabilities, other than powers of attorney given to regulatory authorities in
connection with routine qualifications to do business.
4.26 RESTRUCTURING DOCUMENTS.
Except as permitted under Section 6.13, (x) Seller has delivered or
caused to be delivered to Buyer, as of the date hereof, copies of each Lockup
Document and, as of the Closing Date, each other Restructuring Document, to
which Seller, any Subsidiary or any officer, any director or any other member of
senior management of Seller is a party, duly executed by each Person party
thereto and (y) as of the date hereof each such Lockup Document is, and as of
the Closing Date each such Lockup Document and each other Restructuring Document
will be, valid and subsisting and in full force and effect. Each such Lockup
Document and Restructuring Document shall become effective on the Closing Date
and the transactions contemplated thereby shall be consummated concurrently with
or prior to the Closing in accordance with the terms thereof. No breach or
default, or event which would (with the passage of time, notice or both)
constitute a breach or default under such Lockup Document or Restructuring
Document by Seller or any Subsidiary, as the case may be, or, to the best
knowledge of Seller, any other party or obligor with respect thereto, has
occurred or as a result of this Agreement or performance thereof will occur.
4.27 EQUITY LOCKUP AGREEMENT.
Each senior officer, director (other than Vinton Sommerville and
Eiichi Isomura) and other member of senior management of Seller is a party to
the Equity Lockup Agreement. The Persons party to the Equity Lockup Agreement
have the power to vote 51% or more of the Equity Securities of Seller (as of the
date hereof and as of the record date for voting on the Plan). Seller shall
within 30 days of the date hereof deliver to Buyer a duly executed counterpart
signature page of Vinton Sommerville and Eiichi Isomura to the Equity Lockup
Agreement.
4.28 YEAR 2000 PROBLEMS.
Seller's Subsidiaries (i) are engaged in a process of assessment of
the existence of Year 2000 Problems that is reasonably appropriate to the scope
and complexity of their respective Systems; (ii) have made a reasonable effort
to substantially eliminate Year 2000 Problems; and (iii) have provided Buyer
with copies of all written material relating to or otherwise describing the
efforts made by the Subsidiaries to substantially eliminate Year 2000 Problems
and such other related information as Buyer has requested.
4.29 GOVERNMENT FILINGS.
Seller has delivered to Buyer true, correct and complete copies of all
correspondence, filings or communications, including the No Enforcement Request,
and file memoranda evidencing telephonic conferences with representatives of any
Governmental Entity or member of its staff, with respect to the transactions
contemplated by this Agreement.
4.30 SEC FILINGS.
Seller has filed all forms, reports and documents required to be filed
with the SEC since August 16, 1994, and has heretofore delivered to Buyer, in
the form filed with the SEC, together with any amendments thereto, its (i)
Annual Reports on Form 10-K for the fiscal year ended March 31, 1995, 1996,
1997, 1998 and 1999 and (ii) other reports or registration statements filed by
Seller with the SEC since August 16, 1994 (collectively, the "SEC Reports"). As
of their respective dates, the SEC Reports (i) complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations promulgated under each of such respective
acts, and (ii) did not at the time they were filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and agrees as follows:
5.1 ORGANIZATION AND RELATED MATTERS.
Buyer is a GmbH duly organized and validly existing under the laws of
Switzerland. Buyer has the necessary partnership power and authority to execute,
deliver and perform this Agreement and any related agreements to which it is
party. Buyer has all necessary partnership power and authority to carry on its
business as now being conducted and as proposed to be conducted. Where such
concept is applicable, as of the Closing Date Buyer will be duly qualified or
licensed as a foreign corporation in good standing in all jurisdictions in which
the character or location of the assets owned or leased by it or the nature of
its business as conducted and as proposed to be conducted requires licensing or
qualification unless the failure to be so licensed or qualified will not have a
material adverse effect on Buyer. Buyer is a newly formed entity, formed for the
purpose of consummating the transactions contemplated by this Agreement, and has
yet to commence business operations other than as contemplated by the Canadian
Stockholders Agreement. Buyer has no liabilities and will have no material
liabilities as of the Closing Date, other than those incurred in connection with
this Agreement, the Plan, the Restructuring Documents, the Operating Agreement,
the Canadian Stockholders Agreement and the related agreements to which it is a
party, and, as of the Closing Date, will have no material assets other than
capital contributions and/or other investments made by CT in an amount equal to
$13,974,499, the Equity Securities issued to it pursuant to the Canadian
Stockholders Agreement and the Purchased Assets to be purchased pursuant to the
terms hereof and the Plan. True, correct and complete copies of the
organizational documents of Buyer as in effect on the Closing Date shall be
delivered to Seller at the Closing.
5.2 AUTHORIZATION.
The execution, delivery and performance of this Agreement and any
related agreements to which Buyer is a party has been duly and validly
authorized by the board of directors of Buyer and by all other necessary
partnership action on the part of Buyer. This Agreement and any related
agreements to which Buyer is a party constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
5.3 NO CONFLICTS.
The execution, delivery and performance of this Agreement by Buyer
will not violate the provisions of, or constitute a breach or default whether
upon lapse of time and/or the occurrence of any act or event or otherwise under
(a) the Operating Agreement (b) any Law to which Buyer is subject or (c) any
Contract to which Buyer is a party, provided (as to clauses (b) and (c)
respectively) that the appropriate regulatory approvals are received as
contemplated by Section 8.1 and specified consents, if any, are secured.
<PAGE>
5.4 NO BROKERS OR FINDERS.
No agent, broker, finder or investment or commercial banker, or other
Person or firms engaged by or acting on behalf of Buyer or its Affiliates in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will be entitled to any
broker's or finder's or similar fees or other commissions as a result of this
Agreement or such transactions.
5.5 LEGAL PROCEEDINGS.
There is no Order or Action pending or to the best knowledge of Buyer,
threatened against or affecting Buyer that individually or when aggregated with
one or more other Actions has or might reasonably be expected to have a material
adverse effect on Buyer's ability to perform this Agreement or any other aspect
of the transactions contemplated by this Agreement.
5.6 CAPITALIZATION OF BUYER.
As of the date hereof and until the Closing Date, CT shall own all of
the outstanding Equity Securities of Buyer, beneficially and of record. Other
than as contemplated by this Agreement, the Operating Agreement and the
Employment Agreement of Peter Weaver, as of the Closing Date (i) there shall be
no outstanding Contracts or other rights to subscribe for or purchase, or
Contracts or other obligations to issue or grant any rights to acquire, any
Equity Securities of Buyer, or to restructure or recapitalize Buyer, (ii) there
shall be no outstanding Contracts of Buyer to repurchase, redeem or otherwise
acquire any Equity Securities of Buyer and (iii) there shall be no preemptive
rights in respect of any Equity Securities of Buyer. Subject to the terms of the
Operating Agreement and this Agreement, at the Closing, Seller will acquire
title to and complete ownership of the Equity Consideration, free of any
Encumbrance. At the Closing, the Equity Consideration shall be duly authorized,
validly issued and outstanding and shall be fully paid and nonassessable and
shall have been issued in conformity with applicable Laws and shall represent
15% of Buyer's issued and outstanding Equity Securities on a fully diluted
basis.
ARTICLE VI
COVENANTS WITH RESPECT TO CONDUCT OF SELLER
AND ITS SUBSIDIARIES PRIOR TO CLOSING
During the period from the date hereof through the Closing Date,
Seller covenants and agrees as follows:
<PAGE>
6.1 ACCESS.
Seller will, and will cause the Subsidiaries to, authorize and permit
Buyer and its representatives (which term shall be deemed to include its
independent accountants and counsel and representatives of prospective financing
institutions of Buyer) to have access during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with the
conduct of their respective businesses, to all of their respective properties,
books, records, operating instructions and procedures, Tax Returns and all other
information with respect to the Business as Buyer may from time to time request,
and to make copies of such books, records and other documents (including,
without limitation, personnel files, grievance and arbitration files and health
and safety files) and to discuss their respective businesses with such third
Persons, including, without limitation, their respective directors, officers,
employees (including, without limitation labor relations personnel),
accountants, counsel, suppliers, customers, and creditors, as Buyer considers
necessary or appropriate for the purposes of familiarizing itself with the
Business, the Purchased Assets or the Assumed Liabilities, obtaining any
necessary Approvals of or Permits for the transactions contemplated by this
Agreement and the Plan and conducting an evaluation of the organization and
Business of Seller and the Subsidiaries. Without limiting the generality of the
foregoing, Buyer shall be entitled to conduct or cause to be conducted on the
Real Property such surveys and such soils and geological tests and environmental
inspections, audits and tests (including the taking of soils and ground water
samples) and such structural and other physical inspections as Buyer shall deem
necessary or useful in connection with its acquisition of such Real Property.
After making such surveys, tests and inspections, Buyer agrees to promptly
restore the Real Property to its condition prior to such surveys, tests and
inspections.
6.2 MATERIAL ADVERSE CHANGES; REPORTS; FINANCIAL STATEMENTS.
(a) Seller will promptly notify Buyer in writing of any event, fact or
condition of which Seller obtains knowledge which has had or might reasonably be
expected to have or result in a material adverse effect on the Business or any
of the Purchased Assets or Assumed Liabilities or which if known as of the date
hereof would have been required to be disclosed to Buyer in the Schedules
attached hereto. Should any such event, fact or condition of which Seller or any
Subsidiary has knowledge require any change in any Schedule, Seller shall
promptly deliver to Buyer a supplement to such Schedule which shall specify the
change thereto.
(b) Seller will furnish to Buyer (i) as soon as available, and in any
event within ten (10) days after it is prepared, any report by Seller or any of
the Subsidiaries for submission to its board of directors and other material
operating reports and financial reports (including any projections and budgets)
prepared for senior management of any of their respective businesses, (ii) as
soon as available, copies of all portions of all material reports, renewals,
filings, certificates, statements and other documents filed with any
Governmental Entity, (iii) as soon as available, (w) monthly and quarterly
unaudited consolidated and consolidating balance sheets, statements of
operations and cash flow and changes in stockholder's equity of Seller, (x)
monthly and quarterly unaudited consolidated and consolidating balance sheets,
statements of operations and cash flow and changes in stockholder's equity for
each of the Subsidiaries and (y) all pleadings, motions, applications, financial
information and other documents filed by Seller with the Bankruptcy Court or
served by Seller on the United States Trustee in the Chapter 11 Case or any
official committee (if any) appointed in the Chapter 11 Case and (iv) such other
reports as Buyer may reasonably request relating to Seller and the Subsidiaries.
Each of the financial statements delivered pursuant to this Section 6.2(b) shall
be prepared in accordance with GAAP, consistently applied, except that such
financial statements will omit footnote disclosures required by GAAP. Each of
the financial statements delivered pursuant to this Section 6.2(b) shall be
accompanied by a certificate of the respective chief financial officer of Seller
and, as to the Subsidiaries, of Subsidiaries to the effect that such financial
statements present fairly the financial condition and changes in equity and
results of operations and cash flow of Seller and its Subsidiaries for the
periods covered and reflect all adjustments (which consist only of normal
recurring adjustments not material in amount) necessary for a fair presentation.
6.3 CONDUCT OF BUSINESS.
Except as otherwise expressly contemplated by this Agreement or the
Plan, neither Seller nor any Subsidiary will without the prior written consent
of Buyer (which consent shall not be unreasonably withheld):
(a) conduct the Business in any manner except in the ordinary course;
or
(b) amend, terminate, renew/fail to renew or renegotiate any Material
Contract (including, without limitation, Assumed Contracts) or default (or take
or omit to take any action that, with or without the giving of notice or passage
of time or both, would constitute a default) in any of its obligations under any
Material Contract (including, without limitation, Assumed Contracts) or any
Lease or enter into any new Material Contract or any Lease; or take any action
that would jeopardize the continuance of its material supplier or customer
relationships; or
(c) terminate, amend or fail to renew any existing insurance coverage;
or
(d) terminate, amend or fail to renew or preserve any Permits; or
(e) incur or agree to incur any obligation or liability (absolute or
contingent) other than ordinary course trade payables that individually calls
for payment by Seller or any Subsidiary of more than $50,000 in any specific
case or $100,000 in the aggregate (it being understood and agreed that all
claims of any Person with respect to such liabilities of Seller shall be junior
in priority to the claims of Buyer and its Affiliates under the Breakup Fee
Order); or
(f) make any loan, guaranty or other extension of credit, or enter
into any commitment to make any loan, guaranty or other extension of credit, to
or for the benefit of any Affiliate, director, officer, employee, stockholder or
any of their respective Associates or Affiliates; or
(g) grant any general or uniform increase in the rates of pay or
benefits to officers, directors or employees (or a class thereof) or any
material increase in salary or benefits of any officer, director, employee or
agent or pay any bonus to any person, or enter into any new employment,
collective bargaining or severance agreement; or
(h) sell, transfer, mortgage or otherwise Encumber or dispose of any
assets or any liabilities, including the Purchased Assets and Assumed
Liabilities, except (i) for dispositions of property not material in amount or
(ii) in the ordinary course of business; or
(i) except as set forth in the last paragraph of this Section 6.3,
issue, sell, convert, redeem or acquire for value, or agree to do so, any debt
obligations or Equity Securities of Seller or any of the Subsidiaries; or
(j) declare, issue, make or pay any dividend or other distribution of
assets, whether directly or indirectly, whether consisting of money, Equity
Securities other personal property, real property or other thing of value, to
its shareholders, or split, combine, dividend, distribute or reclassify any
shares of its Equity Securities or the Equity Securities of its Subsidiaries; or
(k) change or amend its charter documents or bylaws; or
(l) make any capital expenditures or commitments with respect thereto
aggregating more than $50,000 (it being understood and agreed that all claims of
any Person with respect to such liabilities of Seller shall be junior in
priority to the claims of Buyer and its Affiliates under the Breakup Fee Order);
or
(m) make special or extraordinary payments to any Person other than
retention payments to employees pursuant to retention programs in effect on the
date hereof (which programs have been previously approved by Buyer); or
(n) make any material investment, by purchase, contributions to
capital, property transfers, or otherwise, in any other Person; or
(o) dispose of or permit to lapse any rights to the use of any
Intangible Property or dispose of or disclose any Intangible Property not a
matter of public knowledge; or
(p) directly or indirectly terminate or reduce or commit to terminate
or reduce any bank line of credit or the availability of any funds under any
other agreement or understanding, other than through the use thereof in the
ordinary course and except as contemplated by the Restructuring Documents; or
(q) compromise or otherwise settle any claims, or adjust any assertion
or claim of a deficiency in Taxes (or interest thereon or penalties in
connection therewith), or file any appeal from an asserted deficiency, except in
a form previously approved by Buyer in writing, or file or amend any Tax Return
of Seller or any Subsidiary, in any matters that involves or may involve any of
the Assumed Liabilities or Purchased Assets in any case before furnishing a copy
to Buyer and affording Buyer an opportunity to consult with respect thereto; or
(r) make any Tax election (except when required by Law to make an
election, in which case Seller shall give prior written notice thereof to Buyer)
or make any change in any method or period of accounting or in any accounting
policy, practice or significant procedure; or
(s) introduce any new method of management or operation in respect of
the Business; or
(t) fail to maintain or repair any Purchased Asset in accordance with
good and prudent maintenance and repair procedures; or
(u) agree to or make any commitment to take any actions prohibited by
this Section 6.3; or
(v) voluntarily assume any indebtedness (including, without
limitation, by way of converting or otherwise exchanging any Equity Securities
of Seller or any Equity Securities of any Subsidiary to debt) or enter into any
Subsequent Contract other than in the ordinary course or assume or reject,
pursuant to Section 365 of the Bankruptcy Code, any Contract except as
contemplated by the Plan and the Assumption Order.
Notwithstanding anything in this Section 6.3 to the contrary, it is
hereby understood and agreed that (a) the sale of Seller's headquarters
building, (b) Seller or any Subsidiary entering into distribution, agency or
similar agreements on normal commercial terms with Tecnica S.p.A. and Volkl
International AG, (c) the consummation of the transactions contemplated by the
Lockup Documents and the other Restructuring Documents (including, without
limitation, any financing or refinancing contemplated thereby of any
indebtedness of Seller or any Subsidiary, so long as such financing or
refinancing is pursuant to documentation in form, substance and scope reasonably
satisfactory to Buyer) and (d) the commencement of the Chapter 11 Case, the
interim and final payment of professional fees approved by an Order of the
Bankruptcy Court (all of which fees shall be junior in priority to the claims of
Buyer and its Affiliates under the Breakup Fee Order) and the payment of fees
pursuant to 28 U.S.C. ss.1930(a)(6), shall not be deemed to be a breach of, or a
default under, this Section 6.3.
6.4 NOTIFICATION OF CERTAIN MATTERS.
Seller shall give prompt notice to Buyer, and Buyer shall give prompt
notice to Seller, of (i) Seller's or Buyer's knowledge (as applicable) of the
occurrence, or failure to occur, of any event that would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date and (ii) any failure of Buyer or Seller, as the case may be,
to comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
No such notification shall affect the representations or warranties of
the parties or the conditions to their respective obligations hereunder.
6.5 PERMITS, ORDERS AND APPROVALS.
(a) Seller and Buyer each agree to cooperate and use their best
efforts to obtain all (and will immediately prepare all registrations, filings
and applications, requests and notices preliminary to obtaining all) Approvals,
Orders and Permits (including, without limitation, the Breakup Fee Order, the
Assumption Order, the Disclosure Statement Order and the Confirmation Order)
that may be necessary or which may be reasonably requested by Buyer to
consummate the transactions contemplated by this Agreement.
(b) To the extent that the Approval of a third party with respect to
any Assumed Contract is required in connection with the transactions
contemplated by this Agreement, Seller shall use its best efforts to obtain such
Approval prior to the Closing Date and in the event that any such Approval is
not obtained (but without limitation on Buyer's rights under Section 8.2),
Seller shall cooperate with Buyer to ensure that Buyer obtains the benefits of
each such Assumed Contract.
(c) From the date hereof to the Closing Date, Seller agrees to include
in each Contract entered into subsequent to the date of this Agreement in the
ordinary course of business and in accordance with Section 6.3 ("Subsequent
Contract") a provision permitting the assignment of any such Subsequent Contract
to Buyer and providing that upon such assignment, Buyer shall succeed to all of
Seller's rights, title and interests thereunder subject only to Buyer's express
assumption of all Seller's duties, powers and obligations under such Subsequent
Contract.
<PAGE>
6.6 PRESERVATION OF BUSINESS PRIOR TO CLOSING DATE.
Seller will use its best efforts to preserve the Business and to
preserve the goodwill of customers, suppliers and others having business
relations with Seller and its Subsidiaries and (b) Seller and Buyer will consult
with each other concerning, and Seller will cooperate to keep available to
Buyer, the services of the officers and employees of Seller and its Subsidiaries
that Buyer may wish to retain. Nothing in this Section shall obligate Buyer, or
any Subsidiary after the Closing to retain or offer employment to any officer or
employee of Seller or any Subsidiary except as expressly contemplated hereby or
by the Plan.
6.7 GOVERNMENT FILINGS.
Without limiting the generality of Section 6.5, Seller will make and
will cause Subsidiaries to make any and all (if any) filings required or, in the
opinion of Buyer, desirable, under the Hart-Scott-Rodino Act, the Investment Act
and Laws of similar application in other jurisdictions where the Subsidiaries
have assets or carry out operations and Seller and Buyer shall furnish each
other such necessary information and reasonable assistance as the other may
reasonably request in connection with the preparation of necessary filings or
submissions under the provisions of such Laws. Without limiting the generality
of the preceding sentence, Seller will supply Buyer with copies of all
correspondence (including, without limitation, the No Enforcement Request),
filings or communications, including file memoranda evidencing telephonic
conferences, with representatives of any Governmental Entity or member of its
staff, with respect to the transactions contemplated by this Agreement.
6.8 CHAPTER 11 CASE.
Notwithstanding anything herein to the contrary, Seller shall and
shall cause its counsel:
(a) to prepare and file with the Bankruptcy Court within fourteen (14)
days after the effective date hereof (pursuant to Section 11.21) a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code, together with all
related schedules, statements and other documents, affidavits and instruments
required to be filed with the Bankruptcy Court and/or the United States
Trustee's Office in connection therewith;
(b) to prepare and file with the Bankruptcy Court on the Petition Date
and duly serve on all parties in interest entitled to service pursuant to the
Bankruptcy Code or an applicable Order of the Bankruptcy Court:
(i) all "first day" pleadings and Orders that Buyer may deem
necessary or appropriate;
(ii) a motion, together with any affidavits, memoranda or
other supporting documents as Buyer may deem necessary or
appropriate, seeking entry by the Bankruptcy Court of the Breakup
Fee Order as promptly as possible and no later than fifteen (15)
business days after the Petition Date;
(iii) a motion, together with any affidavits, memoranda or
other supporting documents as Buyer may deem necessary or
appropriate, seeking entry by the Bankruptcy Court of the
Assumption Order as promptly as possible and no later than thirty
(30) days after the Petition Date; and
(iv) the Disclosure Statement, the Plan, and related
solicitation materials, together with such motions, affidavits,
memoranda or other supporting documents as Buyer may deem
necessary or appropriate for the Bankruptcy Court's approval
thereof; and
(c) to appear in, be heard on, and defend against any Action filed in
the Bankruptcy Court and hearing thereon that:
(i) opposes the entry of, or seeks to amend or modify, the
Breakup Fee Order, the Assumption Order, the Disclosure Statement
Order, the Confirmation Order or any other Order deemed material
by Buyer;
(ii) seeks to terminate, annul, modify or condition the
automatic stay imposed on any material asset (including, without
limitation, any Purchased Asset) of Seller pursuant to Section
362 of the Bankruptcy Code;
(iii) seeks to recover from any material asset (including,
without limitation, any Purchased Asset) of Seller any costs or
expenses under Section 506(c) of the Bankruptcy Code;
(iv) seeks to convert Seller's Chapter 11 Case to a case
under Chapter 7 of the Bankruptcy Code or otherwise seeks to
dismiss the Chapter 11 Case; or
(v) seeks to appoint an interim or permanent trustee or
examiner in the Chapter 11 Case.
All petitions, pleadings, motions, applications, responses,
statements, documents, Orders, instruments and other materials to be prepared,
filed and/or served by Seller on any Person in the Chapter 11 Case shall be in
form, substance and scope reasonably satisfactory to Buyer.
6.9 INCONSISTENT AGREEMENTS.
Seller and its Subsidiaries will not initiate, solicit or encourage,
directly or indirectly, and will cause all of their respective shareholders
party to the Equity Lockup Agreement, directors, officers, senior management,
and agents not to, directly or indirectly, initiate, solicit or encourage any
inquiry, offer or proposal with respect to, or furnish any information relating
to, or participate in any negotiations or discussions concerning, any
acquisition, merger, tender or exchange offer or other form of business
combination, or any acquisition or disposition of all or any substantial part of
the assets or Equity Securities of Seller or any Subsidiary. Seller will
promptly notify Buyer of the details of any discussions with or proposal or
offer from any other Person relating to an acquisition, merger, tender or
exchange offer or other form of business combination involving Seller, any
Subsidiary or any of their respective Equity Securities or substantial assets or
any other proposal, the acceptance of which would be inconsistent with the
consummation of this Agreement in accordance with its terms. Compliance with
this Section 6.9 shall not relieve Seller of any other express or implied
obligations under this Agreement or under applicable Law. Notwithstanding
anything contained in this Section 6.9 to the contrary, Seller and its
Subsidiaries shall not be prohibited from (i) providing information to any
Person in response to unsolicited inquiries regarding a potential sale of all or
any substantial part of the assets or Equity Securities of Seller or any
Subsidiary to the extent required by Law and (ii) selling or agreeing to sell to
any Person, negotiating or having any discussions with any Person concerning a
possible sale of, or soliciting or accepting any offer to purchase from any
Person, all or any portion of Seller's headquarters building.
6.10 EMPLOYEE BENEFIT PLANS.
Seller shall take all actions necessary to cause Marker USA to adopt,
and become the sponsoring employer of, the Employment Plans maintained by Seller
and identified on Schedule 4.16A which cover employees of such U.S. Subsidiary
and of any other U.S. Subsidiary, and the U.S. Subsidiaries shall retain all of
their respective liabilities under such Employment Plans.
6.11 REPAIR OF DAMAGE; CONDEMNATION.
(a) In the event that prior to the Closing there is any "Non-Material"
(as defined in subsection (c) hereof) damage to the Purchased Assets, or any
part thereof, at Buyer's option either (i) Seller shall at its cost and in a
good and workmanlike manner repair or replace such damage prior to the Closing,
or (ii) Buyer shall accept such Purchased Assets in their then-current
condition, without an abatement or reduction in the Purchase Price.
(b) In the event that prior to the Closing, any Non-Material portion
of the Purchased Assets is subject to a taking, Buyer shall accept the Purchased
Assets in their then-current condition and proceed with the Closing, in which
case Buyer shall be entitled to an assignment of all of Seller's rights to any
award in connection with such taking. In the event of any such Non- Material
taking, Seller shall not compromise, settle or adjust any claims to such award
without Buyer's prior written consent.
(c) For the purpose of this Section 6.11, damage to the Purchased
Assets or a taking of a portion thereof shall be deemed to be "Non-Material" if
the reasonably estimated cost of restoration or repair of such damage or the
amount of the condemnation award with respect of such taking shall not exceed
$50,000.
(d) Seller agrees to give Buyer prompt notice of any taking, damage or
destruction of the Purchased Assets
6.12 CORPORATE NAME.
On or prior to the Closing Date, Seller shall take all action
necessary and file all documents or instruments necessary with any Governmental
Entity or other Person to change its current name to a name that is distinctly
different in spelling and sound from its current name. Such new name shall be
subject to Buyer's prior approval (which shall not be unreasonably withheld) and
shall not conflict with or interfere with Buyer's ability to use Seller's
current name after the Closing or otherwise be misleading to any Person. Seller
shall seek Bankruptcy Court authorization to modify the caption of its Chapter
11 petition to reflect its changed name and to use the modified caption in all
subsequent pleadings (if any) filed with the Bankruptcy Court. From and after
the Closing, Seller agrees that it will not exploit the "Marker" name for
monetary gain or otherwise.
6.13 POST SIGNING LOCKUP DOCUMENTS.
To the extent Seller has not delivered or caused to be delivered
either or both FX Lockup Agreements, the First Security Lockup Agreement or the
German Bank Lockup Agreement on or prior to the date hereof, Seller shall
deliver or cause to be delivered to Buyer a fully executed copy of each such
Lockup Document in form and substance reasonably satisfactory to Buyer on or
before the Petition Date.
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS
7.1 TAX MATTERS.
(a) Seller shall have the right and obligation to timely prepare and
file, and cause to be timely prepared and filed, when due, any Tax Return of
Seller or any Subsidiary that is required to include the operations, ownership,
assets or activities of the Seller or any Subsidiary for all periods ending on
or before the Closing Date, and due after the Closing Date. Seller shall provide
Buyer with copies of all such Tax Returns within a reasonable period prior to
their filing, and Seller shall not file any such Tax Returns without the prior
written consent of Buyer, which consent shall not be unreasonably withheld (it
being understood and agreed that the intent of the parties is to file such Tax
Returns in a timely manner after giving effect to any extensions relating
thereto).
(b) After the Closing, Seller shall cooperate fully with Buyer and the
Subsidiaries in the preparation of all Tax Returns of Buyer and the Subsidiaries
and shall provide, or cause to be provided at Buyer's sole cost and expense, to
Buyer and the Subsidiaries any records and other information requested by such
parties in connection therewith as well as access to, and the cooperation of,
the Auditors of Seller. After the Closing, Seller shall cooperate fully with
Buyer and the Subsidiaries in connection with any Tax investigation, audit or
other proceeding relating to the Business. Any information obtained pursuant to
this Section 7.1(a) or (b) or pursuant to any other Section hereof providing for
the sharing of information or the review of any Tax Return or other Schedule
relating to Taxes shall be subject to Section 11.9.
7.2 EMPLOYMENT MATTERS.
(a) Non-Represented Employees. As of the Closing Date, Buyer may, at
its option, offer employment to any employee of Seller that is not represented
by a collective bargaining organization or is not party to an employment
contract specifically assumed by Buyer hereunder on such terms and conditions as
may be mutually agreed upon by Buyer and such employees. Seller shall not take
any action, directly or indirectly, to prevent or discourage any such employee
from being employed by Buyer as of the Closing Date and shall not solicit,
invite, induce or entice any such employee to remain in the employ of Seller or
otherwise attempt to retain the services of any such employee, except with the
prior written consent of Buyer. Seller agrees to consult with Buyer on all
material oral or written communications or meetings primarily regarding future
employment with such employees and/or the represented employees described below.
(b) Union Contracts. Neither Seller nor any U.S. Subsidiary is a party
to any collective bargaining agreement or other labor union contracts.
(c) No Third Party Beneficiaries. Notwithstanding any possible
inferences to the contrary, neither Seller nor Buyer intends for this Section
7.2 to create any rights or obligations except as between Seller and Buyer, and
no past, present or future employees of Seller or Buyer shall be treated as
third-party beneficiaries of this Section 7.2.
7.3 CERTAIN NOTICES.
Until such time as Seller no longer owns or otherwise has an interest
in any of the Equity Consideration, Seller and its Affiliates will promptly
deliver to Buyer after receipt thereof (which in no event will be later than
three business days after receipt), a copy of any and all written communications
(including, without limitation, all demands, statements or notices) received
from any Person, including, without limitation, any Governmental Entity,
relating in any way to Seller's failure to comply with any Law and without
limiting the generality of the foregoing, with respect to any oral communication
from any Person (including, without limitation, any Governmental Entity)
alleging that Seller failed to comply with the Investment Act, Seller and its
Affiliates will promptly deliver to Buyer a written summary thereof (which in no
event will be later than three business days after receipt of such oral
communication).
7.4 INVESTMENT ACT COVENANTS.
(a) Seller shall not take any act whether before or after the Closing
Date to become, or fail to take any act whether before or after the Closing Date
and thereby become, (i) an "investment company" (as such term is defined in the
Investment Act) not subject to the exception set forth in Section 7(a) of the
Investment Act or (ii) a company required to be registered under the Investment
Act.
(b) Without limiting the generality of the foregoing, after the
Closing Date (i) Seller shall operate for the primary purpose of liquidating its
assets (including, without limitation, the Equity Consideration received by
Seller pursuant to Section 2.3), (ii) Seller shall dissolve and liquidate all of
its assets (including, without limitation, the Equity Consideration) no earlier
than the third anniversary of the Closing Date and no later than the fifth
anniversary of the Closing Date and (iii) Seller shall comply in all material
respects with each and every fact and/or assumption set forth in the No
Enforcement Request.
7.5 TAX COOPERATION (BUYER).
(a) Buyer shall have the right and obligation to timely prepare and
file, and cause to be timely prepared and filed, when due, any Tax Return that
is required to include the operations, ownership, assets or activities of any
Subsidiary for all periods beginning before and ending after the Closing Date.
(b) After the Closing, Buyer shall cooperate fully with Seller in the
preparation of all Tax Returns due after the Closing Date and shall provide, or
cause to be provided to Seller copies of any records and other information
reasonably requested by Seller in connection therewith (it being understood that
Buyer shall bear the cost and expense of making copies of such records and other
information delivered to Seller pursuant to this Section 7.5(b)). Any
information obtained pursuant to this Section 7.5(a) or (b) or pursuant to any
other Section hereof providing for the sharing of information or the review of
any Tax Return shall be subject to Section 11.9
7.6 INSURANCE.
Buyer will maintain and/or cause the Subsidiaries to maintain in full
force and effect at all times after the Closing Date, the same products
liability insurance with Winterthur International or any of its divisions or
subsidiaries as was maintained by Seller immediately prior to the Closing Date
(which policies are summarized on Schedule 4.12); provided that Buyer and the
Subsidiaries may in their discretion amend such policies to provide for more
favorable coverage by having higher limits on the insurer's liability or by
having terms, conditions, exclusions, and limitations more favorable to Buyer
and/or the Subsidiaries than that maintained by Seller immediately prior to the
Closing.
Notwithstanding the preceding sentence, Buyer and/or the Subsidiaries
may, in their discretion, maintain products liability insurance with such other
insurance companies or associations as Buyer and/or the Subsidiaries may deem
appropriate; provided that such insurance company or other association has a
claims-paying rating from A.M. Best and Company of not less than the
claims-paying rating (determined as of the Closing Date) of Winterthur
International and; provided, further that in no event shall the products
liability insurance policies to be maintained with such insurance companies or
associations have limits on the insurer's liability lower than, or terms,
conditions, exclusions and limitations less favorable to Buyer and/or the
Subsidiaries, than the products liability insurance policies maintained by
Seller immediately prior to the Closing.
7.7 TAX ELECTION.
So long as Seller is the holder of record of the Equity Consideration,
Buyer shall make any elections required in order for Buyer to be treated as a
partnership for United States federal income tax purposes and shall not make any
elections to cause Buyer to be treated as a corporation for such purposes.
7.8 CERTAIN ADVANCES.
(a) Subject to Section 7.8(b) and so long as Seller shall not be in
default of any of its obligations hereunder or under the Operating Agreement,
Buyer shall advance to Seller from time to time an aggregate amount not to
exceed $300,000 for each twelve month period following the Closing Date (the
"Advances"); provided that, the proceeds of the Advances shall be used by Seller
solely for: (i) maintaining director and officer liability insurance for
Seller's board of directors and officers, (ii) preparing, filing and
distributing (including to Seller's shareholders) such documents and other
information as may be required by United States federal and state securities
laws that are applicable to Seller, (iii) compliance with its statutory and
other legally required or contractual obligations arising under this
Agreement(other than any indemnification obligation arising under Article X
hereof) and/or the Operating Agreement and (iv) ordinary administrative and
operating expenses associated with clauses (i), (ii) and (iii) (including,
salaries and the payment of reasonable costs, fees and expenses of attorneys and
other professionals, provided that the scope of their engagement is reasonably
satisfactory to Buyer and a copy of each invoice submitted by such attorneys and
other professionals is promptly delivered to Buyer). Seller shall not use the
proceeds of the Advances (and Seller shall not make any requests for Advances
nor shall Buyer be committed to make any Advances) for any reason other than as
specifically set forth in this Section 7.8(a).
(b) Notwithstanding anything herein to the contrary, Buyer shall have
no obligation to make any Advances to Seller from and after the earlier of (i)
the second anniversary of the Closing Date, (ii) Seller's breach of its
obligations under this Section 7.8(a) and (iii) Seller's failure to be the
holder of record of the Equity Consideration.
(c) Each request for an Advance shall be made pursuant to a written
request duly executed by an officer of Seller (each, an "Advance Request"). Each
Advance Request shall be delivered to Buyer at least two business days prior to
the proposed date of the funding of any Advance and such Advance Request shall
(i) specify the amount of the Advance requested which shall be in an aggregate
minimum amount of $5,000 and integral multiples of $1,000 in excess of that
amount and (ii) shall specify the proposed uses of the proceeds of such Advance.
(d) All Advances, together with accrued interest thereon at 5% per
annum from the date of the funding of such Advance, shall be repaid by Seller
pursuant to Section 10.3(iii)(C).
7.9 OPERATING AGREEMENT.
To the extent a definitive form of Operating Agreement has not been
agreed to by the parties hereto prior to the date hereof, each party covenants
that it shall agree to a mutually satisfactory definitive form of Operating
Agreement prior to the Petition Date.
ARTICLE VIII
CONDITIONS OF PURCHASE
8.1 GENERAL CONDITIONS.
The obligations of the parties to effect the Closing shall be subject
to the following conditions unless waived in writing by all parties:
(a) No Orders; Legal Proceedings. No Law or Order shall have been
enacted, entered, issued, promulgated or enforced by any Governmental Entity,
nor shall any Action have been instituted and remain pending or, to the best
knowledge of Seller, have been threatened and remain so by any Governmental
Entity at what would otherwise be the Closing Date, that prohibits or restricts
or would (if successful) prohibit or restrict the transactions contemplated by
this Agreement. No Governmental Entity shall have notified any party to this
Agreement that consummation of the transactions contemplated by this Agreement
would constitute a violation of any Laws of any jurisdiction and/or that it
intends to commence proceedings to restrain or prohibit such transactions or
force divestiture or rescission, unless such Governmental Entity shall have
withdrawn such notice and abandoned any such proceedings prior to the Closing
Date.
(b) Approvals. To the extent required by applicable Law, all Permits
and Approvals required to be obtained from any Governmental Entity shall have
been received or obtained on or prior to the Closing Date and, to the extent
applicable, any applicable waiting period under the Hart-Scott-Rodino Act shall
have expired or been terminated.
(c) Plan Liabilities and Obligations. All liabilities or obligations
of Seller under the Plan or relating to the Bankruptcy Case (other than Excluded
Liabilities but including cure payments payable by Seller in connection with the
Assumed Contracts pursuant to Bankruptcy Code Section 365(b) and (f)) shall be
paid contemporaneous with the Closing and in accordance with the terms of the
Plan.
8.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
(a) Representations and Warranties and Covenants of Seller.
(i) Except as set forth in clause (ii) of this Section
8.2(a), all of the representations and warranties of Seller
herein contained shall be true, correct and complete in all
material respects as of the date hereof and at the Closing Date
with the same effect as though made at such time (without giving
effect to any supplement to any Schedule delivered pursuant to
Section 6.2(a)), except to the extent such representations and
warranties specifically relate to an earlier date, in which case
such representations and warranties shall have been true, correct
and complete in all material respects on and as of such earlier
date.
(ii) Each of Seller's representations and warranties in
Sections 4.2 and 4.20 and in the first-two sentences of Section
4.1(a) and each representation and warranty of Seller which is
qualified as to materiality shall be true, correct and complete
in all respects as of the date hereof and at the Closing Date
with the same effect as though made at such time (without giving
effect to any supplement to any Schedule delivered pursuant to
Section 6.2(a)), except to the extent such representations and
warranties specifically relate to an earlier date, in which case
such representations and warranties shall have been true, correct
and complete in all respects on and as of such earlier date.
(iii) Seller shall have performed all obligations and
complied with all covenants (including, without limitation, the
covenants set forth in Section 6.3, Section 6.8 and Section 6.13)
and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing Date, and Seller
shall have delivered to Buyer certificates of Seller in form and
substance reasonably satisfactory to Buyer, dated the Closing
Date and signed by its chief executive officer and chief
financial officer, certifying the accuracy of clauses (i), (ii)
and (iii) of this Section 8.2(a).
(b) No Material Adverse Change. There shall not have been any Material
Adverse Change after the date hereof. Without limiting the generality of the
foregoing, (i) no court or other Governmental Entity having jurisdiction in the
premises of any Subsidiary shall have entered a decree or order for relief in
respect of such Subsidiary in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar Law; no other
similar relief shall have been granted under any applicable Law; (ii) no
involuntary case shall have been commenced against any Subsidiary under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
Law; no decree or order of a court or other Governmental Entity having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other office having similar powers over any
Subsidiary, or over all or a substantial part of its property, shall have been
entered; there shall not have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of any Subsidiary for all or a substantial
part of its property; no warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of any
Subsidiary; and (iii) no Subsidiary (other than DNR North America, Inc. and DNR
USA, Inc.) shall have had an order for relief entered with respect to it or have
commenced a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar Law, or shall have consented to the
entry of an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such Law, or shall have
consented to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; and no Subsidiary
shall have made any assignment for the benefit of creditors.
(c) Opinion of Counsel. Buyer shall receive at the Closing from
Stroock & Stroock & Lavan LLP, counsel to Seller, an opinion dated the Closing
Date, in form and substance substantially as set forth in Exhibit D. Buyer shall
receive at the Closing from Prince, Yeates & Geldzahler, P.C., counsel to
Seller, an opinion dated the Closing Date, in form and substance substantially
as set forth in Exhibit D-1.
(d) Consents. Seller shall have obtained and provided to Buyer all
required Approvals and Permits listed on Schedule 4.8(b), each in form and
substance reasonably satisfactory to Buyer.
(e) Pro Forma Balance Sheets. Buyer shall have received no later than
ten business days prior to the final confirmation hearing on the Plan, the Pro
Forma Balance Sheets, together with the certificates of the chief financial
officers of Seller and the Subsidiaries applicable thereto.
(f) Post-Signing Schedules. No later than ten business days after the
bar date fixed by the Bankruptcy Court pursuant to Federal Rule of Bankruptcy
Procedure 3003(c)(3) and in no event later than ten business days prior to the
final confirmation hearing on the Plan, Buyer shall have received the Claims
Schedule, Schedule 2.1(a)(viii), Schedule 2.2(b)(iii) and Schedule 2.2(b)(iv)
and each such Schedule shall be in form and substance reasonably satisfactory to
Buyer and the aggregate amount of liabilities set forth on each such Schedule
shall be acceptable to Buyer and such liabilities shall be payable at such times
as Buyer deems acceptable.
(g) Employment Agreements. Each Employment Agreement shall be in full
force and effect on the Closing Date.
(h) Investigation. Buyer shall not, in the course of its on-going
business investigation, have discovered information related in any material
respect to the Business not previously disclosed in writing by Seller or its
Subsidiaries, which Buyer reasonably believes has or is likely to have a
materially adverse effect on the Business or the Purchased Assets or Assumed
Liabilities or that is materially inconsistent with information disclosed to
Buyer prior to the date hereof.
(i) Minimum Units Sold. The number of units of Product sold (including
both shipped units and open orders) to retailers and distributors (other than
any Subsidiary or Affiliate of Seller) for the portion of the 1999 "Pre-Season
Sales Program" completed by the Closing Date (which program runs from February 1
through September 15) shall be within 85% of the number of units of Products
sold (including both shipped units and open orders) to retailers and
distributors (other than any Subsidiary or Affiliate of Seller) for the same
period of the 1998 "Pre-Season Sales Program".
(j) Minimum Net Worth. The consolidated net worth of Seller and the
Subsidiaries as reflected on the Pro Forma Balance Sheets, exclusive of goodwill
and other intangibles of Seller and the Subsidiaries and before giving effect to
any capital contribution and/or other investment made by Buyer, shall be not
less than -$6,000,000 (by example, if the consolidated net worth is -$7,000,000
this condition will not be satisfied).
(k) Changes in Law. No Law or Order shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Entity, nor shall any Action
have been instituted and remain pending or have been threatened by any Person
(including any Governmental Entity) at what would otherwise be the Closing Date
which would not permit the Business as presently conducted to be continued by
Buyer unimpaired following the Closing Date.
(l) Other Reports and Deliveries. Buyer shall have received in form,
substance and scope reasonably satisfactory to Buyer all reports, certificates,
financial statements and other materials to be delivered to Buyer prior to the
date hereof and/or prior to the Closing Date, including, without limitation, the
Inventory reports, the Accounts Receivable aging lists and financial statements
required to be delivered pursuant to Sections 4.21, 4.22 and 6.2(b),
respectively.
(m) Title. Title to the Purchased Assets shall have been approved by
Buyer and each existing title policy with respect to each parcel of Real
Property shall have been received by Buyer.
(n) Chapter 11 Case.
(i) Without limiting the generality of Section 8.1, Section
8.2(d) or any other provision of this Agreement:
A. the Breakup Fee Order shall have been entered by the
Bankruptcy Court no later than fifteen (15) business days
after the Petition Date, pursuant to which Buyer and its
Affiliates shall have a superpriority claim, senior to any
and all other claims of any and all creditors of or holders
of equity interests in Seller (other than claims of the
United States Trustee pursuant to 28 U.S.C. ss.1930(a)(6)
with respect to the Breakup Fee and the Reimbursement
Expense;
B. the Assumption Order shall have been entered by the
Bankruptcy Court no later than thirty (30) days after the
Petition Date;
C. the Disclosure Statement Order shall have been
entered by the Bankruptcy Court no later than thirty (30)
days after the Petition Date; and
D. the Confirmation Order shall have been entered by
the Bankruptcy Court no later than fifty-five (55) days
after the Petition Date and Seller shall have complied with
each of its terms and each term of the Plan and shall not
have otherwise defaulted in the performance thereof; and
(ii) with respect to the Orders set forth in the preceding
clauses (A), (B), (C) and (D), each such Order shall be in full
force and effect as of the Closing Date and each such Order shall
not have been reversed, stayed, modified or amended.
(o) Other Bankruptcy Events. Each Order (including, but not limited
to, the Confirmation Order, the Disclosure Statement Order, the Assumption Order
and the Breakup Fee Order) entered at any time or from time to time in Seller's
Chapter 11 Case shall be in form, substance and scope reasonably satisfactory to
Buyer. Without limiting the generality of the foregoing, no Order shall have
been entered by the Bankruptcy Court that:
(i) authorizes the appointment of an interim or permanent
trustee or examiner in the Chapter 11 Case; or
(ii) terminates, annuls, modifies or conditions the
automatic stay imposed on any material asset of Seller pursuant
to Section 362 of the Bankruptcy Code.
(p) Assumed Liabilities. As of the date of entry of the Confirmation
Order, the aggregate amount of Assumed Liabilities (after giving effect to the
Restructuring Documents but before giving effect to any capital contribution
and/or other investment made by Buyer) shall not exceed $16,000,000 and, after
giving effect to the Restructuring Documents but before giving effect to any
capital contribution and/or other investment made by Buyer, the aggregate amount
of the liabilities of Seller and the Subsidiaries on a consolidated basis as set
forth on the Pro Forma Balance Sheet shall not exceed $83,000,000.
(q) Restructuring Documents. Buyer shall have received duly executed
copies of each of the Restructuring Documents and each such Restructuring
Document shall be in full force and effect and in form and substance reasonably
satisfactory to Buyer. The Restructuring Documents shall not have been amended,
supplemented or otherwise modified without the prior written consent of Buyer
and the transactions contemplated thereby shall be consummated concurrently with
or prior to the Closing in accordance with the terms thereof.
(r) New Financing Facility.
Buyer shall have entered into the New Financing Facility the terms of
which shall be in full force and effect on the Closing Date.
(s) Amended Organizational Documents.
Seller shall have amended and restated its bylaws and certificate of
incorporation which shall be in form and substance reasonably satisfactory to
Buyer and shall provide, among other things, that the business and affairs of
the Seller shall be solely to hold, own and invest in Equity Securities of the
Buyer and that Seller shall not engage in any other business. Buyer shall have
received, with respect to Seller and each Subsidiary, (i) certified copies of
its (as the case may be, amended and restated) formation documents, and where
such concept is applicable, a good standing certificate from the Secretary of
State (or equivalent functionary) of the jurisdiction of its formation and each
other state (or other jurisdiction) in which it is qualified as a foreign entity
to do business, each dated a recent date prior to the Closing Date; (ii) copies
of its (as the case may be, amended and restated) bylaws, certified as of the
Closing Date by its corporate secretary or an assistant secretary or such other
officer as the Buyer may approve; (iii) resolutions of its board of directors
which, among other things, (x) approve and authorize and/or ratify the
execution, delivery and performance of this Agreement, the other Restructuring
Documents, the Operating Agreement and any related agreements to which it is a
party and, in the case of the Subsidiaries, authorize the transfer of the Equity
Securities from Seller to Buyer, (y) in the case of Seller, resolve that it
shall not engage in, does not intend to engage in, and shall not hold itself out
as engaging in investing, reinvesting or trading in securities and (z) generally
authorize its officers to do or cause to be done from time to time all such
other acts and things and to execute and deliver all such instruments and
documents as Buyer shall deem necessary or desirable to carry out the purposes
and the intent of this Agreement, certified as of the Closing Date by its
corporate secretary or an assistant secretary (or such other officer as Buyer
may approve) as being in full force and effect without modification or
amendment; and (iv) signature and incumbency certificates of its officers
executing this Agreement.
(t) Operating Agreement.
Buyer shall have received a duly executed copy of the Operating
Agreement in the form of Exhibit C annexed hereto and which shall be in full
force and effect.
(u) Canadian Stockholders Agreement.
Seller shall not have breached or otherwise defaulted in the
performance of any of its obligations under the Canadian Stockholders Agreement
or any of the terms and conditions thereof, and the Canadian Stockholders
Agreement shall be in full force and effect.
(v) Corporate Headquarters.
If Seller's corporate headquarters building and the related real
estate has not been sold prior to the Closing Date (as permitted under the last
paragraph of Section 6.3), then, at Buyer's sole discretion, Seller shall have
pursuant to the Plan assigned, conveyed and transferred to Marker USA all of
Seller's right, title and interest in such Real Property on or prior to the
Closing Date for no additional consideration and Seller shall have delivered to
Marker USA a general warranty deed, properly executed and acknowledged,
conforming to and conveying the agreed state of title for such Real Property
together with such other instruments of transfer as may be reasonably requested
by Buyer (it being understood that if Buyer declines the transfer of such Real
Property to Marker USA, then appropriate adjustments to the representations,
warranties, covenants and closing conditions to the extent premised on the
transfer of such Real Property shall be made).
8.3 CONDITIONS TO OBLIGATIONS OF SELLER.
The obligations of Seller to effect the Closing shall be subject to
the following conditions, except to the extent waived in writing by Seller:
(a) Representations and Warranties and Covenants of Buyer.
(i) Except as set forth in clause (ii) of this Section
8.3(a), all of the representations and warranties of Buyer herein
contained shall be true, correct and complete in all material
respects as of the date hereof and at the Closing Date with the
same effect as though made at such time, except to the extent
such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material
respects on and as of such earlier date.
(ii) Each of Buyer's representations and warranties in
Section 5.6 and the first-two sentences of Section 5.1 and each
representation and warranty of Buyer which is qualified as to
materiality shall be true, correct and complete in all respects
as of the date hereof and at the Closing Date with the same
effect as though made at such time, except to the extent such
representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall
have been true, correct and complete in all material respects on
and as of such earlier date.
(iii) Buyer shall have performed all obligations and
complied with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to
the Closing Date, and Buyer shall have delivered to Buyer
certificates of Seller in form and substance reasonably
satisfactory to Seller, dated the Closing Date and signed by its
chief executive officer and chief financial officer, certifying
the accuracy of clauses (i), (ii) and (iii) of this Section
8.3(a).
(b) Opinion of Counsel. Seller shall receive at the Closing from
O'Melveny & Myers LLP, counsel to Buyer, an opinion dated the Closing Date, in
form and substance substantially as set forth in Exhibit E. Seller shall receive
at the Closing from Buyer's Swiss counsel (who shall be reasonably satisfactory
to Seller), an opinion dated the Closing Date, in form and substance
substantially as set forth in Exhibit E-1.
(c) Operating Agreement. Seller shall have received a duly executed
copy of the Operating Agreement together with the protocol annexed thereto in
the form of Exhibit C annexed hereto and which shall be in full force and
effect.
(d) Organizational Documents. Seller shall have received (i) certified
copies of Buyer's formation documents in form and substance satisfactory to the
parties hereto and, where such concept is applicable, foreign qualifications
from each jurisdiction which requires its licensing or qualification; (ii) a
certificate of the appropriate authority regarding the existence of Buyer under
the laws of Switzerland; (iii) resolutions of its board of directors which,
among other things (x) approve and authorize and/or ratify the execution,
delivery and performance of this Agreement and each related agreement to which
Buyer is a party and (y) generally authorize the officers to do or cause to be
done from time to time all such other acts as such officers shall deem necessary
or desirable to carry out the purposes and intent of this Agreement, certified
as of the Closing Date by its secretary or an equivalent officer as being in
full and force and effect without modification or amendment; and (iv)
appropriate documents demonstrating the signature authority of its officers
executing this Agreement, any related agreement and the above-mentioned
formation documents.
(e) Other Documents and Deliveries. On or before the date hereof,
Tecnica S.p.A. and Mr. Hans-Dieter Cleven shall have executed and delivered to
Seller a letter agreement by and among Seller, Tecnica S.p.A. and Mr.
Hans-Dieter Cleven which shall be in full force and effect in accordance with
the terms thereof from the date hereof through the Closing Date. Seller shall
have received on or before the Closing Date such documentation as may be
reasonably necessary to evidence CT's aggregate capital contribution and/or
other investment of $13,974,499 in cash to Buyer in consideration for an 85%
equity interest in Buyer.
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 TERMINATION OF AGREEMENT.
Anything herein to the contrary notwithstanding, this Agreement and
the transactions contemplated by this Agreement shall terminate if the Closing
does not occur on or before the close of business on November 30, 1999 unless
extended by mutual consent in writing of Buyer and Seller and otherwise may be
terminated at any time before the Closing as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and Seller.
(b) Conditions to Buyer's Performance Not Met. By Buyer by written
notice to Seller if any event occurs or condition exists which would render
impossible the satisfaction of one or more conditions to the obligations of
Buyer to consummate the transactions contemplated by this Agreement as set forth
in Section 8.1 or 8.2.
(c) Conditions to Seller's Performance Not Met. By Seller by written
notice to Buyer if any event occurs or condition exists which would render
impossible the satisfaction of one or more conditions to the obligation of
Seller to consummate the transactions contemplated by this Agreement as set
forth in Section 8.1 or 8.3.
(d) Material Breach. By Buyer or Seller if there has been a material
misrepresentation or other material breach by the other party in its
representations, warranties or covenants set forth herein; provided, however,
that if such breach is susceptible to cure, the breaching party shall have ten
(10) days after receipt of notice from the other party of its intention to
terminate this Agreement if such breach continues in which to cure such breach.
(e) Pursuit of Other Offers. By Buyer, without limiting any of its
other rights or remedies in event of any breach of this Agreement, if (i) Seller
or any Subsidiary solicits, encourages, initiates, discusses or negotiates any
acquisition, merger, tender or exchange offer or other form of business
combination, or any acquisition or disposition of all or any substantial part of
the assets or the Equity Securities of Seller or any of the Subsidiaries, other
than the transactions expressly contemplated by the last paragraph of Section
6.3, or provides or authorizes any other Person on its behalf to provide
information to any Person concerning any of the foregoing (it being understood
and agreed that nothing herein shall be deemed to limit Seller's express or
implied obligations under applicable Law), (ii) Seller's board of directors
fails to support the Plan or otherwise fails to recommend to other parties in
interest in the Chapter 11 Case approval of the transactions contemplated by
this Agreement or withdraws any favorable recommendation of such transactions to
such parties in interest, or (iii) Seller's board of directors fails to take all
other action necessary or helpful to secure any required vote in favor of the
Plan or approval of the Plan.
(f) Destruction or Condemnation. By Buyer, if any of the Purchased
Assets are damaged, destroyed or taken, and if such damage, destruction or
condemnation is not "Non- Material" pursuant to Section 6.11(c).
9.2 EFFECT OF TERMINATION.
In the event that this Agreement shall be terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate without further liability of any party to another; provided that the
obligations of the parties contained in Section 11.9 and Section 11.14 shall
survive any such termination and shall survive confirmation of any plan of
reorganization and the conversion or dismissal of the Chapter 11 Case and shall
not be discharged under Section 1141(d) of the Bankruptcy Code. A termination
under Section 9.1 shall not relieve any party of any liability for a breach of,
or for any misrepresentation under this Agreement, or be deemed to constitute a
waiver of any available remedy (including specific performance if available) for
any such breach or misrepresentation.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in or made pursuant to
this Agreement shall survive the Closing and shall expire eighteen months after
the Closing Date except that the representations and warranties contained in
Section 4.4 shall continue through the earlier of (x) the third (3rd)
anniversary of the Closing Date and (y) expiration of the applicable statute of
limitations, (or, if a claim has been asserted prior to either such date, until
six (6) months after the date of its final resolution), and if a claim or notice
is given under Article X with respect to any representation or warranty
(including, without limitation, under Section 4.4) prior to the applicable
expiration date, such representation or warranty shall continue indefinitely
until the applicable claim is finally resolved.
ARTICLE X
INDEMNIFICATION
10.1 OBLIGATIONS OF SELLER.
Subject to Section 10.3, Seller agrees to indemnify and hold harmless
Buyer and its members/partners (other than Seller), directors, officers,
employees, Affiliates, subsidiaries, agents and assigns from and against any and
all Losses of Buyer, directly or indirectly, as a result of, or based upon or
arising from:
(a) any inaccuracy in or breach or nonperformance, in each case
whether or not of a material nature, of any of the representations, warranties,
disclosures, covenants or agreements made by Seller in or pursuant to this
Agreement (without giving effect to any supplement to the Schedules delivered by
Seller pursuant to Section 6.2(a)), any Schedule, any supplement to any Schedule
delivered by Seller pursuant to Section 6.2(a) and any other certificate or
document delivered by Seller pursuant to this Agreement;
(b) any Excluded Liability or any other liability or obligation of
Seller not expressly assumed by Buyer pursuant to Section 2.2(b) and the Plan;
(c) any liability or obligation (other than post-petition product
warranty and product liability claims to the extent covered by insurance and any
deductibles therefor) of Seller or any Subsidiary not disclosed to Buyer in
writing prior to Closing (or if disclosed, the inaccuracy of the amount of such
liability or obligation to the extent it exceeds the amount so disclosed) and
that arose or resulted from or was based upon events or conditions that existed
prior to the Closing Date (whether or not any such liability or obligation is an
Assumed Liability); or
(d) any and all Actions, claims, demands, assessments and judgments
incidental to the foregoing or the enforcement of such indemnification.
Notwithstanding anything herein to the contrary, Seller expressly
understands and agrees that unless Giancarlo Zanatta, Umberto Furlanetto,
Christoph Bronder, Antonio Di Bartolomeo, Jim Kearns and/or Gianni Rossetto had
prior to the Closing Date actual knowledge of the scope of the inaccuracy of or
non-compliance with any representation, warranty, covenant or obligation of
Seller or the Subsidiaries and Seller or the Subsidiaries had prior to the
Closing Date provided and/or made available to Buyer all relevant information
available to Seller or the Subsidiaries at such time relating to such
representation, warranty, covenant or obligation, Buyer's right to
indemnification and the payment of Buyer's Losses pursuant to Section 10.3(iii)
will not be affected by any investigation conducted by Buyer, its Affiliates or
their respective agents or representatives, at any time, whether before or after
the execution and delivery of this Agreement or the Closing Date, with respect
to such representation, warranty, covenant or obligation of Seller. Subject to
the preceding sentence, Buyer's waiver of any condition to Closing based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect Buyer's right to
indemnification and the payment of Buyer's Losses (subject, in each case, to
Section 10.3(iii)) based on such representations, warranties, covenants and
obligations of Seller.
Except as expressly set forth herein, Seller's Indemnification
Obligations shall only become due and payable in accordance with the provisions
of Section 10.3(iii) as an offset against any Redemption Payment due to Seller
under and pursuant to the terms of the Operating Agreement. Notwithstanding
anything herein to the contrary, with respect to an Indemnifiable Claim that
relates to or arises from an Investment Act Breach, the remedies provided in
Section 10.3(iii) will not be exclusive of or limit any other remedies that may
be available to Buyer or any other Indemnified Party (including, without
limitation, the right to seek recourse against Seller or any of its assets).
10.2 OBLIGATIONS OF BUYER.
Buyer agrees to indemnify and hold harmless Seller from and against
any Losses of Seller, directly or indirectly, as a result of, or based upon or
arising from, (i) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Buyer in or
pursuant to this Agreement whether or not of a material nature and (ii) to the
extent Seller is not obligated to indemnify and hold Buyer harmless for any
Assumed Liability pursuant to Section 10.1, any third-party claims in respect of
any Assumed Liability specifically set forth in Sections 2.2(b)(i)-(iv) and the
Schedules referenced in such Sections.
10.3 LIMITATIONS ON SELLER'S INDEMNIFICATION OBLIGATIONS.
Except as expressly set forth herein or in the Operating Agreement,
Seller's Indemnification Obligations are subject to the following limitations:
(i) Minimum Amount. Seller shall not be subject to liability
under this Article X unless and until the aggregate amount of
Buyer's Losses exceed $100,000 (in which case Seller shall be
liable for the full amount of Buyer's Losses subject to Section
10.3(ii)); provided, however, Seller will be liable for all
Losses resulting from or relating to an Investment Act Breach or
Seller's intentional failure to perform or comply with any
covenant or other obligation of Seller set forth herein.
(ii) Maximum Amount. Subject to the last sentence of this
Section 10.3(ii), the maximum aggregate liability of Seller for
indemnification under this Article X shall not exceed 70% of the
aggregate value of Seller's Equity Consideration as such value is
determined in accordance with and pursuant to the terms of the
Operating Agreement (the "Maximum Liability"). Notwithstanding
anything herein to the contrary, Seller expressly understands and
agrees that it shall be liable for all Losses resulting from or
relating to an Investment Act Breach or Seller's intentional
failure to perform or comply with any covenant or other
obligation of Seller set forth herein and such Losses shall not
be subject to the Maximum Liability cap set forth in the first
sentence of this Section 10.3(ii).
(iii) Offset.
(A) If Seller has incurred a Seller's Indemnification
Obligation before the date Buyer or CT is obligated to pay the
Redemption Payment, then Buyer or CT shall have the right to
withhold and set off (without notice of any kind to Seller, such
notice being expressly waived hereby) from such Redemption
Payment an amount equal to the Seller's Indemnification
Obligation.
(B) If any matter as to which Buyer may be able to
assert a claim hereunder is pending or unresolved at the time the
Redemption Payment is due and payable to Seller, then Buyer or CT
(as the case may be) shall deposit with a mutually acceptable
escrow agent (pursuant to an escrow agreement and such other
documentation as may be desirable, in each case in form and
substance satisfactory to the parties hereto) an amount equal to
the amount of Buyer's indemnification claim (the "Disputed
Amount"; which amount in no event shall be in excess of the
Maximum Liability unless such indemnification claim relates to or
arises from an Investment Act Breach or Seller's intentional
failure to perform or comply with any covenant or other
obligation of Seller set forth herein, in which case Buyer or CT
shall deposit with the escrow agent an amount equal to the amount
of the Redemption Payment). The escrow agent shall hold the
Disputed Amount in an interest bearing account. The Disputed
Amount (together with interest) shall be released by the escrow
agent to the prevailing party in any indemnification dispute or
as the parties may mutually agree. If any or all of the Disputed
Amount is released to Buyer or CT, then such amount shall be
offset against the remaining Redemption Payment owing to Seller.
If any or all of the Disputed Amount is released to Seller, then
such amount shall be deemed to be a Redemption Payment. Upon the
release of the Disputed Amount in accordance with the foregoing
and provided that Buyer and/or CT have otherwise complied in all
material respects with their respective obligations under the
Operating Agreement, including the obligation to pay to Seller
the portion of the Redemption Payment (if any) net of the
Disputed Amount, Buyer and/or CT's respective obligations to
Seller shall be deemed satisfied in full.
(C) In addition to any rights now or hereafter granted
to Buyer or CT hereunder or under applicable Law and not by
limitation of any such rights, it is hereby expressly understood
and agreed that Buyer or CT shall have the right to withhold and
set off (without notice of any kind to Seller, such notice being
expressly waived hereby) from any Redemption Payment due and
payable to Seller (irrespective of whether or not there is a
pending or unresolved indemnification claim hereunder) an amount
equal to the sum of (x) all unreimbursed Advances and Litigation
Costs incurred by Buyer under Section 10.4(b)(i) or (ii),
together with accrued interest thereon at 5% per annum from the
date of payment thereof, plus (y) $775,000, and the reimbursement
of such amount shall not be subject to the Maximum Liability cap
set forth in Section 10.3 (ii).
10.4 PROCEDURE.
(a) Notice. Any party seeking indemnification with respect to any Loss
(the "Indemnified Party") shall promptly give notice thereof to the party
required to provide indemnity hereunder (the "Indemnifying Party"). The
Indemnified Party's failure to give such notice to the Indemnifying Party will
not relieve the Indemnifying Party of any liability that it may have to the
Indemnified Party, except to the extent that the Indemnifying Party demonstrates
that the defense of such Action was materially prejudiced by the Indemnified
Party's failure to give such notice.
(b) Defense.
(i) If Buyer is the Indemnified Party and any claim, demand
or liability is asserted by any third party (including, without
limitation, any Governmental Entity) against Buyer, then at
Seller's discretion:
(A) Seller shall assume and control the defense of any
such Action and Buyer shall pay when due the Litigation Costs of
such Action; provided that the attorneys and other professionals
retained by Seller for the defense of such Action are reasonably
acceptable to Buyer and are engaged pursuant to terms and
conditions reasonably satisfactory to Buyer and provided,
further, that Buyer shall have no obligation to pay any
additional Litigation Costs once the aggregate amount of
Litigation Costs paid by Buyer for all Actions pending or
resolved (x) in any calendar year exceeds $150,000 or (y) at any
time exceeds $300,000. All Litigation Costs not paid by Buyer
pursuant to the terms hereof shall be the sole expense of Seller
and shall be paid by Seller when due;
<PAGE>
(B) Seller shall assume and control the defense of such
Action and shall pay when due all Litigation Costs in connection
therewith; or
(C) Buyer to, and Buyer shall, assume and control the
defense of such Action and pay when due all Litigation Costs in
connection therewith (it being understood and agreed that once
Buyer assumes the defense of such Action, Seller shall not
intervene in or otherwise become a party to such Action and all
Litigation Costs incurred by Buyer shall be subject to
reimbursement pursuant to Section 10.3(iii)(C)).
(ii) If Seller fails to notify Buyer of its determination in
accordance with Section 10.4(b)(i) within 10 business days of
receipt of notice from Buyer pursuant to Section 10.4(a), Buyer
may, in its discretion, assume and control the defense of such
Action and pay when due the Litigation Costs in connection
therewith (it being understood and agreed that once Buyer assumes
the defense of such Action, Seller shall not intervene or
otherwise become a party to such Action and all Litigation Costs
incurred by Buyer shall be subject to reimbursement pursuant to
Section 10.3(iii)(C)).
(iii) If Seller is the Indemnified Party and any claim,
demand or liability is asserted by any third party (including,
without limitation, any Governmental Entity) against Seller, then
Buyer shall assume the defense of any such Action.
(iv) In any Action asserted by a third party (other than
where Buyer is the Indemnified Party and has already assumed the
defense of such Action, in which case Buyer's Litigation Costs
are reimbursable pursuant to Section 10.3(iii)(C)), the
Indemnified Party shall have the right to employ its own counsel
and such other professionals as it determines to be reasonably
necessary in such Action but the Litigation Costs incurred by the
Indemnified Party in connection therewith shall be paid by the
Indemnified Party unless (A) the employment of counsel and other
professionals by the Indemnified Party has been authorized by the
prior written consent of the Indemnifying Party or (B) the
Indemnified Party reasonably believes that there may be defenses
available to it that are different from or in addition to the
defenses available to the Indemnifying Party or which are
otherwise not being asserted by the Indemnifying Party, and the
Indemnifying Party has refused or is unable to assert such
defenses, then the Litigation Costs incurred by the Indemnified
Party in connection with such Action shall be paid by the
Indemnifying Party (without giving effect (in the case where
Seller is the Indemnifying Party) to the minimum liability floor
or the Maximum Liability cap set forth in Section 10.3(i) and
(ii), respectively) in accordance with the terms hereof.
(v) Seller hereby waives and shall release, acquit and
forever discharge Buyer and its employees, agents,
representatives, consultants, attorneys and fiduciaries from any
and all claims, causes of action, damages and expenses arising
from or relating to Buyer's defense of any Action in which the
Buyer itself is the Indemnified Party other than such claims,
causes of action, damages and expenses that result from Buyer's
bad faith, gross negligence or willful misconduct and Seller
hereby agrees that at the request of Buyer, Seller shall from
time to time reaffirm in writing the waiver and release set forth
in this sentence. Seller agrees that with respect to any Action
asserted by a third party where Buyer is the Indemnified Party
and has assumed the defense thereof pursuant to Section
10.4(b)(i)(C) or Section 10.4(b)(ii), Seller will be bound by any
determination made in such Action except to the extent such
determination resulted from Buyer's bad faith, gross negligence
or willful misconduct.
(vi) Whether or not the parties choose to assume the defense
of any Action pursuant to the terms hereof, the parties hereto
shall cooperate in the defense or prosecution of any claim
involving a third party and shall furnish such records,
information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith. No claim shall be settled or
compromised without the written consent of the other party if
such settlement or compromise requires such other party to make
any payment or to take or refrain from taking any action or
enjoins such other party or subjects it to other equitable relief
or subjects it to any potential criminal law claim or liability.
(c) Tax Adjustments. Subject to Section 10.3(iii), any amounts payable
by the Indemnifying Party to or on behalf of an Indemnified Party in respect of
a Loss shall be adjusted as follows:
(i) If such Indemnified Party is liable for any additional
Taxes as a result of the payment of amounts in respect of an
Indemnifiable Claim, the Indemnifying Party will pay to the
Indemnified Party (in accordance with the setoff procedures set
forth in Section 10.3(iii) and without giving effect to the
Maximum Liability cap set forth in Section 10.3(ii)) in addition
to such amounts in respect of the Loss (x) an amount equal to
such additional Taxes (the "Tax Reimbursement Amount") plus (y)
any additional amounts required to pay additional Taxes imposed
with respect to the Tax Reimbursement Amount and with respect to
amounts payable under this clause (y), with the result that the
Indemnified Party shall have received from the Indemnifying
Party, net of the payment of Taxes, an amount equal to the Loss.
(ii) The Indemnified Party shall reimburse the Indemnifying
Party an amount equal to the net reduction in any year in the
liability for Taxes (that are based upon or measured by income)
of the Indemnified Party or any member of a consolidated or
combined tax group of which the Indemnified Party is, or was at
any time, part, which reduction is actually realized with respect
to any period after the Closing Date and which reduction would
not have been realized but for the amounts paid (or any audit
adjustment or deficiency with respect thereto, if applicable) in
respect of a Loss, or amounts paid by the Indemnified Party
pursuant to this paragraph (a "Net Tax Benefit"). The amount of
any Net Tax Benefit shall be paid not later than 15 days after
the date on which such Net Tax Benefit shall be realized. Any
expenses associated with the realization of a Net Tax Benefit or
any contest or proceeding with respect to a Net Tax Benefit shall
be deemed to reduce such Net Tax Benefit.
10.5 SURVIVAL.
This Article X shall survive any termination of this Agreement and
shall survive confirmation of any plan of reorganization and the conversion or
dismissal of the Chapter 11 Case and shall not be discharged under Section
1141(d) of the Bankruptcy Code. This indemnification further shall survive the
Closing and shall remain in effect indefinitely. Any matter as to which a claim
has been asserted by notice to the other party that is pending or unresolved at
the end of any applicable limitation period shall continue to be covered by this
Article X notwithstanding any applicable statute of limitations (which the
parties hereby waive) until such matter is finally terminated or otherwise
resolved by the parties under this Agreement or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and paid.
10.6 NOTICE BY SELLER.
Seller agrees to notify Buyer of any liabilities, claims or
misrepresentations, breaches or other matters covered by this Article X upon
discovery or receipt of notice thereof (other than from Buyer), whether before
or after Closing.
ARTICLE XI
GENERAL
11.1 AMENDMENTS; WAIVERS.
This Agreement and any Schedule or Exhibit attached hereto may be
amended only by agreement in writing of all parties. No waiver of any provision
nor consent to any exception to the terms of this Agreement or any agreement
contemplated hereby shall be effective unless in writing and signed by the party
to be bound and then only to the specific purpose, extent and instance so
provided.
<PAGE>
11.2 SCHEDULES; EXHIBITS; INTEGRATION.
Each Schedule and Exhibit delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement. The
Schedules attached hereto shall be numbered to correspond to the applicable
Section of this Agreement and shall be deemed to qualify only that Section. This
Agreement, together with such Schedules and Exhibits, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings of the parties in connection
therewith, including, but not limited to, the letter of intent dated March 7,
1999, between Buyer and Seller, as amended, supplemented or otherwise modified
from time to time.
11.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) Standard. Each party will use its best efforts to cause all
conditions to its obligations to be timely satisfied and to perform and fulfill
all obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
effected substantially in accordance with its terms as soon as feasible. The
parties shall cooperate with each other in such actions and in securing
requisite Approvals. Each party shall execute and deliver both before and after
the Closing such further certificates, agreements and other documents and take
such other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters.
(b) Limitation. As used in this Agreement, the term "best efforts"
shall not mean efforts which require the performing party to do any act that is
unreasonable under the circumstances, to make any capital contribution or to
expend any funds other than reasonable out-of-pocket expenses incurred in
satisfying its obligations hereunder, including but not limited to the fees,
expenses and disbursements of its accountants, actuaries, counsel and other
professionals.
11.4 GOVERNING LAW.
This Agreement, the legal relations between the parties and any
Action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement, including but not limited to the negotiation,
execution, interpretation, coverage, scope, performance, breach, termination,
validity, or enforceability of this Agreement, shall be governed by and
construed in accordance with the Laws of the State of New York and without
regard to conflicts of law doctrines, except to the extent that certain matters
are preempted by federal law or are governed as a matter of controlling law by
the law of the jurisdiction of organization of the respective parties.
Subject to the jurisdiction of the Bankruptcy Court, each party hereby
irrevocably submits to and accepts for itself and its properties, generally and
unconditionally, the non-exclusive jurisdiction of and service of process
pursuant to the laws of the State of New York and the rules of its courts,
waives any defense of forum non conveniens and agrees to be bound by any
judgment rendered thereby arising under or out of in respect of or in connection
with this Agreement or any related document or obligation. Each party further
irrevocably designates and appoints the individual identified in or pursuant to
Section 11.13 hereof to receive notices on its behalf, as its agent to receive
on its behalf service of all process in any such Action before any body, such
service being hereby acknowledged to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by registered mail
to each party at its address provided in Section 11.13; provided that, unless
otherwise provided by applicable Law, any failure to mail such copy shall not
affect the validity of the service of such process. If any agent so appointed
refuses to accept service, the designating party hereby agrees that service of
process sufficient for personal jurisdiction in any action against it in the
applicable jurisdiction may be made by registered or certified mail, return
receipt requested, to its address provided in Section 11.13. Each party hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by Law or shall limit the right of any party to bring any action or
proceeding against the other party in any other jurisdiction. Nothing herein
shall limit or otherwise affect any choice of Law or choice of venue made by
Seller and Buyer in any other agreement to which they are both a party,
including, without limitation, the Operating Agreement.
11.5 NO ASSIGNMENT.
Neither this Agreement nor any rights or obligations under it are
assignable except that Buyer may assign its rights hereunder (including but not
limited to its rights under Article X) to any wholly-owned Subsidiary of Buyer
or to any post-Closing purchaser of the Equity Securities or of a substantial
part of the assets of Buyer, in each case subject to the terms of the Operating
Agreement.
11.6 HEADINGS.
The descriptive headings of the Articles, Sections and subsections of
this Agreement are for convenience only and do not constitute a part of this
Agreement.
11.7 COUNTERPARTS.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise provided therein) when one or more counterparts have
been signed by each party and delivered to the other party.
<PAGE>
11.8 PUBLICITY AND REPORTS.
Seller and Buyer shall coordinate all publicity relating to the
transactions contemplated by this Agreement and no party shall issue any press
release, publicity statement or other public notice relating to this Agreement,
or the transactions contemplated by this Agreement (including, without
limitation, the commencement of the Chapter 11 Case), without obtaining the
prior consent of both Seller and Buyer except to the extent that a particular
action is required by applicable Law, including, without limitation, any
disclosure by Seller required by the Exchange Act . Seller shall obtain the
prior consent of Buyer to the form and content of any application or report,
other than reports under the Exchange Act made to any Governmental Entity or
which relates to this Agreement.
11.9 CONFIDENTIALITY.
All information disclosed by any party (or its representatives)
whether before or after the date hereof, in connection with the transactions
contemplated by, or the discussions and negotiations preceding, this Agreement
to any other party (or its representatives) shall be kept confidential by such
other party and its representatives and shall not be used by any such Persons
other than as contemplated by this Agreement, except to the extent that such
information (i) was known by the recipient when received, (ii) it is or
hereafter becomes lawfully obtainable from other sources, (iii) is necessary or
appropriate to disclose to a Governmental Entity having jurisdiction over the
parties, (iv) as may otherwise be required by Law or (v) to the extent such duty
as to confidentiality is waived in writing by the other party. If this Agreement
is terminated in accordance with its terms, each party shall use all reasonable
efforts to return upon written request from the other party all documents (and
reproductions thereof) received by it or its representatives from such other
party (including all reproductions made by the receiving party and all material
based on such documents generated by the receiving party or its representatives
(to the extent such material is not deemed privileged and confidential by the
receiving party or its representatives pursuant to the attorney-client
privilege, the attorney-work product doctrine or any other applicable statutory
or common law privilege)) that include information not within the exceptions
contained in the first sentence of this Section 11.9, unless the recipients
provide assurances reasonably satisfactory to the requesting party that such
documents have been destroyed.
11.10 INVESTMENT REPRESENTATION.
Except as expressly provided for in the Plan, Seller is acquiring the
Equity Consideration for its own account solely for the purpose of investment
and not with a view to its distribution within the meaning of Section 2(11) of
the Securities Act. Seller acknowledges that the Equity Consideration will not
be registered under the Securities Act, any applicable state securities Law or
any applicable foreign securities Law, and that the Equity Consideration may not
be transferred or sold except pursuant to the terms of the Operating Agreement
and the Plan.
11.11 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement. Nothing in this Agreement is intended to relieve or
discharge the obligation of any other Person to (or to confer any right of
subrogation or action against) any party to this Agreement.
11.12 PERFORMANCE BY SUBSIDIARIES.
Seller agrees to cause its Subsidiaries to comply with any obligations
hereunder relating to such Subsidiaries and to cause its Subsidiaries to take
any other action which may be necessary or reasonably requested by Buyer to
consummate the transactions contemplated by this Agreement.
11.13 NOTICES.
Any notice or other communication hereunder must be given in writing
and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism or (c) mailed by certified or registered mail,
postage prepaid), receipt requested as follows:
IF TO BUYER, ADDRESSED TO:
CT Sports Holding AG
Reussenstrasse 6
6340 Baar
Zug, Switzerland
WITH COPIES TO:
Peter V. Pantaleo
O'Melveny & Myers LLP
Citicorp Center
153 East 53rd Street
New York, NY 10022
Tel: 212-326-2056
Fax: 212-326-2061
Brahm Gelfand
LaPointe Rosenstein
1250 Rene Levesque Blvd. West
Montreal, Que., Canada
H3B 5E9
Tel: 514-925-6300
Fax: 514-925-6313
IF TO SELLER, ADDRESSED TO:
Marker International
1070 W. 2300 South
Salt Lake City, Utah 84119
WITH COPIES TO:
Mark A. Rosenbaum
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Tel: 212-806-5400
Fax: 212-806-6006
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.13 and an appropriate answerback is received, (ii) if given by mail,
five business days after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iii) if given by any other
means, when actually delivered at such address.
11.14 EXPENSES.
(a) If (x) any plan of reorganization other than the Plan is confirmed
or (y) any acquisition, merger, tender or exchange offer or other form of
business combination or any disposition of all or any substantial part of the
assets or the Equity Securities of Seller or any Subsidiary is consummated upon
terms more favorable to the shareholders of Seller other than as contemplated by
this Agreement (an "Alternative Sale"), then, in addition to the amounts payable
pursuant to Section 11.14(b) hereof, Seller shall promptly (and in any event
within five days after such event) pay Buyer, in immediately available funds,
$1,000,000 (the "Breakup Fee") which Breakup Fee shall be fully earned upon
Seller's execution of this Agreement; provided, however, that Seller shall have
no obligation to pay the Breakup Fee if Seller's failure to consummate the
transactions contemplated hereby is due to (i) circumstances beyond Seller's
reasonable control so long as Seller is not in material breach of any
representation, warranty or covenant contained in this Agreement and Seller
shall not have consummated or have agreed to consummate an Alternative Sale or
(ii) a material breach of this Agreement by Buyer; provided that the failure of
a condition to the Buyer's obligation to consummate the transactions
contemplated by this Agreement shall not, by itself, constitute a material
breach by Buyer.
(b) If this Agreement is terminated or abandoned for any reason
(except in the event that (x) Seller terminates this Agreement in accordance
with the terms hereof or due to a material breach of this Agreement by Buyer;
provided that, the failure of a condition to Buyer's obligation to consummate
the transactions contemplated by this Agreement shall not, by itself, constitute
a material breach by Buyer or (y) Buyer terminates this Agreement other than as
a result of a material breach of Seller of any representation, warranty or
covenant hereunder or pursuant to Section 9.1(e)) then Seller shall reimburse
Buyer and its Affiliates for all out-of-pocket expenses and fees (including, but
not limited to, reasonable fees, expenses and disbursements of counsel,
accountants, investment bankers and other representatives of Buyer and its
Affiliates) incurred by them or on their behalf in connection with (i) the
transactions contemplated this Agreement and the Plan, (ii) the Chapter 11 Case,
and (iii) the negotiation, preparation, execution or performance of this
Agreement and any related investigations and due diligence analysis of Seller
and the Subsidiaries (collectively referred to as "Reimbursement Expenses").
(c) Except as otherwise provided in Section 11.14(a) and (b), Seller
and Buyer shall each pay their own expenses incident to the negotiation,
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees, expenses and
disbursements of their respective investment bankers, accountants, counsel and
other representatives. If this Agreement is terminated for any reason other than
as a result of Buyer's material breach, then on such termination date Seller and
its Subsidiaries shall jointly and severally reimburse and indemnify Buyer, CT
or their respective Affiliates and subsidiaries all amounts paid at any time or
from time to time (either before or after the termination of this Agreement) by
Buyer, CT or their respective Affiliates and subsidiaries to certain German
banks in reduction of the obligation of Seller and/or its Subsidiaries to such
German banks to the extent such amounts have not been recovered prior to such
termination date as credits against the purchase price of Seller products sold
to Buyer, CT or their respective Affiliates and subsidiaries (it being
understood that Seller and its Subsidiaries shall immediately reimburse Buyer,
CT and their respective Affiliates and subsidiaries for any amounts paid by
Buyer, CT or their respective Affiliates and subsidiaries to such German banks
after the termination of this Agreement for reduction of the obligations of
Seller and/or its Subsidiaries to such German banks).
11.15 REMEDIES; WAIVER.
To the extent permitted by Law all rights and remedies existing under
this Agreement and any related agreements or documents are cumulative to and not
exclusive of, any rights or remedies otherwise available. No failure on the part
of any party to exercise or delay in exercising any right hereunder shall be
deemed a waiver thereof, nor shall any single or partial exercise preclude any
further or other exercise of such or any other right.
<PAGE>
11.16 KNOWLEDGE CONVENTION.
Whenever any statement herein or in any schedule, exhibit, certificate
or other documents delivered to any party pursuant to this Agreement is made "to
its knowledge" or "to its best knowledge" or words of similar intent or effect
of any party or its representative, such person shall make such statement only
after conducting a diligent investigation of the subject matter thereof, and
each statement shall be deemed to include a representation that such
investigation has been conducted.
11.17 REPRESENTATION BY COUNSEL; INTERPRETATION.
Seller and Buyer each acknowledge that each party to this Agreement
has been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of Law or any
legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of Buyer and Seller.
11.18 SPECIFIC PERFORMANCE.
Seller and Buyer each acknowledge that, in view of the uniqueness of
the Business and the transactions contemplated by this Agreement, each party
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed in accordance with its terms, and
therefore agrees that the other party shall be entitled to specific enforcement
of the terms hereof in addition to any other remedy to which it may be entitled,
at law or in equity.
11.19 SEVERABILITY.
If any provision of this Agreement is determined to be invalid,
illegal or unenforceable by any Governmental Entity, the remaining provisions of
this Agreement to the extent permitted by Law shall remain in full force and
effect provided that the essential terms and conditions of this Agreement for
both parties remain valid, binding and enforceable. In event of any such
determination, the parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof. To the extent permitted by Law, the parties hereby to the same extent
waive any provision of Law that renders any provision hereof prohibited or
unenforceable in any respect.
11.20 NO CONSEQUENTIAL DAMAGES.
Notwithstanding anything to the contrary elsewhere in this Agreement,
no party (or its Affiliates) shall, in any event, be liable to the other party
(or its Affiliates) for any consequential damages, including, but not limited
to, loss of revenue or income, or loss of business reputation or opportunity
relating to the breach or alleged breach of this Agreement.
11.21 EFFECTIVENESS.
The effectiveness of this Agreement is expressly conditioned upon
Seller delivering to Buyer within five business days following the date hereof
the Schedules to this Agreement (other than the Schedules referenced in Section
8.2(f)) in form and substance reasonably satisfactory to Buyer. Each reference
in this Agreement to "as of the date hereof" shall mean the date of
effectiveness of this Agreement pursuant to this Section 11.21.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
BUYER:
MARKER INTERNATIONAL GMBH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SELLER:
MARKER INTERNATIONAL
By:
--------------------------------
Name: Kevin Hardy
Title: Chief Financial Officer
By:
--------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officers as of the day and year first above
written.
BUYER:
MARKER INTERNATIONAL GMBH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SELLER:
MARKER INTERNATIONAL
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
BUYER:
MARKER INTERNATIONAL GMBH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SELLER:
MARKER INTERNATIONAL
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
BUYER:
MARKER INTERNATIONAL GMBH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SELLER:
MARKER INTERNATIONAL
By:
--------------------------------
Name: Peter C. Weaver
Title: President, CEO
By:
--------------------------------
Name:
Title:
