SCHEDULE 13D
Amendment No. 4
Standard Brands Paint Company
Common Stock
Cusip # 853156107
Filing Fee: No
Cusip # 853156107
Item 1: Reporting Person - FMR Corp. - (Tax ID: 04-2507163)
Item 4: PF
Item 6: Commonwealth of Massachusetts
Item 7: 1,561,374
Item 8: None
Item 9: 9,863,692
Item 10: None
Item 11: 9,863,692
Item 13: 32.56%
Item 14: HC
PREAMBLE
The filing of this amended and restated Schedule 13D is not,
and should not be deemed to be, an admission that such Schedule
13D is required to be filed. See the discussion under Item 2.
Item 1. Security and Issuer.
This statement relates to shares of the Common Stock, $0.01
par value (the "Shares") of Standard Brands Paint Company, a
Delaware corporation (the "Company"). The principal executive
offices of the Company are located at 4300 West 190th Street,
Torrance, CA 90509.
Item 2. Identity and Background.
This statement is being filed by FMR Corp., a Massachusetts
Corporation ("FMR"). FMR is a holding company one of whose
principal assets is the capital stock of a wholly-owned
subsidiary, Fidelity Management & Research Company ("Fidelity"),
which is also a Massachusetts corporation. Fidelity is an
investment advisor which is registered under Section 203 of the
Investment Advisors Act of 1940 and which provides investment
advisory services to more than 30 investment companies which are
registered under Section 8 of the Investment Company Act of 1940
and serves as investment advisor to certain other funds which are
generally offered to limited groups of investors (the "Fidelity
Funds"). Fidelity Management Trust Company ("FMTC"), a wholly-
owned subsidiary of FMR Corp. and a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, serves as trustee
or managing agent for various private investment accounts,
primarily employee benefit plans and serves as investment adviser
to certain other funds which are generally offered to limited
groups of investors (the "Accounts"). Various directly or
indirectly held subsidiaries of FMR are also engaged in
investment management, venture capital asset management,
securities brokerage, transfer and shareholder servicing and real
estate development. The principal offices of FMR, Fidelity, and
FMTC are located at 82 Devonshire Street, Boston, Massachusetts
02109.
Edward C. Johnson 3d owns 24.9% of the outstanding voting
common stock of FMR. Mr. Johnson 3d is Chairman of FMR Corp.
The business address and principal occupation of Mr. Johnson 3d
is set forth in Schedule A hereto.
The Shares to which this statement relates are owned
directly by one of the Fidelity Funds, (the "Fidelity Fund") and
by one fund managed by FMTC (the "Fund").
The name, residence or business address, principal
occupation or employment and citizenship of each of the executive
officers and directors of FMR are set forth in Schedule A hereto.
Within the past five years, none of the persons named in
this Item 2 or listed on Schedule A has been convicted in any
criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to any civil proceeding and as
a result thereof was or is subject to any judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to federal or state securities laws
or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is amended as follows:
The Fidelity Fund received certain Shares of common stock
pursuant to the Company's 1993 plan of reorganization filed under
Chapter 11 of the United States Bankruptcy Code (the "Joint Plan
of Reorganization"). As a result of the Company's 1995
Restructuring described in Item 4 and related events, the
Fidelity Fund received 1,216,595 Shares of common stock and
851,616 shares preferred stock which, upon the satisfaction of
certain events, became convertible into 6,846,993 Shares of
common stock. On June 15, 1995, the Fidelity Fund converted all
of its preferred stock into such 6,846,993 Shares.
Except as described above, the Fidelity Fund has not
acquired any Shares of the Company common stock. Proceeds from
the sale of 380,600 Shares which have been sold since the filing
of Amendment No. 3 to this Schedule 13D reporting transactions
through and including May 24, 1995, aggregated approximately
$1,104,107. The attached Schedule B sets forth information
concerning the sale of such Shares.
The Fund received certain Shares of common stock pursuant to
the Company's 1993 plan of reorganization filed under Chapter 11
of the United States Bankruptcy Code (the "Joint Plan of
Reorganization"). As a result of the Company's 1995
Restructuring described in Item 4 and related events, the Fund
received 228,807 Shares of common stock and 160,165 shares of
preferred stock which, upon the satisfaction of certain events,
became convertible into 1,287,726 Shares of common stock. On
June 15, 1995, the Fund converted all of its preferred stock into
such 1,287,726 Shares.
Except as described above, the Fund has not acquired any
Shares of the Company common stock. Proceeds from the sale of
71,600 Shares which have been sold since the filing of Amendment
No. 3 to this Schedule 13D reporting transactions through and
including May 24, 1995, aggregated approximately $241,277. The
attached Schedule B sets forth information concerning the sale of
such Shares.
Item 4. Purpose of Transaction.
The Fidelity Fund and the Fund acquired the Shares pursuant
to an exchange of bank debt which they had acquired in a
privately negotiated purchase from the original holder for equity
pursuant to the Joint Plan of Reorganization, pursuant to the
consummation of the Restructuring described below and pursuant to
the conversion of preferred stock into common stock on June 15,
1995. The Fidelity Fund and the Fund hold the Shares for
investment purposes.
Fidelity and FMTC, respectively, intend to review
continuously the equity position of the Fidelity Fund and the
Fund in the Company. Depending upon future evaluations of the
business prospects of the Company and upon other developments,
including, but not limited to, general economic and business
conditions and money market and stock market conditions, Fidelity
and FMTC may determine to increase or decrease the equity
interest in the Company by acquiring additional Shares, or by
disposing of all or a portion of the Shares, in each case subject
to the restrictions contained in the Investment Agreement
described below.
The Fidelity Fund and the Fund entered into an Investment
Agreement dated as of February 15, 1995 with the Company, Corimon
Corporation, Corimon, S.A.C.A. ("CRM"), and certain creditors and
shareholders of the Company, pursuant to which Corimon
Corporation acquired a controlling interest in the Company as
part of the Company's restructuring of its debt and equity
capital (the "Restructuring"). The following description of the
Investment Agreement does not purport to be complete and is
qualified in its entirety by reference to the Investment
Agreement, which is attached as Exhibit 1 hereto and is
incorporated herein by reference. The principal elements of the
Restructuring were:
A. An amendment to the Company's Restated Certificate of
Incorporation to increase the authorized capital stock of the
Company and to effect a 1-for-10 reverse stock split (the
"Reverse Stock Split").
B. The sale by the Company to Corimon Corporation of
15,700,496 newly issued Shares, which constituted approximately
76.1% of the Company's outstanding common stock, for $14 million.
The new Shares were priced at $0.89 per share post-Reverse Stock
Split, or $0.089 per share pre-Reverse Stock Split. The $14
million to be paid by Corimon Corporation was advanced to the
Company upon execution of the Investment Agreement in the form of
an interim loan.
C. The exchange of $16 million of the Company's
outstanding debt (including approximately $8.7 million and $1.6
million, respectively, of debt held by the Fidelity Fund and the
Fund) into 2,242,926 newly issued Shares and 1,570,049 newly
issued shares of 8% cumulative convertible mandatory redeemable
preferred stock of the Company (the "Preferred Stock"). The
Shares were priced at the same price per share as the Shares sold
to Corimon Corporation as described in paragraph B above, and the
Preferred Stock, which has a conversion price of $1.11 per share
of common stock, was priced at $8.92 per share.
D. The transfer by the Company of 15 of its real estate
properties to a real estate liquidating trust, established by the
Company on July 12, 1994 (the "Liquidating Property Trust"), in
which the Company had a residual interest; the release of related
long-term debt of the Company; and the transfer of the Company's
residual interest in the Liquidating Property Trust to Corimon
Corporation for an additional $2 million payable in cash by
Corimon Corporation, and to the Fidelity Fund, the Fund,
Transamerica Life Insurance and Annuity Company ("TLIAC"),
Transamerica Occidental Life Insurance Company ("TOLIC"), Sun
Life Insurance Company of America ("SAFI") and Anchor National
Life Insurance Company ("ANLIC") in consideration of their
participation in the Restructuring. In the aggregate, as a
result of the Restructuring, properties or property interests of
the Company having a book value as of January 29, 1995 of
approximately $84 million were disposed of and consolidated long-
term debt of the Company of approximately $67 million was
released.
The terms of the Restructuring under the Investment
Agreement were approved by the stockholders of the Company and
became effective as of May 16, 1995 (the "Effective Date").
Neither Fidelity nor FMTC has any present plan or proposal
which relates to or would result in (i) an extraordinary
corporate transaction, such as a merger, reorganization,
liquidation, or sale or transfer of a material amount of assets
involving the Company or any of its subsidiaries, (ii) any change
in the Company's present Board of Directors or management, (iii)
any material changes in the Company's present capitalization or
dividend policy or any other material change in the Company's
business or corporate structure, (iv) any change in the Company's
charter or by-laws, or (v) the Shares becoming eligible for
termination of their registration pursuant to Section 12(g)(4) of
the 1934 Act.
In connection with the Investment Agreement, the Fidelity
Fund and the Fund entered into a Registration Rights Agreement
and a Put Agreement with respect to the Preferred Stock and
Shares to be acquired by them in the Restructuring. The
Registration Rights Agreement, attached hereto as Exhibit 2 and
incorporated herein by reference, provides that the holders of
Preferred Stock and Shares acquired pursuant to the Restructuring
(including the Fidelity Fund and the Fund) will have the right to
have their shares registered under the Securities Act of 1933, as
amended (the "1933 Act"), by the Company, and certain "piggyback"
rights, subject to standard underwriters' cutback provisions.
The holders of Preferred Stock and Shares will be entitled to
liquidated damages from the Company in the event that the Company
fails to timely file the registration statement or fails to
receive an effective order from the Securities and Exchange
Commission within a certain period of time after filing. The
Company will bear the registration expenses (exclusive of
underwriting discounts and commissions) of all registrations.
The Put Agreement, attached hereto as Exhibit 3 and incorporated
herein by reference, provides that the parties named therein
(including the Fidelity Fund and the Fund) have the right to put
to CRM (i) the Shares that they acquired pursuant to the
Restructuring at a price of $0.89 per share if such Shares are
not registered under the 1933 Act in accordance with the
Registration Rights Agreement, and (ii) the shares of Preferred
Stock that they acquired pursuant to the Restructuring at a price
of $4.46 per share if dividends have not been paid on such shares
for a period of six quarters.
The filing of this statement on Schedule 13D shall not be
construed as an admission by the Fidelity Fund nor the Fund that
it is a member of any such group which may be construed to exist
by virtue of the relationships reported in this Item 4 among the
parties to the Investment Agreement or otherwise.
Item 5. Interest in Securities of Issuer.
Although Item 5 assumes that FMR, Fidelity, and FMTC,
beneficially own all the Shares, reference is made to Item 2 for
a disclaimer of beneficial ownership with respect to the
securities which are "beneficially owned" by the other
corporations.
(a) FMR beneficially owns, through Fidelity, as investment
advisor to the Fidelity Fund, 8,302,318 Shares, or approximately
27.4%, of the outstanding Shares of the Company, and through
FMTC, the managing agent for the Fund, 1,561,374 Shares, or
approximately 5.15%, of the outstanding Shares of the Company.
Neither FMR, Fidelity, FMTC, nor any of its affiliates nor, to
the best knowledge of FMR, any of the persons named in Schedule A
hereto, beneficially owns any other Shares. The combined
holdings of FMR, Fidelity, and FMTC, are 9,863,692 Shares of the
Company, or approximately 32.56% of the outstanding Shares of the
Company.
(b) FMR, through is control of Fidelity, investment advisor
to the Fidelity Fund, and the Fund each has sole power to dispose
of the Shares. Neither FMR nor Mr. Johnson has the sole power to
vote or direct the voting of the 8,302,318 Shares, owned directly
by the Fidelity Fund, which power resides with the Fund's Boards
of Trustees. Fidelity carries out the voting of the Shares under
written guidelines established by the Fund's Board of Trustees.
FMR, through its control of FMTC, investment manager to the Fund,
and the Fund each has sole dispositive power over 1,561,374
Shares, and sole power to vote or to direct the voting of
1,561,374 Shares, and no power to vote or to direct the voting of
Shares owned by the Fund.
Item 6. Contract, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Except as described above in Items 4 and 5, neither FMR nor
any of its affiliates nor, to the best knowledge of FMR, any of
the persons named in Schedule A hereto has any joint venture,
finder's fee, or other contract or arrangement with any person
with respect to any securities of the Company.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Investment Agreement
Exhibit 2 - Registration Rights Agreement
Exhibit 3 - Put Agreement
This statement speaks as of its date, and no inference
should be drawn that no change has occurred in the facts set
forth herein after the date hereof.
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
FMR Corp.
DATE: June 29, 1995 By: /s/Arthur
Loring
Arthur Loring
Vice President-Legal
SCHEDULE A
The name and present principal occupation or employment of
each executive officer and director of FMR Corp. are set forth
below. The business address of each person is 82 Devonshire
Street, Boston, Massachusetts 02109, and the address of the
corporation or organization in which such employment is conducted
is the same as his business address. All of the persons listed
below are U.S. citizens.
POSITION WITH
PRINCIPAL
NAME FMR CORP. OCCUPATION
Edward C. Johnson 3d President,
Chairman of the
Director, CEO Board and CEO, FMR
Chairman &
Mng. Director
J. Gary Burkhead Director President-Fidelity
Caleb Loring, Jr. Director, Director, FMR
Mng. Director
James C. Curvey Director, Sr. V.P., FMR
Sr. V.P.
William L. Byrnes Vice Chairman Vice Chairman, FIL
Director & Mng.
Director
Robert C. Pozen Sr. V.P. & Gen'l Sr. V.P. & Gen'l
Counsel Counsel, FMR
Mark Peterson Exec. Exec.
V.P.-Management V.P.-Management
Resources Resources, FMR
Denis McCarthy Sr. Vice Pres. - Vice Pres., Chief
Chief Financial Financial Officer,
Officer FMR
SCHEDULE B
Standard Brands Paint Company
One Fidelity Fund sold Shares since May 25, 1995 at the dates and
at the prices set forth below. The transactions were made for
cash in open market transactions or with other investment
companies with the same or an affiliated investment advisor.
DATE SHARES PRICE
05-25-95 84,000 $4.08
05-26-95 32,400 3.41
05-31-95 1,100 3.50
06-01-95 58,200 2.90
06-05-95 10,500 2.91
06-12-95 25,700 2.62
06-14-95 4,100 2.25
06-15-95 4,100 2.19
06-16-95 21,400 2.13
06-19-95 40,300 2.05
06-20-95 40,300 2.08
06-21-95 38,500 2.41
06-22-95 20,000 2.86
SCHEDULE B
Standard Brands Paint Company
One Fund sold Shares since May 25, 1995 at the dates and at the
prices set forth below. The transactions were made for cash in
open market transactions or with other investment companies with
the same or an affiliated investment advisor.
DATE SHARES PRICE
05-25-95 16,000 $4.08
05-26-95 6,000 3.41
05-31-95 200 3.50
06-01-95 11,100 2.90
06-05-95 2,000 2.91
06-12-95 4,800 2.62
06-14-95 800 2.25
06-15-95 800 2.19
06-16-95 3,600 2.13
06-19-95 7,200 2.05
06-20-95 7,200 2.08
06-21-95 7,200 2.41
06-22-95 4,700 2.86
INVESTMENT AGREEMENT
Among
CORIMON, S.A.C.A.
a Venezuelan corporation
CORIMON CORPORATION,
a Delaware corporation
FIDELITY CAPITAL & INCOME FUND, KODAK RETIREMENT INCOME PLAN
TRUST FUND, TRANSAMERICA LIFE INSURANCE AND ANNUITY CO.,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE CO., SUN LIFE INSURANCE
COMPANY OF AMERICA, ANCHOR NATIONAL LIFE INSURANCE COMPANY,
STANDARD BRANDS PAINT COLLATERAL TRUST
and
STANDARD BRANDS PAINT COMPANY,
a Delaware corporation
Dated as of February 15, 1995
TABLE OF CONTENTS
ARTICLE I
Definitions
1.1.
Definit
ions 1
1.2.
Interpr
etation 8
ARTICLE II
Interim Funding
2.1. Note
Purchase Agreement 8
2.2. Grantor
Trust Transactions 9
2.3.
Investm
ent Agreement and Ancillary Funding Agreements 9
2.4.
Directo
rs and By-Laws 9
2.5. Funding
9
ARTICLE III
Purchase and Sale of Shares
3.2.
Exchang
e of Debt and Issuance of Shares 10
3.3. Advisor
Fees 10
3.4.
Fidelit
y Note Purchase Agreement. 10
3.5.
Propert
y Transfer 10
3.6. Leases
and Other Ancillary Agreements 10
3.7. Closing
10
ARTICLE IV
Conditions to Funding and Closing
4.1.
Conditi
ons of Parent and Holdings with Respect to the Funding
and Closing 11
4.2.
Conditi
ons of Company with Respect to the Funding and Closing
12
4.3.
Conditi
ons of the Other Investors and
Grantor Trust with Respect to the Funding and Closing
13
ARTICLE V
Representations and Warranties
5.1.
Represe
ntations and Warranties of Company 14
5.2.
Represe
ntations and Warranties of Parent and Holdings 23
5.3.
Represe
ntations and Warranties of the Other Investors 25
ARTICLE VI
Covenants Relating to Conduct of Business
of Company
6.1. Conduct
of Business 26
ARTICLE VII
Additional Agreements
7.1.
Prepara
tion of the Proxy Statement; Stockholders Meeting 28
7.2. Access
to Information; Confidentiality 28
7.3.
Reasona
ble Efforts; Notification; Consent 28
7.4. Fees
and Expenses 29
7.5. Public
Announcements 30
7.6.
Stockho
lder Litigation 30
7.7.
Employm
ent Arrangements 30
7.8.
Reporti
ng Company 30
7.9. NYSE
Listing 30
7.10.
Liquida
ting Property Trust Leases and Property Transfer 30
7.11.
Agreeme
nt to Vote Shares 30
7.12. No
Voting Trusts 30
7.13. No
Proxy Solicitations 30
7.14.
Transfe
r and Encumbrance 30
7.15.
Additio
nal Purchases 31
7.16.
Covenan
ts Relating to Post-Funding Tax Matters 31
7.17.
Environ
mental Indemnity, Etc. 32
ARTICLE VIII
Termination, Amendment and Waiver
8.1.
Termina
tion 33
8.2. Effect
of Termination 33
8.3.
Amendme
nt 34
8.4.
Extensi
on; Waiver 34
8.5.
Procedu
re for Termination, Amendment, Extension or Waiver
34
ARTICLE IX
General Provisions
9.1.
Surviva
l of Warranties and Certain Agreements 34
9.2. Notices
34
9.3.
Counter
parts 36
9.4. Entire
Agreement; No Third-Party Beneficiaries 36
9.5.
Assignm
ent 36
9.6.
Severab
ility 37
9.7.
GOVERNI
NG LAW 37
9.8.
Enforce
ment 37
SCHEDULES
Schedule 1.1 Financial Information
Schedule 3.2 Debt Exchange
Schedule 5.1(b) Subsidiaries
Schedule 5.1(c) Stock Equivalents
Schedule 5.1(d) Consents
Schedule 5.1(e) Balance Sheet
Schedule 5.1(g) Certain Changes
Schedule 5.1(h) Mortgaged Property
Schedule 5.1(i) Litigation
Schedule 5.1(k) Taxes
Schedule 5.1(m) Disqualified Individual Payments
Schedule 5.1(q) Material Contracts
Schedule 5.1(t) Affiliates
Schedule 5.1(aa) Grantor Trust Subsidiaries
EXHIBITS
Exhibit A Amendment to Certificate of Incorporation
Exhibit B Certificate of Designations
Exhibit C Form of Proxy
Exhibit D Closing Memorandum
Exhibit E Allocation Schedule
Exhibit F Amended Liquidating Property Trust Agreement
Exhibit G Third Amended Agreement
Exhibit H Second Amended and Restated Trust Loan
Agreement
INVESTMENT AGREEMENT dated as of February 15, 1995
(this "Agreement"), among Corimon, S.A.C.A., a Venezuelan
corporation ("Parent"), Corimon Corporation, a Delaware
corporation and a wholly owned Subsidiary of Parent ("Holdings"),
Fidelity Capital & Income Fund, ("Investor1"), Kodak Retirement
Income Plan Trust Fund, ("Investor2"), Transamerica Life
Insurance and Annuity Co., a North Carolina corporation
("Investor3"), Transamerica Occidental Life Insurance Co., a
California corporation ("Investor4"), Sun Life Insurance Company
of America, an Arizona corporation ("Investor5"), Anchor National
Life Insurance Company, a California corporation ("Investor6"
and, together with Investor1, Investor2, Investor3, Investor4 and
Investor5, the "Other Investors"), Standard Brands Paint
Collateral Trust, a California trust ("Grantor Trust"), and
Standard Brands Paint Company, a Delaware corporation
("Company").
RECITALS
WHEREAS Parent, Holdings, the Other Investors, Grantor
Trust and Company desire to make the respective investments in,
and recapitalization of, Company on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS Parent, Holdings, the Other Investors, Grantor
Trust and Company desire to make certain representations,
warranties, covenants and agreements and also to prescribe
various conditions in connection with the Transactions
contemplated hereby; and
WHEREAS, simultaneously with the execution and delivery
of this Agreement, each of Parent, Holdings, the Other Investors,
Grantor Trust and Company has entered into the Ancillary Funding
Agreements to which it is a party.
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements contained in this
Agreement and in the Ancillary Agreements, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1. Definitions. For purposes of this Agreement:
"Advisor Shares" has the meaning set forth in
Section 3.3.
"Affiliate" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
"Allonges" means the Allonges delivered by Borrowers to
Servicing Agent pursuant to subsection 3.1A of the Second Amended
Agreement and substantially in the form of Exhibit II to the
Second Amended Agreement.
"Amended Liquidating Property Trust Agreement" means
the Amended and Restated Liquidating Property Trust Agreement to
be entered into among Company, Borrowers, Holdings, Newco, the
Insurance Company Lenders or their Affiliates and Bankers Trust
Company of California, as Trustee, in substantially the form of
Exhibit F hereto.
"Amendments" has the meaning set forth in
Section 3.1(b).
"Ancillary Agreements" means the Ancillary Funding
Agreements and the Ancillary Closing Agreements.
"Ancillary Closing Agreements" means (i) the Beneficial
Interest Purchase Agreement, (ii) the Liquidating Property Trust
Note Purchase Agreement, (iii) the Liquidating Property Trust
Amendment Documents and (iv) the Third Amended Agreement, (v) the
Liquidating Property Trust Lease Documents and (vi) the South
Warehouse Lease.
"Ancillary Funding Agreements" means (i) the
Stockholders Agreement, (ii) the Registration Rights Agreement,
(iii) the Proxies, (iv) the Put Agreement, (v) the Interim Loan
Agreement and (vi) the Intercreditor Agreement.
"Argosy" has the meaning set forth in Section 4.1(f).
"Bankruptcy Code" means the United States Code, the
Federal Rules of Bankruptcy Procedure promulgated thereunder, and
the local Bankruptcy Rules for the Central District of
California.
"Bankruptcy Court" means the United States Bankruptcy
Court for the Central District of California.
"base amount" has the meaning set forth in
Section 5.1(m).
"Beneficial Interest Purchase Agreement" has the
meaning set forth in the Liquidating Property Trust Amendment
Documents.
"Board of Directors" means the Board of Directors of
Company except where the context requires otherwise.
"Borrower Notes" means the promissory notes of
Borrowers issued pursuant to subsection 2.1D of the Original
Agreement and substantially in the form of Exhibit II to the
Original Agreement, as modified pursuant to the Allonges, and as
such notes may be amended, supplemented or otherwise modified
from time to time.
"Borrowers" means Standard Brands Paint Co., Standard
Brands Realty Co., Inc. and The Art Store.
"Business Day" means any day excluding Saturday, Sunday
and any day that is a legal holiday under the laws of the State
of California or New York or is a day on which banking
institutions located in the State of California or New York are
authorized by law or other governmental action to close.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal, or mixed) by that
Person as lessee that would, in conformity with GAAP, be required
to be accounted for as a capital lease on the balance sheet of
that Person.
"Certificate of Designations" means the certificate of
designations of Company, in the form of Exhibit B hereto.
"Certificate of Incorporation" means the certificate of
incorporation of Company, and as amended in the form of Exhibit A
hereto.
"Closing" has the meaning set forth in Section 3.7.
"Closing Date" has the meaning set forth in
Section 3.7.
"Closing Documents" means the documents agreed to be
delivered at the Closing as set forth in the Closing memorandum
attached as Exhibit D hereto.
"Common Stock" means the common stock of Company, par
value $.01 per share, and as converted pursuant to the Stock
Split.
"Company" has the meaning set forth above.
"Contingent Obligation", as applied to any Person,
means any direct or indirect liability, contingent or otherwise,
of that Person with respect to any indebtedness, lease, dividend,
letter of credit, or other obligation of itself or another,
including, without limitation, any obligation under any interest
rate swap agreement or currency swap agreement, any obligation
directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business),
co-made, or discounted or sold with recourse by that Person, or
in respect of which that Person is otherwise directly or
indirectly liable, including, without limitation, any such
obligation for which that Person is in effect liable through any
agreement (contingent or otherwise) to purchase, repurchase, or
otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions, or otherwise), or to maintain the solvency or any
balance sheet, income or other financial condition of the obligor
of such obligation, or to make payment for any products,
materials, or supplies or for any transportation, services, or
lease regardless of the non-delivery or non-furnishing thereof,
in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof.
The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported.
"DGCL" means the General Corporation Law of the State
of Delaware.
"Director" means a member of the Board of Directors.
"disqualified individual" has the meaning set forth in
Section 5.1(m).
"Dollars" means the lawful money of the United States
of America.
"Effective Date" means the effective date of the Plan,
as provided therein.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor
statute.
"ERISA Affiliate", as applied to any Person, means any
trade or business (whether or not incorporated) that is a member
of a group of which that Person is also a member and that is
under common control within the meaning of the regulations
promulgated under Section 414 of the Internal Revenue Code.
"Employee Stock Options" has the meaning set forth in
Section 5.1(c).
"excess parachute payment" has the meaning set forth in
Section 5.1(m).
"Exchange Act" means the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder, as
amended.
"Existing Grantor Trust Indebtedness" means
Indebtedness of Company or Borrowers to the Grantor Trust in an
aggregate principal amount not to exceed $6,000,000 pursuant to
the Existing Grantor Trust Loan Agreements.
"Existing Grantor Trust Loan Agreements" means the
documents listed on Schedule 9 to the New Loan Agreement and the
Loan Agreement dated March 16, 1994 among Company, the New Loan
Borrowers and the Grantor Trust.
"Existing Insurance Company Indebtedness" means
indebtedness of Company and Interim Borrowers to the Insurance
Company Lenders pursuant to the Existing Insurance Company Loan
Agreement.
"Existing Insurance Company Loan Agreement" means the
Amended and Restated Loan Agreement dated as of June 14, 1993
among Company, Borrowers, Insurance Company Lenders and Servicing
Agent, as such Agreement may be amended, modified or supplemented
from time to time, including pursuant to the Third Amended
Agreement.
"Fidelity Limited Guaranty" means the limited recourse
guaranty by Company of up to $10,000,000 of the obligations of
the Grantor Trust under the Secured Fidelity Note pursuant to the
Plan, which amount has been reduced in accordance with its terms
to $2,500,000, as it may be amended, supplemented or otherwise
modified pursuant to Section 6.14 of the New Loan Agreement.
"Fidelity Note Purchase Agreement" means a Note
Purchase Agreement for $5,000,000 or more of notes between
Company and one or more entities affiliated with Investor1 and
Investor2.
"Filed SEC Documents" has the meaning set forth in
Section 5.1(g).
"Funding" and "Funding Date" have the meanings set
forth in Section 2.5.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants, including, without limitations, adjustments
prescribed in accordance with SOP 90-7 if elected by the Company,
and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity
as may be approved by a significant segment of the accounting
profession, that are applicable to the circumstances as of the
date of determination.
"Governmental Entity" has the meaning set forth in
Section 4.1(b).
"Grantor Trust" has the meaning set forth above.
"Grantor Trust Documents" means the Grantor Trust Asset
Purchase Agreement (as defined in the Plan), the Existing Grantor
Trust Loan Agreements, the Secured Fidelity Notes, the Fidelity
Limited Guaranty and the "Grantor Trust Documents" as defined in
the Plan.
"Grantor Trust Subsidiaries" means The Art Store
Holding Company, The Art Store and SBP Properties Holding
Company.
"Holdings" has the meaning set forth above.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations
promulgated thereunder, as amended.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations
with respect to Capital Leases that is capitalized on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of
property or services which purchase price is (y) due more than
six months from the date of incurrence of the obligation in
respect thereof, or (z) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any mortgage,
pledge, Lien, security interest, or vendor's interest under any
conditional sale or other title retention agreement existing on
any property or asset owned or held by that Person regardless
whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person;
provided that, applied to Borrowers, "Indebtedness" shall not
include the Liquidating Property Trust Obligations.
"Insurance Company Lenders" means Investor3, Investor4,
Investor5 and Investor6.
"Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the date hereof, among Holdings, the Other
Investors, Interim Borrowers and Company, in the form of
Exhibit C to the Interim Loan Agreement.
"Interim Borrowers" means Standard Brands Paint Co. and
Standard Brands Realty Co., Inc.
"Interim Loan Agreement" means the Interim Loan
Agreement, dated as of the date hereof, among Company, Interim
Borrowers and Holdings.
"Interim Notes" means the promissory notes of Interim
Borrowers issued pursuant to the Interim Loan Agreement and
substantially in the form of Exhibit A thereto, and as such
Interim Notes may be amended, supplemented, or otherwise modified
from time to time.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter. For purposes of this Agreement, all reference to
Sections of the Internal Revenue Code shall include any
applicable predecessor provisions to such Sections.
"Lender" and "Lenders" have the meanings set forth in
the New Loan Agreement.
"Lien" means any lien, mortgage, pledge, security
interest, charge, or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security
interest).
"Liquidating Property Trust" means the liquidating
property trust established pursuant to the Liquidating Property
Trust Documents.
"Liquidating Property Trust Agreement" means the Trust
Agreement dated as of July 12, 1994 among Company, Standard
Brands Paint Co., Standard Brands Realty Co. Inc., as Depositors,
and Bankers Trust Company of California, N.A., as Trustee.
"Liquidating Property Trust Amendment Documents" means
the Amended Liquidating Property Trust Agreement and the Second
Amended and Restated Trust Loan Agreement.
"Liquidating Property Trust Documents" means the
Liquidating Property Trust Agreement and the Amended and Restated
Trust Loan Agreement dated as of July 12, 1994 among the
Liquidating Property Trust, Insurance Company Lenders and
Servicing Agent, as each such agreement may be amended,
supplemented or modified from time to time, including by the
Liquidating Property Trust Amendment Documents.
"Liquidating Property Trust Lease Documents" has the
same meaning as Depositors Leases in the Liquidating Property
Trust Amendment Documents.
"Liquidating Property Trust Leases" has the meaning set
forth in Section 4.1(k).
"Liquidating Property Trust Note Purchase Agreement"
means the Note Purchase Agreement among Holdings, an entity
organized by Investor1 and Investor2 and the Insurance Company
Lenders.
"Liquidating Property Trust Obligations" means all of
the obligations of the Liquidating Property Trust to Insurance
Company Lenders and Servicing Agent under the Liquidating
Property Trust Documents.
"material adverse change" or "material adverse effect"
means any change or effect (or any development that is reasonably
likely to result in any change or effect) that is materially
adverse to the business, properties, assets, condition (financial
or otherwise), results of operations or prospects of Company and
its Subsidiaries in each case taken as a whole, or to the value
of the Common Stock or the Preferred Stock. By way of
background, Schedule 1.1 sets forth the most recent financial
information of the Company.
"Material Contracts" has the meaning set forth in
Section 5.1(q).
"Mortgage" or "Mortgages" have the meanings set forth
in the New Loan Agreement and the Interim Loan Agreement.
"Mortgaged Property" means real and personal property
subject to the lien of a Mortgage; but shall not include the
Mortgaged Properties which were transferred to the Liquidating
Property Trust pursuant to the Liquidating Property Trust
Documents.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA in which any employees of
Company or any ERISA Affiliate of Company participate or from
which any such employees may derive a benefit.
"New Borrower Notes" means the promissory notes of New
Loan Borrowers issued pursuant to subsection 2.1(D) of the New
Loan Agreement and substantially in the form of Exhibit II
annexed to the New Loan Agreement.
"New Loan Agreement" means that certain Loan Agreement
dated as of March 16, 1994 by and among Company, the New Loan
Borrowers, the lenders named therein, Transamerica Occidental
Life Insurance Company, as servicing and collateral agent for
lenders, as such New Loan Agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"New Loan Borrowers" means Standard Brands Paint Co.
and Standard Brands Realty Co., Inc.
"New Shares" has the meaning set forth in Section 3.2.
"Note Purchase Agreement" means the Note Purchase
Agreement, dated as of the date hereof, between Holdings and
Grantor Trust.
"Obligations" means all obligations of every nature of
Company from time to time owed to Holdings under the Interim Loan
Agreement and the Interim Notes.
"Original Agreement" means the Loan Agreement, dated as
of November 30, 1987, among Company, Borrowers, Insurance Company
Lenders and Servicing Agent, as amended to the date hereof.
"Other Investors" has the meaning set forth above.
"Party" means a Party to this Agreement.
"Pension Plan" means any employee plan that is subject
to the provisions of Title IV of ERISA in which any employees of
Company or any ERISA Affiliate of Company participate or from
which any such employees may derive a benefit, other than a
Multiemployer Plan.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, or other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Plan" means Debtors' Fourth Amended Joint Plan of
Reorganization filed March 1993, filed by Company in the
Reorganization Cases on March 1993 and as it was amended
thereafter, was confirmed on May 14, 1993 and became effective on
June 14, 1993.
"Preferred Shares" has the meaning set forth in Section
3.2.
"Preferred Stock" means the preferred stock of Company
issued pursuant to the Certificate of Designations.
"Property Transfer" has the meaning set forth in
Section 4.1(j).
"Proposals" has the meaning set forth in
Section 4.1(i).
"Proxy" means a Proxy contemplated by Section 2.3(d),
in the form of Exhibit C hereto.
"Proxy Statement" has the meaning set forth in
Section 7.1(a).
"Put Agreement" means the Put Agreement, dated the date
hereof, among Parent, Grantor Trust, the Other Investors and
Company.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated the date hereof, among Holdings, the
Other Investors and Company.
"Reorganization Cases" means Company's and Borrowers'
(other than The Art Store) jointly administered cases under the
Bankruptcy Code.
"SARs" has the meaning set forth in Section 5.1(c)
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section
5.1(e).
"Second Amended Agreement" means the Second Amended and
Restated Existing Loan Agreement, dated as of July 12, 1994,
among Company, Borrowers, Insurance Company Lenders and Servicing
Agent.
"Second Amended and Restated Trust Loan Agreement"
means the Second Amended and Restated Trust Loan Agreement to be
entered into among the Liquidating Property Trust, Insurance
Company Lenders and Servicing Agent, in substantially the form of
Exhibit H hereto.
"Secured Fidelity Notes" means the Fixed Rate and
Floating Rate Senior Notes issued by the Grantor Trust to
Investor1 and Investor2.
"Securities Act" means the Securities Act of 1933 and
the rules and regulations promulgated thereunder, as amended.
"Servicing Agent" means Transamerica Occidental Life
Insurance Company, as servicing and collateral agent for Lenders
and Insurance Company Lenders.
"Share" has the meaning set forth in Section 3.1(a).
"Share Issuances" shall mean the issuances of the New
Shares, the Preferred Shares and the Advisor Shares pursuant to
Sections 3.2 and 3.3.
"South Warehouse" means the South Warehouse located in
Torrance, California and owned by the Liquidating Property Trust.
"South Warehouse Lease" has the meaning set forth in
Section 4.1(l).
"Stock Equivalents" has the meaning set forth in
Section 5.1(c).
"Stock Split" has the meaning set forth in
Section 3.1(a).
"Stockholders Agreement" means the Stockholders
Agreement, dated as of the date hereof, between Holdings and
Company.
"Stockholders Meeting" has the meaning set forth in
Section 7.1(b).
"Subsidiary" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
"Tax" or "Taxes" shall mean all federal, state, local
or foreign taxes, including but not limited to, income, gross
receipts, windfall profits, alternative minimum, value added,
severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes, together
with and interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
"Tax Return" shall mean all reports and returns
required to be filed with respect to Taxes.
"The Art Store Note" means the note dated May 31, 1993,
from The Art Store to Standard Brands Paint Co. in the principal
amount of $5,000,000, such note having been endorsed to Lewis C.
Leighton as Trustee of the Grantor Trust on June 14, 1993.
"Third Amended Agreement" means the Third Amended and
Restated Existing Agreement, among Company, Borrowers, Insurance
Company Lenders and Servicing Agent, in the form of Exhibit G
hereto.
"Transactions" means the Transactions contemplated by
this Agreement and the Ancillary Agreements.
"Working Capital Notes" means the notes issued pursuant
to the Fidelity Note Purchase Agreement and purchased by
Investor1.
1.2. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". For purposes of
this Agreement, the knowledge of any Party shall mean the
knowledge of such Party and its Subsidiaries after due inquiry.
ARTICLE II
Interim Funding
2.1. Note Purchase Agreement. Prior to the execution
and delivery of this Agreement, the Parties thereto executed and
delivered the Note Purchase Agreement and the closing occurred
thereunder.
2.2. Grantor Trust Transactions. The Transactions in
this Section 2.2 shall precede the Transactions in Sections 2.3
and 2.4; and the Transactions in this Section 2.2 shall occur in
the order stated. Grantor Trust shall pay $1,518,351 of Existing
Insurance Company Indebtedness and Company shall pay $237,374 of
Existing Insurance Company Indebtedness. Insurance Company
Lenders shall release the cross-collateralization and the
guarantees with respect to the Existing Insurance Company
Indebtedness owed to Insurance Company Lenders by The Art Store
and discharge any deed of trust or other security instrument
encumbering real or personal property owned by The Art Store.
Grantor Trust shall contribute the Art Store Note to The Art
Store Holding Company. The Art Store Holding Company shall
contribute the Art Store Note to The Art Store. The Art Store
shall cancel the Art Store Note. Investor1 and Investor2 shall
exchange the Secured Fidelity Notes with the Grantor Trust for
(i) $5,050,200 principal amount of Existing Grantor Trust
Indebtedness, (ii) $5,260,625 principal amount of New Borrower
Notes, (iii) the stock of The Art Store Holding Company, a
Delaware corporation, (iv) the stock of SBP Properties Holding
Company, a California corporation and (v) $594,824 in cash, all
in accordance with Exhibit E hereto. Investor1 and Investor2
shall deliver the Fidelity Limited Guaranty to Company for
cancellation.
2.3. Investment Agreement and Ancillary Funding Agree-
ments. Concurrently with the execution and delivery of this
Agreement,
the Parties thereto shall execute and deliver
each of the Ancillary Funding Agreements;
Holdings shall loan $14,000,000 to Interim
Borrowers, by wire transfer to Company for their benefit,
for a like amount of Interim Notes issued under the Interim
Loan Agreement and all filings and recordings in connection
with the Interim Loan Agreement shall be made;
All outstanding options, SARs and warrants for
the Common Stock shall be cancelled as of or prior to the
Funding Date and the Other Investors shall cancel and return
all options, SARs and warrants for Common Stock held by
them; and
(d) The Other Investors shall grant their irrevocable
proxies, each in the form of Exhibit C hereto, to Holdings or its
designees. Such proxies shall be irrevocable during the term of
this Agreement to the extent permitted under Delaware law and
coupled with an interest. Company and Borrowers shall
simultaneously pay all accrued and unpaid payments to the Other
Investors and all accrued and unpaid rent due under the Master
Lease (as defined in the Liquidating Property Trust Agreement).
Any defects in such proxies shall be corrected by the Other
Investor(s) concerned promptly after the Funding according to the
reasonable request of Holdings.
2.4. Directors and By-Laws. Concurrently with the
execution and delivery of this Agreement and the Stockholders
Agreement, Company will take all necessary action to appoint to
its Board of Directors the individuals set forth in Schedule 2.1
to the Stockholders Agreement and to adopt the By-Laws as set
forth in Schedule 2.6 to the Stockholders Agreement.
2.5. Funding. The interim funding which consists of
the Transactions referred to in Sections 2.1 through 2.4 (the
"Funding") shall be held at the offices of Sullivan & Cromwell,
444 South Flower Street, Los Angeles, California 90071 (provided
that certain of the actions contemplated by Section 2.1 may take
place in New York or Boston) as of the date of execution and
delivery of this Agreement (the "Funding Date"). At the Funding,
Company, Parent, Holdings, Grantor Trust and the Other Investors
shall deliver such opinions, certificates and documents as may be
reasonably requested to evidence such Funding.
ARTICLE III
Purchase and Sale of Shares
Prior to Closing, Company will effect a 1 for 10 reverse
stock split of its Common Stock, pursuant to which each 10
outstanding shares of its Common Stock, par value $.01 per
share, will be converted into one share (a "Share") of its
new Common Stock, par value $.01 per share (the "Stock
Split"). The Company may, at its option, pay cash for any
fractional shares or round such fractional shares up to the
nearest whole number of Shares.
Prior to or concurrently with Closing, Company
will amend its Certificate of Incorporation as set forth in
Exhibit A hereto (the "Amendments") and take all necessary
action to appoint to its Board of Directors the individuals
set forth in Schedule 2.1 to the Stockholders Agreement.
3.2. Exchange of Debt and Issuance of Shares. Subject
to the terms and conditions set forth herein, Holdings,
Investor1, Investor2, Investor3, Investor4, Investor5 and
Investor6 shall exchange $14,000,000 of Interim Notes, $6,000,000
of Existing Grantor Trust Indebtedness and $10,000,000 of New
Borrower Notes (collectively, the "Exchange Debt") held by them
with the Company for 17,943,422 newly issued Shares (the "New
Shares") of Common Stock at an exchange price of $0.89 (based on
the principal amount of the Exchange Debt) per New Share and
1,570,049 newly issued shares (the "Preferred Shares") of
Preferred Stock at an exchange price of $8.92 (based on the
principal amount of the Exchange Debt) per Preferred Share, as
set forth on Schedule 3.2. Company shall simultaneously pay to
the holders thereof all interest accrued and unpaid on the
Exchange Debt. Each Party shall take all actions necessary to
release any Liens, security interests or guarantees in connection
with the Exchange Debt and discharge any deed of trust or other
security instrument encumbering real or personal property
securing such Exchange Debt.
3.3. Advisor Fees. As partial payment to Libra
Investments, Inc., Company shall issue to Libra Investments, Inc.
448,586 newly issued Shares (the "Advisor Shares"). Such partial
payment of their advisory fees shall be credited at a price of
$0.89 per Share.
3.4. Fidelity Note Purchase Agreement. It is
presently contemplated that, concurrently or shortly after the
Closing, a closing shall occur under a Fidelity Note Purchase
Agreement.
3.5. Property Transfer. Concurrently with the
Closing, the Parties thereto shall execute and deliver the
Liquidating Property Trust Amendment Documents and the Third
Amended Agreement and the Property Transfer shall occur under the
Liquidating Property Trust Amendment Documents.
3.6. Leases and Other Ancillary Agreements.
Concurrently with the Closing, the Parties thereto shall execute
and deliver the Liquidating Property Trust Lease Documents and to
the extent not already done, the other Ancillary Agreements.
3.7. Closing. The Closing of the Transactions
contemplated in Sections 3.2 through 3.6 (the "Closing") shall be
held at the offices of Sullivan & Cromwell, 444 South Flower
Street, Los Angeles, California 90071 (provided that certain of
the actions may take place in New York or Boston) on the Business
Day immediately following the Stockholders Meeting or such other
date mutually agreed upon by the Parties. The date on which the
Closing shall occur is hereinafter referred to as the "Closing
Date". At the Closing, Company, Parent, Holdings, and the Other
Investors shall deliver the Closing Documents.
ARTICLE IV
Conditions to Funding and Closing
4.1. Conditions of Parent and Holdings with Respect to
the Funding and Closing. The obligations of Parent and Holdings
to consummate the Transactions contemplated to occur at the
Funding and the Closing are subject to the satisfaction (or
waiver by Parent and Holdings) as of the Funding and the Closing
of the following conditions (it is understood that the execution
and delivery of this Agreement and the Funding shall occur at the
same time):
The representations and warranties of Company,
Grantor Trust and the Other Investors set forth in this
Agreement and in the Ancillary Agreements qualified as to
materiality shall be true and correct, and those not so
qualified shall be true and correct in all material
respects, as of the date hereof and as of the time of the
Funding and the Closing as though made as of such time,
except to the extent such representations and warranties
expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall
be true and correct in all material respects, on and as of
such earlier date). Each of Company, Grantor Trust and the
Other Investors shall have performed or complied in all
material respects with all obligations and covenants
required by this Agreement and the Ancillary Agreements to
be performed or complied with by Company, the Grantor Trust
and the Other Investors by the time of the Funding and the
Closing.
No statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Federal, state, local
or foreign government or any court of competent jurisdic-
tion, administrative agency or commission or other
governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity") or other legal restraint
or prohibition preventing the Transactions shall be in
effect.
Each of Company, Grantor Trust and the Other
Investors shall have executed and delivered to Parent and
Holdings as applicable, each Ancillary Funding Agreement.
Each Ancillary Funding Agreement shall be in full force and
effect, subject to the conditions contained herein or
therein, and none of Company, Grantor Trust or the Other
Investors shall be in material default thereunder. The
conditions contained in the Ancillary Funding Agreements
shall have been satisfied or waived.
The waiting periods under the HSR Act shall have
expired or been terminated and the consents, approvals,
orders, authorizations, registrations, declarations and
filings set forth on Schedule 5.1(d) shall have been
obtained or made.
The New Shares shall have been approved for
quotation on the New York Stock Exchange.
The Board of Directors of the Company (i) shall
have received an opinion of The Argosy Group L.P. ("Argosy")
to the effect that the Transactions contemplated hereby are
fair from a financial point of view to the stockholders of
the Company and (ii) shall have approved the Transactions
and the Proposals.
The Proxy Statement shall have been filed, or be
in a form ready to file, with the SEC.
The form of the Liquidating Property Trust
Amendment Documents and the form of the Liquidating Property
Trust Leases shall be satisfactory in form and substance to
Parent and Holdings.
The conditions set forth in subsections (i) through (l)
shall be applicable at Closing (but not at Funding).
Proposals approving (i) this Agreement and the
Ancillary Agreements, (ii) the Stock Split, (iii) the
Amendments, (iv) the Property Transfer, (v) the Share
Issuances and (vi) the appointment of directors set forth in
Schedule 2.1 to the Stockholders Agreement, as well as any
other matters that the Company and the Parent may reasonably
consider advisable to effect the Transactions (the
"Proposals") shall have been approved, in person or by
proxy, by the stockholders of Company at the Stockholders
Meeting, in accordance with applicable law, the rules of The
New York Stock Exchange and the Certificate and By-Laws of
Company.
Company shall have transferred to the
Liquidating Property Trust the properties identified in the
Amended Liquidating Property Trust Agreement, together with
related Existing Insurance Company Indebtedness, and the
closing shall have occurred under the Third Amended
Agreement and the Liquidating Property Trust Amendment
Documents (the "Property Transfer").
The Liquidating Property Trust shall have leased
to Company the stores owned by the Liquidating Property
Trust pursuant to leases that are satisfactory in form and
substance to Parent and Holdings (the "Liquidating Property
Trust Leases").
The Liquidating Property Trust shall have leased
to Company the South Warehouse on terms that are
satisfactory to Parent and Holdings (the "South Warehouse
Lease").
4.2. Conditions of Company with Respect to the Funding
and Closing. The obligation of Company to consummate the
Transactions contemplated to occur at the Funding and the Closing
are subject to the satisfaction (or waiver by Company) as of the
Funding and the Closing of the following conditions (it is
understood that the execution and delivery of this Agreement and
the Funding shall occur at the same time):
The representations and warranties of Parent,
Holdings, Grantor Trust and the Other Investors set forth in
this Agreement and in the Ancillary Agreements qualified as
to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material
respects, as of the date hereof and as of the time of the
Closing as though made as of such time, except to the extent
such representations and warranties expressly relate to an
earlier date (in which case such representations and
warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and
correct in all material respects, on and as of such earlier
date). Each of Parent, Holdings, Grantor Trust and the
Other Investors shall have performed or complied in all
material respects with all obligations and covenants
required by this Agreement and the Ancillary Agreements to
be performed or complied with by Parent, Holdings, Grantor
Trust and the Other Investors by the time of the Funding and
the Closing.
No statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity
or other legal restraint or prohibition preventing the
Transactions shall be in effect.
Each of Parent, Holdings, Grantor Trust and the
Other Investors shall have executed and delivered to Company
each Ancillary Funding Agreement to which it is a party.
Each Ancillary Funding Agreement shall be in full force and
effect, subject to the conditions contained herein or
therein, and none of the Parent, Holdings, Grantor Trust or
the Other Investors shall be in material default thereunder.
The conditions contained in the Ancillary Funding Agreements
shall have been satisfied or waived.
The waiting periods under the HSR Act shall have
expired or been terminated and the consents, approvals,
orders, authorizations, registrations, declarations and
filings set forth on Schedule 5.1(d) (other than those
within the control of Company) shall have been obtained or
made.
The Board of Directors of the Company shall have
received an opinion of Argosy to the effect that the
Transactions contemplated hereby are fair from a financial
point of view to the stockholders of the Company.
The conditions set forth in subsections (f) through (i)
shall be applicable at Closing (but not at Funding).
The Proposals shall have been approved by the
stockholders of Company at the Stockholders Meeting, in
accordance with applicable law, the rules of the New York
Stock Exchange and the Certificate and By-Laws of Company.
The Property Transfer shall have occurred.
The Liquidating Property Trust Leases shall be
in full force and effect.
The South Warehouse Lease shall be in full force
and effect.
4.3. Conditions of the Other Investors and Grantor
Trust with Respect to the Funding and Closing. The obligation of
the Other Investors, and Grantor Trust in the case of the Funding
only, to consummate the Transactions contemplated to occur at the
Funding and the Closing are subject to the satisfaction (or
waiver by the Other Investors and Grantor Trust) as of the
Funding and the Closing of the following conditions (it is
understood that the execution and delivery of this Agreement and
the Funding shall occur at the same time):
The representations and warranties of Parent,
Holdings and Company set forth in this Agreement and in the
Ancillary Agreements qualified as to materiality shall be
true and correct, and those not so qualified shall be true
and correct in all material respects, as of the date hereof
and as of the time of the Funding and the Closing as though
made as of such time, except to the extent such represen-
tations and warranties expressly relate to an earlier date
(in which case such representations and warranties qualified
as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material
respects, on and as of such earlier date). Each of Parent,
Holdings and Company shall have performed or complied in all
material respects with all obligations and covenants
required by this Agreement and the Ancillary Agreements to
be performed or complied with by Parent, Holdings, Investor
and Company by the time of the Funding and the Closing.
No statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity
or other legal restraint or prohibition preventing the
Transactions shall be in effect.
Each of the Parent, Holdings and Company shall
have executed and delivered to Grantor Trust and the Other
Investors, as applicable, each Ancillary Funding Agreement.
Each Ancillary Funding Agreement shall be in full force and
effect, subject to the conditions contained herein and
therein, and none of Parent, Holdings or Company shall be in
material default thereunder. The conditions contained in
the Ancillary Funding Agreements shall have been satisfied
or waived.
The waiting periods under the HSR Act shall have
expired or been terminated and the consents, approvals,
orders, authorizations, registrations, declarations and
filings set forth on Schedule 5.1(d) shall have been
obtained or made.
The New Shares shall have been approved for
quotation on the New York Stock Exchange.
The Board of Directors of the Company (i) shall
have received an opinion of Argosy to the effect that the
Transactions contemplated hereby are fair from a financial
point of view to the stockholders of the Company and
(ii) shall have approved the Transactions and the Proposals.
The Proxy Statement shall have been filed, or be
in a form ready to file, with the SEC.
The form of the Liquidating Property Trust
Amendment Documents shall be satisfactory in form and
substance to Investor1 and Investor2.
The conditions set forth in subsections (i) through (l)
shall be applicable at Closing (but not at Funding).
The Proposals shall have been approved in person
or by proxy, by the stockholders of Company at the
Stockholders Meeting, in accordance with applicable law, the
rules of the New York Stock Exchange and the Certificate and
By-Laws of Company.
The Property Transfer shall have occurred.
The Liquidating Property Trust Leases shall be
in full force and effect.
The South Warehouse Lease shall be in full force
and effect.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of Company.
Company represents and warrants to Parent, Holdings, Grantor
Trust and the Other Investors as follows:
Organization, Standing and Corporate Power.
Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its
business as now being conducted. Company and each of its
Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate)
would not have a material adverse effect on Company.
Company has delivered to Parent complete and correct copies
of its Certificate of Incorporation and By-laws and the
certificates of incorporation and by-laws or other
constitutive documents of its Subsidiaries, in each case as
amended to the date of this Agreement. Grantor Trust is a
trust duly organized, validly existing and in good standing
under the laws of the State of California and has the
requisite power and authority to enter into this Agreement
and the Ancillary Agreements and to consummate the
Transactions. The Liquidating Property Trust is a trust
duly organized and validly existing under the laws of the
State of California and has all requisite power and
authority to enter into the Liquidating Property Trust
Documents and to carry out the Transactions contemplated
thereby.
Subsidiaries. Schedule 5.1(b) lists each
Subsidiary of Company. All the outstanding shares of
capital stock of each Subsidiary that is a corporation have
been validly issued and are fully paid and nonassessable.
Except as set forth in Schedule 5.1(b), the entire equity
interest in each Subsidiary of Company is owned by Company,
by another Subsidiary of Company or by Company and another
such Subsidiary, free and clear of all Liens. Except as
permitted under Section 6.3 of the New Loan Agreement,
neither Company nor any of its Subsidiaries owns or holds,
directly or indirectly, any capital stock or equity security
of, or any equity interest in, any corporation of business
other than Subsidiaries of Company.
Capital Structure; New Shares; Preferred Shares.
The authorized capital stock of Company consists of
30,000,000 shares of Common Stock, par value $0.01 per
share, and 5,000,000 shares of preferred stock, par value
$0.01 per share. At the date hereof, (i) 22,429,275 shares
of Common Stock and no shares of preferred stock of Company
were issued and outstanding, (ii) 28,231 shares of Common
Stock were held by Company in its treasury, (iii) there are
no outstanding employee stock options to purchase shares of
Common Stock ("Employee Stock Options") and no shares
reserved for issuance pursuant to any Employee Stock Option
(although 1,500,000 shares of Common Stock are authorized in
connection with the relevant plans), and (iv) 750,000 shares
of Common Stock were reserved for issuance upon the exercise
of outstanding warrants, all of which warrants are held by
one or more Parties. Except as set forth above, at the date
hereof, no shares of capital stock or other voting
securities of Company were issued, reserved for issuance or
outstanding and except as set forth on Schedule 5.1(c),
there are not any phantom stock or other contractual rights
the value of which is determined in whole or in part by the
value of any capital stock of Company ("Stock Equivalents").
There are no outstanding stock appreciation rights ("SARs")
with respect to Common Stock. Except for the approval of
the Proposals as contemplated by Section 4.1(i), no further
approval of the stockholders or the directors of Company or
of any Governmental Entity will be required by Company for
the issuance and sale of the New Shares and the Preferred
Shares as contemplated by this Agreement. When issued and
sold to Holdings or the Other Investors, as applicable, the
New Shares and the Preferred Shares will be duly authorized,
validly issued, fully paid and nonassessable and will be
free and clear of all claims, liens, encumbrances, security
interests and charges of any nature (arising from actions of
the Company) and are not subject to any preemptive right of
any stockholder of Company. Other than this Agreement and
the Ancillary Agreements, the New Shares and the Preferred
Shares are not subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or
understanding to which the Company is a party, including any
such agreement, arrangement, commitment or understanding
restricting or otherwise relating to the voting or
disposition of the New Shares or the Preferred Shares. All
outstanding shares of capital stock of Company are, and all
shares that may be issued pursuant to the Employee Stock
Options and the other agreements and instruments listed
above will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. There are not any outstanding bonds, debentures,
notes or other indebtedness of Company having the right to
vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
stockholders of Company may vote. Except as set forth
above, as of the date of this Agreement, there are not any
securities, options, warrants, calls, rights, convertible or
exchangeable securities or commitments, agreements,
arrangements or undertakings of any kind to which Company or
any of its Subsidiaries is a party or by which any of them
is bound obligating Company or any of its Subsidiaries to
issue, deliver or sell or create, or cause to be issued,
delivered or sold or created, additional shares of capital
stock or other voting securities or Stock Equivalents of
Company or of any of its Subsidiaries or obligating Company
or any of its Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of
the date of this Agreement, there are not any outstanding
contractual obligations of Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Company or any of its
Subsidiaries. Except in agreements to which any Party is
also a party, neither the Company nor any of its
Subsidiaries has entered into any agreement to register its
equity or debt securities under the Securities Act. Grantor
Trust is the record and beneficial owner of $6,250,000
principal amount of New Borrower Notes, $6,000,000 principal
amount of Existing Grantor Trust Indebtedness and all of the
capital stock of SBP Holding Company and The Art Store
Holding Company, to the best of Company's knowledge, is free
and clear of all Liens.
Authority; Noncontravention. (i) Company, each
Interim Borrower and Grantor Trust has the requisite
corporate (or other) power and authority to enter into this
Agreement and the Ancillary Agreements and, subject to the
Proposals having been approved by the stockholders of
Company at the Stockholders Meeting, to consummate the
Transactions. The execution and delivery by the Company and
each Interim Borrower of this Agreement and each Ancillary
Agreement by Company, each Interim Borrower and Grantor
Trust to which it is a party and the consummation by
Company, each Interim Borrower and Grantor Trust of the
Transactions have been duly authorized by all necessary
corporate (or other) action on the part of Company, each
Interim Borrower and Grantor Trust, subject, in the case of
this Agreement, to adoption of this Agreement by the holders
of a majority of the outstanding shares of Common Stock.
This Agreement and the Ancillary Agreements to which it is a
party have been duly executed and delivered by Company, each
Interim Borrower and Grantor Trust and constitute valid and
legally binding agreements of Company, each Interim Borrower
and Grantor Trust enforceable against Company, each Interim
Borrower and Grantor Trust in accordance with their
respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(ii) The execution and delivery by Company and each
Interim Borrower of this Agreement and the Ancillary Agreements
did not, and the consummation of the Transactions and compliance
with the provisions of this Agreement and the Ancillary
Agreements without obtaining the consent of any third party will
not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of
any obligation or to loss by Company or any of its Subsidiaries
of a material benefit under, or the creation of any material
additional benefit to any third party under, or result in the
creation of any Lien upon any of the properties or assets of
Company or any of its Subsidiaries under, (i) the Certificate of
Incorporation or By-laws of Company or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to Company or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Company or any of its
Subsidiaries or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the
aggregate could not reasonably be expected to (x) have a material
adverse effect on Company, (y) impair the ability of Company and
each Interim Borrower to perform its obligations under this
Agreement or any Ancillary Agreement to which it is a party or
(z) prevent the consummation of any of the Transactions. No
consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or any party
to a Material Contract is required by or with respect to Company
or any of its Subsidiaries in connection with the execution and
delivery of this Agreement and the Ancillary Agreements or the
consummation by Company of the Transactions, except for (i) the
filing of a premerger notification and report form by Company
under the HSR Act and any filings required pursuant to the
statutes and regulations listed on Schedule 5.1(d), (ii) the
filing with the SEC of (x) a proxy statement relating to the
approval by Company's stockholders of the Share Issuances and the
other Proposals (as amended or supplemented from time to time,
the "Proxy Statement") and (y) such reports under Sections 12 and
13(a) of the Exchange Act as may be required in connection with
this Agreement, the Ancillary Agreements and the Transactions and
(iii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as are set forth on
Schedule 5.1(d), which have been obtained prior to the date
hereof.
SEC Documents; Undisclosed Liabilities. Company
has filed all required reports, schedules, forms, statements
and other documents with the SEC since January 31, 1993 (the
"SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
the case may be, and none of the SEC Documents contained any
untrue statement of a material fact or omitted 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.
Except to the extent that information contained in any SEC
Document has been revised or superseded by a later Filed SEC
Document, none of the SEC Documents contains any untrue
statement of a material fact or omits 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. The financial
statements of Company included in the SEC Documents comply
as to form in all material respects with applicable account-
ing requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated
financial position of Company and its Subsidiaries as of the
dates thereof and their consolidated statements of
operations, stockholders equity and cash flows for the
periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except
as set forth in the Filed SEC Documents, neither Company nor
any of its Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet
of Company and its Subsidiaries or in the notes thereto,
other than liabilities and obligations incurred in the
ordinary course of business consistent with prior practice
and experience since October 31, 1994. Schedule 5.1(e) sets
forth a balance sheet of The Art Store as of the balance
sheet date indicated on such Schedule. Such balance sheet
has not been prepared in accordance with generally accepted
accounting principles, among other things the footnotes are
omitted, but was rather prepared for internal management
purposes. Nevertheless, such balance sheet makes reasonable
disclosure of the financial condition of the subject company
as of such balance sheet date. Since such balance sheet
date, to the best knowledge of Company, there has been no
material adverse change in The Art Store.
Proxy Statement. The Proxy Statement will not,
at the date it is first mailed to Company's stockholders or
at the time of the meeting of Company's stockholders held to
vote on approval of the Proposals, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects
with the requirements of the Exchange Act. No
representation is made by Company with respect to statements
made or incorporated by reference in the Proxy Statement
based on information supplied by Parent, Holdings or the
Other Investors for inclusion or incorporation by reference
in the Proxy Statement.
Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available
prior to the date of this Agreement (the "Filed SEC
Documents") or in Schedule 1.1, since January 31, 1994,
Company has conducted its business only in the ordinary
course, and there has not been (i) any material adverse
change in Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of Company's
capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares of
its capital stock (other than pursuant to the Stock Split),
(iv) except as set forth on Schedule 5.1(g) (x) any granting
by Company or any of its Subsidiaries to any executive
officer of Company or any of its Subsidiaries of any
increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required
under employment agreements in effect on January 31, 1994,
(y) any granting by Company or any of its Subsidiaries to
any such executive officer of any increase in severance or
termination pay, except as was required under any
employment, severance or termination agreements in effect on
January 31, 1994, or (z) any entry by Company or any of its
Subsidiaries into any employment, severance or termination
agreement with any such executive officer, (v) any damage,
destruction or loss, whether or not covered by insurance,
that has had or could reasonably be expected to have a
material adverse effect on Company or (vi) any change in
accounting methods, principles or practices by Company
materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in
generally accepted accounting principles.
Title to Properties and Assets; Liens.
(i) Except as contemplated by this Agreement and the
Ancillary Agreements, Company and its Subsidiaries have good,
sufficient and legal title to all the properties and assets
reflected in the consolidated balance sheet as of October 31,
1994 included in Form 10-Q of Company except for assets acquired
or disposed of in the ordinary course of business since the date
of such consolidated balance sheet. All such properties are free
and clear of Liens, except as permitted under Section 6.2 of the
New Loan Agreement.
(ii) Schedule 5.1(h) hereto correctly sets forth the
following information with respect to each Mortgaged Property:
(a) store number (if applicable) and (b) street address. Each
Subsidiary has good and marketable fee title to each Mortgaged
Property identified in Schedule 5.1(h) as being owned by such
Subsidiary and each Mortgaged Property is free and clear of
Liens, except as permitted under Section 6.2 of the New Loan
Agreement.
(iii) Company has previously furnished to Parent true,
correct and complete copies of all ground leases, space leases,
subleases, easement agreements, reciprocal easement agreements,
two-party supplemental agreements, option agreements, license
agreements, and other agreements, instruments, and documents
(whether or not recorded) that encumber, or otherwise affect in
any material respect, its fee interest in or to any Mortgaged
Property or any portion thereof.
(iv) No condemnation proceeding involving any Mortgaged
Property or portion of any thereof or parking facility used in
connection therewith has commenced or, to the knowledge of any
Subsidiary or Company, is contemplated by any governmental
authority.
(v) The operation of the Company, its Subsidiaries,
the Grantor Trust Subsidiaries and each Mortgaged Property does
not involve a violation of (i) any statutes, laws, regulations,
rules, ordinances, or orders of any kind whatsoever (including,
without limitation, zoning and building laws, ordinances, codes,
or approvals and environmental protection orders, laws or
regulations) other than violations that would not result in any
material change in the business, operations, properties, assets
or condition (financial or otherwise) of any Subsidiary, Grantor
Trust Subsidiary or Company and would not materially adversely
affect such Mortgaged Property or the ability of Company or any
of its Subsidiaries or the Grantor Trust to perform their
respective Obligations or consummate the Transactions, (ii) any
building permits, restrictions of record, or any agreement
affecting any such Mortgaged Property or portion thereof other
than violations that would not result in any material change in
the business, operations, properties, assets or condition
(financial or otherwise) of any Subsidiary, Grantor Trust
Subsidiary or Company and would not materially adversely affect
such Mortgaged Property or the ability of Company or any of its
Subsidiaries or the Grantor Trust to perform their respective
Obligations or consummate the Transactions.
(vi) Each Mortgaged Property has adequate water, gas,
telephone, electrical supply, storm and sanitary sewage
facilities, and means of access to and from public highways, and
has fire and police protection to the fullest extent available in
the jurisdiction in which such Mortgaged Property is located.
(vii) Except as disclosed in writing to Parent on
Schedule 5.1(h), (x) the operations of Company and each of its
Subsidiaries and the Grantor Trust Subsidiaries comply with all
applicable environmental, health, and safety statutes and
regulations except to the extent that noncompliance would not
result in any material change in the business, operations,
properties, assets, or condition (financial or otherwise) of any
Subsidiary, Grantor Trust Subsidiary or Company, and that would
not materially adversely affect any Mortgaged Property or the
ability of Company or any of its Subsidiaries to perform their
respective Obligations or consummate the Transactions; (y) none
of the Mortgaged Properties or the operations to the Company or
any of its Subsidiaries or the Grantor Trust Subsidiaries is the
subject of any private claims or any federal or state
investigation evaluating whether any remedial action is needed in
response to a release of any hazardous waste (as such term is
defined in any applicable state or federal or environmental law
or regulations) or other hazardous material into the environment
except to the extent that such claims or remedial action would
not result in any material change in the business, operations,
properties, assets, or condition (financial or otherwise) of any
Subsidiary, Grantor Trust Subsidiary or the Company and that
would not materially adversely affect any Mortgaged Property or
the ability of Company or any of its Subsidiaries to perform
their respective Obligations or consummate the Transactions; and
(z) neither Company nor any of its Subsidiaries nor any Grantor
Trust Subsidiary has any material contingent liability in
connection with any release of any hazardous waste or hazardous
material into the environment including, without limitation, any
contingent liability arising in connection with a failure, or
alleged failure, to comply with the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. 9601, et seq.), or the Federal Resource Conservation
and Recovery Act, as amended (42 U.S.C. 6901 et seq.), except
for such contingent liabilities that would not result in a
material change in the business, operations, properties, assets,
or condition (financial or otherwise) of any Subsidiary, Grantor
Trust Subsidiary or Company and that would not materially
adversely affect any Mortgaged Property or the ability of Company
or any of its Subsidiaries to perform their respective
Obligations or consummate the Transactions.
Litigation; Adverse Facts. There is no action,
suit, proceeding or arbitration (whether or not purportedly
on behalf of Company or any of its Subsidiaries or the
Liquidating Property Trust or the Grantor Trust Subsidiaries
at law or in equity or before or by any federal, state,
municipal or other government department, commission, board,
bureau, agency, or instrumentality, domestic or foreign)
pending (except as otherwise disclosed on Schedule 5.1(i)
hereto) or, to the knowledge of Company or any Subsidiary,
threatened against or affecting Company or any of its
Subsidiaries or the Liquidating Property Trust or the
Grantor Trust Subsidiaries or any of Company's or such
Subsidiary's or the Liquidating Property Trust's or the
Grantor Trust Subsidiaries' properties not provided for in
the Plan that would (i) result in any material adverse
change in the business, operations, properties, assets, or
condition (financial or otherwise) of Company and its
Subsidiaries, taken as a whole, or the Grantor Trust,
(ii) materially adversely affect any Mortgaged Property,
(iii) impair the ability of Company or Grantor Trust to
perform its obligations under this Agreement or any
Ancillary Agreement or (iv) prevent the consummation of any
of the Transactions, and there is no basis known to Company
for any such action, suit or proceeding. Neither Company
nor any of its Subsidiaries nor the Liquidating Property
Trust nor the Grantor Trust Subsidiaries is (i) in violation
of any applicable law that materially adversely affects or
may materially adversely affect any Mortgaged Property, the
business, operations, properties, assets or condition
(financial or otherwise) of Company and its Subsidiaries,
taken as a whole, or the Grantor Trust, or the ability of
Company, the Grantor Trust or any of its Subsidiaries to
perform their respective Obligations or consummate the
Transactions, or (ii) subject to or in default with respect
to any final judgment, writ, injunction, decree, rule or
regulation of any court or any federal, state, municipal, or
other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, that would
have a material adverse affect any Mortgaged Property, the
business, operations, properties, assets or condition
(financial or otherwise) of Company and its Subsidiaries,
taken as a whole, or the Grantor Trust, or the ability of
Company or any of its Subsidiaries or the Grantor Trust to
perform their respective Obligations or consummate the
Transactions. There is no action, suit, proceeding, or
investigation pending or, to the knowledge of Company, the
Grantor Trust or any Subsidiary, threatened against or
affecting Company or any of its Subsidiaries or the
Liquidating Property Trust or the Grantor Trust Subsidiaries
that questions the validity or enforceability of this
Agreement or any of the Ancillary Agreements or challenges
the Transactions.
Absence of Changes in Benefit Plans.
(i) Company and each of its ERISA Affiliates is in
compliance in all material respects with any applicable
provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Pension Plans and
Multiemployer Plans, except to the extent that all such
noncompliances would result in the loss of the deductibility of
contributions to any Pension Plan or Multiemployer Plan, or would
result in the incurrence by Company and its ERISA Affiliates of
any civil penalty assessed pursuant to Section 502(i) of ERISA or
a tax imposed by Section 4975 of Internal Revenue Code in an
aggregate amount not in excess of $100,000.
(ii) Except for the termination of Company's LESOP and
PAYSOP, as defined and described in the Plan and the contemplated
"freezing" of Company's three Pension Plans by ceasing the
accrual of benefits under such Pension Plans, no event or
condition which presents a material risk of plan termination or
any other event that may cause the Company or any ERISA Affiliate
to incur liability or have a lien imposed on its assets under
title IV of ERISA has occurred or is reasonably expected to occur
with respect to any Pension Plan; and none of the events
described above might result in the imposition of any lien or
incurrence by Company or any of its ERISA Affiliates of any
liability under any Pension Plan or to the Pension Benefit
Guaranty Corporation (or any successor thereto) or any other
party under Sections 4062, 4063, and 4064 of ERISA or any other
law in excess of $100,000.
(iii) Vested liabilities (as defined in Section 3(25) of
ERISA) under all Pension Plans (with assets less than vested
liabilities only) do not exceed the assets thereunder by more
than $100,000.
(iv) Neither Company nor any of its ERISA Affiliates
has incurred or reasonably expects to incur any withdrawal
liability under ERISA to any Multiemployer Plan in excess of
$100,000.
Payment of Taxes. Except as set forth in
Schedule 5.1(k), as of the date of this agreement and on the
Closing Date, (i) all Tax Returns that are required to be
filed by or with respect to the Company and each of its
Subsidiaries have been duly filed, (ii) all Taxes due with
respect to the periods covered by the Tax Returns referred
to in clause (i) have been timely paid, (iii) no adjustments
or deficiencies relating to the Tax Returns referred to in
clause (i) have been proposed, asserted or assessed by the
Internal Revenue Service or the appropriate state, local or
foreign taxing authority, (iv) no extension of time with
respect to any date on which a Tax Return was or is to be
filed by the Company or any Subsidiary is in force, and
there are no pending or threatened actions or proceedings
for the assessment or collection of Taxes against the
Company or any of its Subsidiaries, (v) each adjustment,
deficiency, action or proceeding set forth in
Schedule 5.1(k) is being contested or handled in good faith,
(vi) there are no outstanding waivers or agreements
extending the applicable statute of limitations for any
period with respect to any Taxes of the Company or any of
its Subsidiaries, (vii) the Company and the Subsidiaries
income Tax Returns have been examined by the Internal
Revenue Service or the appropriate state, local or foreign
tax authority, (viii) no closing agreement pursuant to
Section 7121 of the Internal Revenue Code, or similar
provision of any state, local, or foreign law, has been
entered into by or with respect to the Company or any of its
Subsidiaries, (ix) there are no tax sharing agreements or
similar contracts or arrangements to which the Company or
any of its Subsidiaries is a party, (x) the Company or any
of its Subsidiaries has not been a member of an affiliated
group (within the meaning of Section 1504 of the Internal
Revenue Code) filing a consolidated federal income Tax
Return, other than a group the common parent of which is the
Company, (xi) no powers of attorney with respect to Taxes
granted by the Company or any of its Subsidiaries are in
effect, (xii) no claim has ever been made by an authority in
a jurisdiction where the Company or any Subsidiary does not
file Tax Returns that the Company or such Subsidiary is or
may be subject to taxation by that jurisdiction, (xiii) no
audit of any Tax Return filed by the Company or any
Subsidiary is in progress, and neither the Company nor any
Subsidiary has been notified by any tax authority that any
such audit is contemplated or pending, and (xiv) there are
no security interests on any of the assets of the Company or
any Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Taxes.
Officers. Except as set forth on
Schedule 5.1(g), there are no severance or other payment
obligations triggered as a result of the Transactions. No
action, suit, proceeding or arbitration relating to any
officer of the Company is pending or threatened against the
Company.
No Excess Parachute Payments. No amount that
could be received (whether in cash or property or the
vesting of property) as a result of any of the Transactions
by any employee, officer or director of Company or any of
its affiliates who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or
Benefit Plan currently in effect would be characterized as
an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Internal Revenue Code). Set forth
in Schedule 5.1(m) is (i) the maximum amount that could be
paid to each such disqualified individual as a result of the
Transactions under all employment, severance and termination
agreements, other compensation arrangements and Benefit
Plans currently in effect and (ii) the "base amount" (as
such term is defined in Section 280G(b)(3) of the Internal
Revenue Code) for each such disqualified individual
calculated as of the date of this Agreement.
Voting Requirements. The affirmative vote of a
majority of the Company's issued and outstanding stock with
respect to the Proposals is the only vote of the holders of
any class or series of Company's capital stock necessary to
approve this Agreement, the Ancillary Agreements and the -
Transactions. This Agreement and the Ancillary Agreements
and the Transactions have been approved by a vote of the
directors as required by Company's Certificate of
Incorporation and By-laws.
State Takeover Statutes. The Board of Directors
has approved this Agreement and the Ancillary Agreements,
and such approval is sufficient to render inapplicable to
this Agreement, the Ancillary Agreements and the
Transactions the provisions of Section 203 of the DGCL. To
the best of Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports
to apply to this Agreement, any Ancillary Agreement or any
of the Transactions.
Brokers. No broker, investment banker,
financial advisor or other person, other than Libra
Investments, Inc., Pinnacle Partners and Argosy, the fees
and expenses of which will be paid by Company, is entitled
to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of
Company. A complete and correct copy of Company's
engagement letters with Libra Investments, Inc., Pinnacle
Partners and Argosy has been delivered to Parent prior to
the execution of this Agreement. Company has not, and will
not, increase any such fees and expenses prior to Closing.
Material Contracts. All contracts, leases and
other agreements to which Company or any of its Subsidiaries
is a party and that are material to the business,
properties, assets, condition (financial or otherwise),
results of operations or prospects of Company and its
Subsidiaries, taken as a whole (the "Material Contracts")
have been filed as exhibits to the SEC Documents or are
listed on Schedule 5.1(q). Except as disclosed in
Schedule 5.1(q), each Material Contract is in full force and
effect; Company and its Subsidiaries have performed in all
material respects all the obligations required to be
performed thereby under each Material Contract; neither
Company nor any of its Subsidiaries has received any written
assertion of default under any Material Contract; neither
Company nor any of its Subsidiaries expects any termination
or material change to, or receipt of a proposal with respect
to, any of the Material Contracts as a result of the
Transactions; and neither Company nor any of its
Subsidiaries has knowledge of any material breach or
anticipated material breach by any other party to any
Material Contract. Company has filed as an exhibit to an
SEC Document or has furnished Parent with true, complete and
unredacted copies of each Material Contract, together with
all amendments, waivers or other changes thereto. Company
does not have any Material Contract or any other contract or
agreement with the United States Department of Energy, the
United States Department of Defense or any of the armed
forces of the United States.
Governmental Regulation. Neither Company nor any
of its Subsidiaries is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940 or to any federal or state statute or
regulation, limiting its ability to (i) issue the New Shares
or the Preferred Shares, (ii) incur Indebtedness for money
borrowed, (iii) to create Liens on any of its properties to
secure such Indebtedness or (iv) otherwise to consummate the
Transactions. SBP Transportation Co., Inc., a California
corporation, is subject to the Interstate Commerce Act, but
such act does not limit the actions described above.
Disclosure. No representation or warranty of
Company or any Subsidiary contained in this Agreement or any
Ancillary Agreement, or any other document, certificate, or
written statement furnished to Parent, Holdings or the Other
Investors by or on behalf of the Company or any Subsidiary
for use in connection with the Transactions contains any
untrue statement of a material fact or omits to state a
material fact (known to Company or any Subsidiary in the
case of any document not furnished by it) necessary in order
the make the statements contained herein or therein not
misleading. The term "material" in the preceding sentence
shall be interpreted in accordance with Section 10(b) of the
Exchange Act. There is no fact known to Company or any
Subsidiary (other than matters of general economic nature)
that materially adversely affects any Mortgaged Property,
the business, operations, property, assets, or condition
(financial or otherwise) of Company and its Subsidiaries,
taken as a whole, or the ability of Company or any
Subsidiary to perform their respective obligations that have
not been disclosed herein or in such other documents, certi-
ficates and statements furnished to Parent, Holdings,
Grantor Trust and the Other Investors for use in connection
with the Transactions.
(t) Affiliates. Company hereby certifies to Fidelity
Management Trust Company ("Fidelity") both in its individual
capacity and its capacity as a fiduciary (as defined in Section
3(21)(A) of the Employee Retirement Income Security Act of 1974,
as amended) of the Kodak Retirement Income Plan (the "Plan"),
that, to the best of its knowledge, Company is not an affiliate
(as defined in Section V(C) of the U.S Department of Labor
Prohibited Class Exemption 84-14, 49 Fed. Reg. 9494 (March 13,
1984) ("PTCE 84-14")), and during the one-year period ending on
the Closing Date was not such an affiliate, of any person
identified on Schedule 5.1(t) hereto. Company hereby
acknowledges and agrees that the foregoing certification will be
relied upon by Fidelity in causing the Plan to enter into the
Transactions contemplated by this Agreement.
(u) Licenses. The Company and its Subsidiaries hold
all material licenses, franchises, permits, consents,
registrations, certificates and other approvals (including,
without limitation, those relating to environmental matters,
public and worker health and safety, buildings, highways or
zoning) (individually, a "License" and collectively, "Licenses")
required for the conduct of its business as now being conducted,
and is operating in substantial compliance therewith, except
where the failure to hold any such License or to operate in
compliance therewith would not have a material adverse effect on
the Company and its Subsidiaries.
(v) Private Offerings. No form of general
solicitation or general advertising was used by the Company or
any of its Subsidiaries or any of the Company's or such
Subsidiary's representatives, or, to the knowledge of the
Company, any other Person acting on behalf of the Company or any
of its Subsidiaries, in connection with the offering of the
securities being purchased under this Agreement or under any
other document. Neither the Company, any of its Subsidiaries nor
any person acting on the Company's or such Subsidiary's behalf
has directly or indirectly offered the Interim Notes, New Shares
or Preferred Shares, or any part thereof or any other similar
securities or the securities being purchased under any other
document, for sale to, or sold or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in
respect thereof with any Person or Persons other than the
Parties. Assuming the accuracy of the representations of the
Parties as set forth in Sections 5.2 and 5.3, neither the
Company, any of its Subsidiaries nor any person acting on the
Company's or such Subsidiary's behalf has taken or will take any
action which would subject the issue and sale of the securities
being purchased under this Agreement to the provisions of
Section 5 of the Securities Act.
(w) Foreign Assets Control Regulation, Etc. Neither
the issue and sale of the Interim Notes, the New Shares or the
Preferred Shares by the Company nor its use of the proceeds
thereof as contemplated by this Agreement will violate the
Foreign Assets Control Regulations, the Control Regulations, the
Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the
Nicaraguan Trade Control Regulations, the South African
Transactions Control Regulations, the Libyan Sanctions
Regulations, the Soviet Gold Coin Regulations, the Panamanian
Transactions Regulations, the Haitian Transactions Regulations or
the Iraqi Sanctions Regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or
Executive Orders 12722 and 12724 (Transactions with Iraq).
(x) Federal Reserve Regulations and Other Matters.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, use any of the proceeds from the sale of the Interim
Notes for the purpose, whether immediate, incidental or ultimate,
of buying any "margin stock," or of maintaining, reducing or
retiring any indebtedness originally incurred to purchase any
stock that is currently a "margin stock," or for any other
purpose which might constitute the Transactions a "purpose
credit," in each case within the meaning of Regulation G or U of
the Board of Governors of the Federal Reserve System (12 C.F.R.
207 and 221, as amended, respectively), or otherwise take or
permit to be taken any action which would involve a violation of
such Regulation G or Regulation U or of Regulations T or X of the
Board of Governors of the Federal Reserve System (12 C.F.R. 220
and 224, as amended, respectively) or any other regulation of
such Board. No indebtedness that may be maintained, reduced or
retired with the proceeds from the sale of the Interim Notes was
incurred for the purpose of purchasing or carrying any "margin
stock" and neither the Company nor any of its Subsidiaries own
any such "margin stock" or have any present intention of
acquiring, directly or indirectly any such "margin stock."
(y) Insurance. After the Funding Date, Company will
provide to each Party, if so requested in writing, a list of all
insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers
and directors under which the Company or any of its Subsidiaries
may derive any material benefit, the term and deductible for each
such policy, the agency and company providing such insurance and
the name of each person scheduled as having an interest therein
as loss payee, pledgee or otherwise. There is no claim by the
Company or any of its Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned,
reserved, denied or disputed by the underwriters of such policies
or bonds or their agents where such question, reservation, denial
or dispute, in each case, would have a material adverse effect on
the Company and its Subsidiaries on a consolidated basis. All
premiums due and payable under all such policies and bonds have
been paid, and the Company and its Subsidiaries are otherwise in
full compliance with the terms and conditions of all such
policies and bonds, except in each case where the failure would
not have a material adverse effect on the Company and its
subsidiaries on a consolidated basis. Such policies of insurance
and bonds (or other policies and bonds providing substantially
similar insurance coverage) are and have been in full force and
effect for at least the last year or since the inception of the
Company or any of its Subsidiaries, as the case may be, and
remain in full force and effect. Such policies of insurance and
bonds are of the type and in amounts customarily carried by
persons conducting business similar to that presently conducted
by the Company and its Subsidiaries. The Company knows of no
threatened termination of any such policies or bonds that would
be material to the Company and its Subsidiaries taken as a whole.
(z) Intellectual Property. The Company and its
Subsidiaries have ownership of, or license to use, all patent,
copyright, trade secret, trademark, or other proprietary rights
used or to be used in the business of the Company or any of its
Subsidiaries and which are material to the Company and its
Subsidiaries on a consolidated basis (collectively, "Intellectual
Property"). There are no claims or demands of any other person
pertaining to any of such Intellectual Property and no
proceedings have been instituted, or are pending or, to the
knowledge of the Company, threatened, which challenge the rights
of the Company or any of its Subsidiaries in respect thereof,
except those that would not have a material adverse effect on the
Company and its Subsidiaries on a consolidated basis. The
Company and its Subsidiaries have the right to use all customer
lists, designs, manufacturing or other processes, computer
software, systems, data compilations, research results and other
information required for or incident to its products or their
business as presently conducted or contemplated and which are
material to the Company and its Subsidiaries on a consolidated
basis.
(aa) Grantor Trust Subsidiaries. (i) The Art Store,
a California corporation has good, sufficient and legal fee title
to all the properties listed on Schedule 5.1(h) as being owned by
The Art Store free and clear of Liens, except as disclosed on
Schedule 5.1(h) or as permitted under Section 6.2 of the New Loan
Agreement.
(ii) The Art Store has a good, sufficient and legal
leasehold interest in all of the properties listed on Schedule
5.1(h) as being leased by The Art Store and such leasehold
interest is free and clear of all Liens, except as disclosed on
Schedule 5.1(h).
(iii) Schedule 5.1(aa) sets forth the following
information with respect to each of the Grantor Trust
Subsidiaries as of the most recent practicable date through the
Funding: (A) the basis of the Grantor Trust Subsidiary in its
assets; (B) the basis of The Art Store Holding Company in the
Stock of The Art Store; and (C) the amount of any net operating
loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to such
Grantor Trust Subsidiary.
(iv) As of the Funding, the adjusted basis of The Art
Store Holding Company in the stock of The Art Store will be at
least $7,000,000; the excess of the adjusted basis of The Art
Store in its assets over its liabilities will be at least
$7,000,000; and the excess of the adjusted basis of SBP
Properties Holding Company in its assets over its liabilities
will be at least $1,500,000.
(v) Except as disclosed on Schedule 5.1(aa), none of
the Grantor Trust Subsidiaries has any liability for the Taxes of
any other Person (other than the Grantor Trust Subsidiaries and
other than Taxes of the consolidated group, the common parent of
which is Company) (A) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), (B) as
a transferee or successor, (C) by contract or (D) otherwise.
5.2. Representations and Warranties of Parent and
Holdings. Each of Parent and Holdings represents and warrants to
Company and the Other Investors as follows:
Authority. Each of Parent and Holdings has the
requisite power and authority to enter into this Agreement
and the Ancillary Agreements and to consummate the
Transactions.
Validity. This Agreement and the Ancillary
Agreements have been duly authorized, executed and delivered
by Parent and Holdings and constitute valid and legally
binding agreements of Parent and Holdings enforceable
against such Party in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors'
rights and to general equity principles.
Information Supplied. None of the information
supplied or to be supplied by Parent or Holdings about
Parent or Holdings in writing for inclusion or incorporation
by reference in the Proxy Statement will, at the date the
Proxy Statement is first mailed to the Company's
stockholders or at the time of the meeting of the Company's
stockholders held to vote on adoption of this Agreement,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they are made, not mislead-
ing.
Brokers. No broker, investment banker,
financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or Holdings,
except as described in Section 5.1(p), which would be or
become the responsibility of any other Party.
Ownership of Company Securities. Neither Parent
nor Holdings is the record or beneficial owner of any shares
of Common Stock, principal amount of New Borrower Notes or
Grantor Trust Notes, warrants to purchase shares of Common
Stock or any other equity or debt securities of the Company,
except as contemplated by this Agreement or the Ancillary
Agreements.
Investment Intent. Holdings is purchasing or
acquiring the New Shares and Preferred Shares for its own
account for investment and not with a present view to, or
for sale in connection with, any distribution thereof in
violation of the Securities Act. Holdings does not have any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the
New Shares or Preferred Shares. Holdings is aware that the
certificates evidencing the New Shares and Preferred Shares
shall bear substantially the following legend relating to
restrictions on resale under the Securities Act:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED EXCEPT IN ACCORDANCE THEREWITH."
Acquisition for Investment and Rule 144.
Holdings has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits
and risks of the prospective investment. Holdings
understands that the New Shares and Preferred Shares will
not be registered under the Securities Act in reliance on a
specific exemption from the registration provision of the
Securities Act which depends upon, among other things, the
bona fide nature of Holdings' investment intent as expressed
herein. Holdings acknowledges that the New Shares and
Preferred Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an
exemption from such registration is available. Holdings has
been advised or is aware of the provisions of Rule 144 and
Rule 144A promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement
subject to the satisfaction of certain conditions.
Consents. All material consents, approvals,
orders, authorizations of or registrations, declarations or
filings in connection with the valid execution and delivery
of this Agreement and the Ancillary Agreements by Parent and
Holdings or the purchase of the New Shares and the Preferred
Shares by Holdings have been obtained or made, or will be
obtained or made prior to the Closing Date.
5.3. Representations and Warranties of the Other
Investors. Each of the Other Investors and Grantor Trust
represents and warrants, with respect to such Person only,
severally and jointly, to Company, Parent and Holdings as
follows:
Authority. Investor1 has the requisite power
and authority to enter into this Agreement and the Ancillary
Agreements and to consummate the Transactions. Investor2
has the requisite power and authority to enter into this
Agreement and the Ancillary Agreements and to consummate the
Transactions. Each of Investor3, Investor4, Investor5 and
Investor6 is a corporation duly organized, validly existing
and in good standing under the laws of its respective
jurisdiction of incorporation and has the requisite power
and authority to enter into this Agreement and the Ancillary
Agreements and to consummate the Transactions.
Validity. This Agreement and the Ancillary
Agreements have been duly authorized, executed and delivered
by such Person and constitute valid and legally binding
agreements of such Person enforceable against such Party in
accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general
equity principles.
Information Supplied. None of the information
supplied or to be supplied by such Person about such Person
in writing for inclusion or incorporation by reference in
the Proxy Statement will, at the date the Proxy Statement is
first mailed to Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading.
Brokers. No broker, investment banker,
financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon
arrangements made by or on behalf of such Person, except as
set forth in Section 5.1(p), which would be or become the
responsibility of any other Party.
Ownership of Company Securities. Investor1 is
the beneficial owner of 7,630,307 shares of Common Stock and
warrants to purchase 394,547 shares of Common Stock.
Investor2 is the beneficial owner of 1,433,413 shares of
Common Stock and warrants to purchase 74,203 shares of
Common Stock. Investor3 is the beneficial owner of no
shares of Common Stock, $937,500 principal amount of New
Borrower Notes and warrants to purchase 70,312 shares of
Common Stock. Investor4 is the beneficial owner of
2,139,940 shares of Common Stock, $937,500 principal amount
of New Borrower Notes and warrants to purchase 70,312 shares
of Common Stock. Investor5 is the beneficial owner of
1,305,700 shares of Common Stock, $937,500 principal amount
of New Borrower Notes and warrants to purchase 70,312 shares
of Common Stock. Investor6 is the beneficial owner of no
shares of Common Stock, $937,500 principal amount of New
Borrower Notes and warrants to purchase 70,312 shares of
Common Stock. Except for such ownership, as of the date of
this Agreement, such Person does not beneficially own any
shares of Common Stock, principal amount of Existing Grantor
Trust Indebtedness, Borrower Notes or New Borrower Notes,
warrants to purchase shares of Common Stock or any other
equity or debt securities of Company, except as contemplated
by this Agreement, the Ancillary Agreements or the Existing
Loan Agreement.
Investment Intent. Such Person is purchasing or
acquiring the New Shares and the Preferred Shares for its
own account for investment and not with a present view to,
or for sale in connection with, any distribution thereof in
violation of the Securities Act, provided that disposition
of such Person's property shall at all times be within its
control. Such Person does not have any contract,
undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to
any third person, with respect to any of the New Shares or
Preferred Shares. Such Person is aware that the
certificates representing the New Shares and the Preferred
Shares will bear such legends relating to restrictions on
resale under the Securities Act as provided in
Section 5.2(f).
Acquisition for Investment and Rule 144. Such
Person has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits
and risks of the proposed Investment. Such Person
understands that the New Shares and the Preferred Shares
will not be registered under the Securities Act in reliance
on a specific exemption from the registration provision of
the Securities Act which depends upon, among other things,
the bona fide nature of such Person's investment intent as
expressed herein. Such Person acknowledges that the New
Shares and the Preferred Shares must be held indefinitely
unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.
Such Person has been advised or is aware of the provisions
of Rule 144 and Rule 144A promulgated under the Securities
Act which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain
conditions.
Legal Investment; Consents. The purchase of the
New Shares and the Preferred Shares by such Person hereunder
is legally permitted in all material respects by all laws
and regulations to which such Person is subject and all
material consents, approvals, orders, authorizations of or
registrations, declarations or filings in connection with
the valid execution and delivery of this Agreement and the
Ancillary Agreements by such Person or the purchase of the
New Shares and the Preferred Shares by such Person have been
obtained or made, or will be obtained or made prior to the
Closing Date.
ARTICLE VI
Covenants Relating to Conduct of Business
of Company
6.1. Conduct of Business. (a) Conduct of Business by
Company. Except as otherwise contemplated by this Agreement and
the Ancillary Agreements, during the period from the date of this
Agreement to the earlier of (x) the Closing and (y) the first day
on which each of the five persons designated as Holding Directors
on Schedule 2.1 of the Stockholders Agreement shall have become
Directors of Company, Company shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent
therewith, use its best efforts to preserve intact their current
business organizations, keep available the services of their
current officers and other employees and preserve their relation-
ships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. By
way of background, Schedule 1.1 sets forth the most recent
financial information of Company. Without limiting the
generality of the foregoing, without the prior written consent of
Parent, during the period from the date of this Agreement to the
Closing, Company shall not, and shall not permit any of its
Subsidiaries to:
take any action in violation of the covenants
contained in Company's loan agreements (except to the extent
such covenants have already been violated and no waivers
have been obtained);
(x) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock or (y) purchase, redeem or
otherwise acquire any shares of capital stock of Company or
any of its Subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares
or other securities (other than in accordance with the Stock
Split) or (z) declare, set aside or pay any dividend
(whether in cash, capital stock or property);
issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or
convertible securities (other than (x) the issuance of
Common Stock upon the exercise or conversion of Employee
Stock Options outstanding on the date of this Agreement and
in accordance with their present terms and (y) the issuance
and sale of the New Shares and Preferred Shares in
accordance with the terms hereof);
amend its Certificate of Incorporation, By-Laws or
other comparable charter or organizational documents (other
than in accordance with the Amendments);
acquire or agree to acquire any assets in excess of
$100,000;
sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its
properties or assets in excess of $10,000, or waive or
release any rights, or compromise, release or assign any
indebtedness owed to it or any claims held by it;
(x) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of Company or any of its
Subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of
any of the foregoing, (y) make any loans, advances or
capital contributions to, or investments in, any other
person, other than to Company or any direct or indirect
wholly owned Subsidiary of Company or (z) incur any other
debt, liability or obligation, direct or indirect, whether
accrued, absolute, contingent or otherwise, other than
current liabilities incurred in the ordinary course of
business consistent with past practice;
make or agree to make any new capital expenditure or
expenditures which, individually or in the aggregate, are in
excess of $10,000;
pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise),
other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or
in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of
Company included in the Filed SEC Documents or incurred in
the ordinary course of business consistent with past
practice;
provide any discounts on sales of inventory other than
discounts consistent with past practice;
enter into, terminate or substantially amend or
supplement any contract, lease or other agreement unless the
same is done in the ordinary and usual course of business
and the contract, lease or other agreement in question does
not provide for any party thereto to make payment or deliver
goods or services (or any combination thereof) aggregating
more than $10,000 over the term thereof;
increase in any manner the compensation or fringe
benefits of any of its officers, directors or employees or
pay or agree to pay any severance, pension, retirement
allowance or other similar benefit not required by any
previously existing plan or agreement to any such officers,
directors or employees, or commit itself to any severance,
pension, retirement or profit-sharing loan or agreement or
employment agreement with or for the benefit of any officer,
director, employee or other person;
permit any insurance policy (excluding, however, those
policies for which no replacement is available at a cost
comparable to that currently in effect) naming it as a
beneficiary or a loss payable payee to be cancelled or
terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or
lapse replacement policies providing substantially the same
coverage are in full force and effect;
change any accounting policy or procedure; or
authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Except as required by law,
regulation, or contemplated by this Agreement or the Ancillary
Agreements, the Company, Parent, Holdings, the Grantor Trust and
the Other Investors shall use all reasonable efforts not to, and
shall use all reasonable efforts not to permit any of their
respective Subsidiaries to, take any action that would, or that
could reasonably be expected to, result in (i) any of the
representations and warranties of such Party set forth in this
Agreement or the Ancillary Agreements that are qualified as to
materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions set forth in
Article IV not being satisfied.
Company, Parent, Holdings and the Other Investors shall
promptly notify the other Parties of any change or event causing,
or that, insofar as can reasonably be foreseen, would cause, any
of the conditions with respect to such Person set forth in
Article IV not being satisfied.
ARTICLE VII
Additional Agreements
7.1. Preparation of the Proxy Statement; Stockholders
Meeting. (a) Company shall have prepared and given Parent,
Holdings, Grantor Trust and the Other Investors a reasonable
opportunity to comment on the Proxy Statement to be filed by
Company with the Securities and Exchange Commission (the "Proxy
Statement"). If the Proxy Statement has not been filed with the
SEC, Company shall file with the SEC the Proxy Statement within
7 days after the date hereof. After giving Parent, Holdings,
Grantor Trust and the Other Investors a reasonable opportunity to
comment, Company shall file with the SEC any amendments or
supplements to the Proxy Statement that may be necessary in
response to SEC comments or otherwise. Company shall use
reasonable efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable. Company
shall provide to Parent, Holdings and the Other Investors
promptly any comments or other correspondence it receives from
the SEC staff with respect to the Proxy Statement.
(b) Company shall, as soon as practicable following
the date of this Agreement, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of approving the Proposals and shall,
through its Board of Directors, recommend to its stockholders
approval of the Proposals. The obligations of Company pursuant
to Section 7.1(a) and the first sentence of this Section 7.1(b)
shall not be affected by the commencement, public proposal,
public disclosure or communication to Company of any takeover
proposal by any third party.
7.2. Access to Information; Confidentiality. Company
shall, and shall cause each of its Subsidiaries to, afford to
Parent and to the officers, employees, accountants, counsel,
financial advisors and other representatives of the Parent,
reasonable access during normal business hours during the period
prior to the Closing to all their respective properties, books,
contracts, commitments, personnel and records and, during such
period, Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning
its business, properties and personnel as such other Party may
reasonably request.
7.3. Reasonable Efforts; Notification; Consent.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the Parties shall use all reasonable
efforts (in the case of Investor1 and Investor2, within the
context of its fiduciary obligations, if any, and applicable
regulatory restrictions) to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other Parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Transactions, including
(i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and
the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
Governmental Entity, including those set forth on
Schedule 5.1(d), to the extent necessary to consummate its
obligations as part of the Transactions, (ii) the obtaining or
granting of all necessary consents, approvals or waivers from
third parties or Parties, including those set forth on
Schedule 5.1(d), to the extent necessary to consummate its
obligations as part of the Transactions, (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or
administrative, against it and challenging this Agreement or any
of the Ancillary Agreements or the consummation of the
Transactions, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity vacated or reversed, and (iv) the execution and delivery
of any additional instruments necessary to consummate the
Transactions contemplated by, and to fully carry out the purposes
of, this Agreement and the Ancillary Agreements, including the
satisfaction of all conditions set forth in Article IV and
completion of the Funding and the Closing on a timely basis,
provided that nothing in this Article VII shall be construed to
require any Party to waive any right or condition to any
obligation it may have pursuant to this Agreement or any
Ancillary Agreement. In connection with and without limiting the
foregoing, Company and its Board of Directors shall (i) take all
action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this
Agreement, the Ancillary Agreements or any future transactions
between or among the Parties solely as a result of the
Transactions and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to this Agreement, any
Ancillary Agreement or any contemplated by this Agreement or any
Ancillary Agreement, take all action necessary to ensure that the
Transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Ancillary Agreements
and otherwise to minimize the effect of such statute or
regulation on the Transactions.
(b) Each Party shall give prompt notice to the other
Parties of (i) any representation or warranty made by it
contained in this Agreement or any Ancillary Agreement becoming
untrue or inaccurate in any respect (ii) the failure by it 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 or any Ancillary Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
Parties or the conditions to the obligations of the Parties under
this Agreement or the Ancillary Agreements.
(c) In order to induce each of the Parties to enter
into the Transactions, and anything in the agreements with the
Company to which such Party is a Party to the contrary
notwithstanding, each Party hereby consents to the Transactions
and, subject to satisfaction of the conditions to Funding or
Closing, as applicable, hereby waives all defaults and events of
default relating to any existing agreement between or among any
of the Parties and which include Company, any of its
Subsidiaries, any of the Grantor Trust Subsidiaries, Interim
Borrowers or Grantor Trust as a Party or Parties thereto, that,
to such Party's knowledge, occurred prior to and are continuing
as of the date hereof; provided, that if Closing does not occur
by December 31, 1995 or the Investment Agreement terminates prior
to Closing, the Parties will have the right to rescind such
waiver except with respect to actions and events that are taken
in connection with the Transactions. All terms, conditions and
provisions of such agreements are and shall remain in effect
(except as otherwise contemplated by this Agreement and the
Ancillary Agreements) and, except as set forth above, nothing
herein shall operate as a consent to or waiver of any other or
further matter or any other right, power or remedy of such Party
under such agreements.
7.4. Fees and Expenses. (a) Except as provided below
or in the Existing Insurance Company Loan Agreement, all fees and
expenses incurred in connection with this Agreement and the
Transactions shall be paid by the Party incurring such fees or
expenses, whether or not the sale of the New Shares or the
Preferred Shares on the terms contemplated hereby is consummated.
Company agrees to reimburse Investor1 and Investor2 for their
reasonable out-of-pocket expenses in connection with this
Agreement, the Ancillary Agreements and the Transactions in an
amount not to exceed $100,000.
(b) If a direct or indirect acquisition of, or merger
or other business combination with, Company or any substantial
portion of Company's business or assets, or the sale or other
disposition of a majority of the capital stock of Company (any of
such transactions, a "Disposition") is consummated by Company
with any person other than Parent after the date hereof, then
upon the consummation of such Company shall pay to Parent in
immediately available funds, an amount equal to Parent's and
Holdings' out-of-pocket costs and expenses (including legal fees
and expenses). This Section 7.4(b) shall not apply to any
Disposition undertaken through an involuntary bankruptcy of
Company.
7.5. Public Announcements. Parent, Holdings, Grantor
Trust, the Other Investors and Company shall consult with each
other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public
statements with respect to the Transactions and shall not issue
any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law,
court process, regulatory authority or by obligations pursuant to
any listing agreement with any national securities exchange.
7.6. Stockholder Litigation. Company shall give
Parent the opportunity to participate in the defense or
settlement of any stockholder litigation against the Company and
its directors relating to the Transactions; provided, however,
that no such settlement shall be agreed to without Parent's
consent, which consent shall not be unreasonably withheld.
7.7. Employment Arrangements. The Company shall not
enter into any employment agreement or implement any severance
arrangement with or with respect to any employee of the Company.
7.8. Reporting Company. Company shall use its best
efforts to remain a reporting company under the Exchange Act
prior to and upon consummation of the Transactions contemplated
by this Agreement and the Ancillary Agreements.
7.9. NYSE Listing. Company shall use its best efforts
to cause the outstanding shares of Common Stock and the New
Shares to remain listed on the New York Stock Exchange prior to
and upon consummation of the Transactions contemplated by this
Agreement and the Ancillary Agreements.
7.10. Liquidating Property Trust Leases and Property
Transfer. Company shall use its best efforts to obtain from the
Liquidating Property Trust the Liquidating Property Trust Leases
and cause the Property Transfer to occur.
7.11. Agreement to Vote Shares. Each of the Parties
agrees that during the term of this Agreement to vote such
Party's shares of Common Stock, and to cause any holder of record
of such shares to vote (a) in favor of the Proposals and the
Transactions, (b) against any action or agreement that would
compete with, impede, interfere with or attempt to discourage or
inhibit the timely consummation of the Transactions, (c) except
for the Transactions, against any merger, consolidation, business
combination, reorganization, recapitalization, liquidation or
sale or transfer of any material assets or securities of Company
or its Subsidiaries that would be inconsistent with the
Transactions and (d) as to any matter related to the election or
removal of directors, as directed by Holdings.
7.12. No Voting Trusts. Each of the Parties agrees
that they will not, nor will they permit any entity under their
control to, deposit any of their shares of Common Stock in a
voting trust or subject any of their shares of Common Stock to
any arrangement with respect to the voting of such Shares other
than agreements entered into with Holdings.
7.13. No Proxy Solicitations. Each of the Parties
agrees that such Party will not, nor will such Party permit any
entity under such Party's control to, (a) solicit proxies or
become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the 1934 Act) in opposition to or
competition with the consummation of the Transactions or
otherwise encourage or assist any party in taking or planning any
action which would compete with, impede, interfere with or
attempt to discourage or inhibit the timely consummation of the
Transactions, (b) directly or indirectly encourage, initiate or
cooperate in a stockholders' vote or action by consent of the
Company's stockholders in opposition to or in competition with
the consummation of the Transactions, or (c) become a member of a
"group" (as such term is used in Section 13(d) of the 1934 Act)
with respect to any voting securities of the Company for the
purpose of opposing or competing with the consummation of the
Transactions.
7.14. Transfer and Encumbrance. On or after the date
hereof and during the term of this Agreement until the Closing,
except pursuant to this Agreement and the Ancillary Agreements,
each of the Parties agrees not to transfer, sell, offer,
exchange, pledge or otherwise dispose of or encumber any of such
Party's shares of Common Stock or any Interim Notes, Existing
Grantor Trust Indebtedness or New Borrower Notes, without the
prior written consent of Company and Holdings and prior notice to
the Other Parties, except that (i) each of the Parties (other
than Company) may make such a transfer to any Affiliate (other
than Company) of such Party who agrees in writing to be bound by
the terms of this Agreement and the Ancillary Agreements, but no
such transfer shall relieve such Party of any of its obligations
under this Agreement and the Ancillary Agreements (except that
such relief will be granted in the case of Investor1 or Investor2
upon any transfer by them to a fund or account managed or advised
by Fidelity Management and Research Co. or Fidelity Management
Trust Co.). Company and Holdings will not unreasonably withhold
such consent to limited transfers (for example up to 5% of each
Party's holdings on a pro rata basis) so long as their material
interests are not adversely affected thereby.
7.15. Additional Purchases. Each of the Parties
agrees that such Party will not purchase or otherwise acquire
beneficial ownership of any shares of Common Stock after the
execution of this Agreement, nor will any Party voluntarily
acquire the right to vote or share in the voting of any shares of
Common Stock, unless such Party agrees to deliver to Holdings
immediately after such purchase or acquisition an irrevocable
proxy substantially in the form attached hereto as Exhibit C with
respect to such new shares. Each of the Parties also severally
agrees that any new shares acquired or purchased by him or her
shall be subject to the terms of this Agreement to the same
extent as if they constituted shares of Common Stock held by such
Party as set forth in Article V hereof.
7.16. Covenants Relating to Post-Funding Tax Matters.
(a) Tax Sharing Agreements. Any Tax sharing agreement
between the Company and any of the Grantor Trust Subsidiaries is
terminated as of the Funding and will have no further effect for
any taxable year, whether current, future or past.
(b) Tax Returns. Company will include the income of
the Grantor Trust Subsidiaries on the Company's consolidated
income Tax Returns for all periods through the Funding and pay
income Taxes attributable to such income. Grantor Trust
Subsidiaries will pay income Taxes attributable to their income
for all periods following the Funding. Upon reasonable request,
Grantor Trust Subsidiaries and Company will provide tax
information to each other for the purpose of preparing Tax
Returns. Company will take no position that relates to Grantor
Trust Subsidiaries on its consolidated income Tax Returns for
periods through the Funding that is not in accordance with past
practice, without the prior written consent of Investor1 and
Investor2, which consent will not be unreasonably withheld. The
Grantor Trust Subsidiaries will take no position that relates to
Company on their Tax Returns for periods after the Funding that
is not in accordance with past practice, without the prior
written consent of Company, which consent will not be
unreasonably withheld.
(c) Audits. Company on the one hand and Investor1,
Investor2 and Grantor Trust Subsidiaries on the other will each
provide reasonable notice to the other party regarding audits of
any Tax Returns, to the extent that such audits may affect the
other party's liability for Taxes. Company and the Grantor Trust
Subsidiaries will permit each other and their respective counsel
to participate in any such audits. None of Company or the
Grantor Trust Subsidiaries will settle any audit in a manner that
would adversely affect the Tax liability of the other party,
without the prior written consent of Investor1 and Investor2 or
Company, respectively.
(d) Sale of Stock. Company, Investor1, Investor2 and
the Grantor Trust Subsidiaries shall, upon Company request,
make a joint election under Section 338(h)(10) of the
Internal Revenue Code and any corresponding elections under
state and local tax laws (the "Election") with respect to
the stock of each Grantor Trust Subsidiary, and as promptly
as practicable following the Funding Date, cooperate with
each other to take all actions necessary and appropriate
(including filing such forms, returns, elections, schedules
and other documents as may be required) to effect and
preserve a timely Election in accordance with Section
338(h)(10) of the Internal Revenue Code and the Treasury
Regulations thereunder or any successor provisions and the
corresponding provisions of state and local tax laws.
However, the agreement in this subsection (d) is made
subject to the condition that the making of the Election
will not have a material adverse effect on Investor1,
Investor2 or their investment in the Grantor Trust
Subsidiaries, as such material adverse effect is defined in
a side letter between Investor1 and Investor2, on the one
hand, and Holdings and the Company, on the other hand, which
side letter such parties agree to negotiate in good faith.
(e) Refunds. The Grantor Trust Subsidiaries will
promptly pay to Company any net Tax refund (or net
reduction in Tax liability ) with respect to Taxes for
periods through the Funding when such refund is
received or such reduction is realized, by the Grantor
Trust Subsidiaries or any of their Affiliates. The
Grantor Trust Subsidiaries will cooperate with Company,
at Company's expense, in obtaining such refunds or
reductions. Company will indemnify each of the Grantor
Trust Subsidiaries for any Taxes resulting from the
subsequent disallowance of any such refund or
reduction.
(f) Indemnifications by Company. Company agrees
subsequent to the Funding to indemnify and hold
the Grantor Trust Subsidiaries and their respective
Subsidiaries and Affiliates and persons serving as
officers, directors, partners or employees thereof (the
"Grantor Trust Indemnified Parties") harmless from and
against any liability of the Grantor Trust Indemnified
Parties for Taxes (i) arising with respect to periods
which end on or prior to the Funding Date or as a
result of the Funding, or (ii) arising out of or based
upon any breach of the representations and warranties
contained in Sections 5.1(k) or 5.1(aa), including
without limitation any liability for Taxes of Company
or any member of its consolidated group other than the
Grantor Trust Subsidiaries (A) under Treasury
Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or (D) otherwise. For
purpose of this subsection and subsection (g) below,
"Taxes" includes any related costs, fines, penalties,
interest and expenses with respect thereto (including,
without limitation, reasonable fees of counsel) of any
kind and nature whatsoever (whether or not arising out
of third-party claims and including any reasonable
amounts paid in investigation, defense or settlement of
the foregoing) which will be sustained or suffered by
the Indemnified Parties.
(g) Indemnification by Grantor Trust Subsidiaries.
The Grantor Trust Subsidiaries agree subsequent to the Funding to
indemnify and hold Company and its Subsidiaries and Affiliates
and persons serving as officers, directors, partners or employees
thereof (the "Company Indemnified Parties") harmless from and
against any liability of the Company Indemnified Parties for
Taxes imposed with respect to the Grantor Trust Subsidiaries for
periods, or portions thereof, beginning after the Funding Date
(other than Taxes imposed as a result of the Funding). For
purposes of this subsection "Taxes has the meaning set forth in
subsection (f) above.
(h) Sole Remedy. The indemnification provided in
Section 7.16(e) and (f) above shall be the sole
and exclusive remedy of the Grantor Trust Subsidiaries
with respect to the matters set forth in Section
7.16(e) and (f). The indemnification provided in
Section 7.16(g) above shall be the sole and exclusive
remedy of the Company with respect to the matters set
forth in Section 7.16(g).
7.17. Environmental Indemnity, Etc. (a) Company
agrees subsequent to the Funding to indemnify and hold Investor1,
Investor2 and the Grantor Trust Subsidiaries ("Indemnitees")
harmless from and against any losses, damages, liabilities or
expenses (including reasonable expenses of counsel) that result
from any breach of the representations and warranties of the
Company contained in Section 5.1(h)(vii) to the extent, but only
to the extent, that such breach relates to the Grantor Trust
Subsidiaries, and subject to a maximum aggregate indemnification
liability of Company under this provision of $2.5 million.
(b) Promptly after becoming aware of or receiving
notice of any such breach, each Indemnitee shall, if the
Indemnitee believes that indemnification with respect thereto may
be sought from Company under this Agreement, notify Company in
writing and specify with reasonable particularity the
circumstances thereof. The right to indemnification shall
terminate as to any matter for which such notice has not been
given within two years from the date hereof. In addition,
Indemnitee shall give Company such information and cooperation as
it may reasonable require and as shall be within Indemnitee's
power. Any delay in such notification, if within such two year
period, will not relieve Company from any such liability unless
the delay in notice materially prejudiced Company. This right of
indemnification is not transferrable.
(c) If the Indemnitee is entitled to indemnification
on some claims, issues or matters, but not on others, involved in
a legal or administrative proceeding, the Company shall indemnify
the Indemnitee against an appropriate proportion of the overall
losses, damages, liabilities or expenses (and no more), based on
the matters for which the Indemnitee is entitled to be
indemnified hereunder in relation to any other matters involved
therein.
(d) The expenses incurred by Indemnitee in
investigating, defending, or appealing any legal or
administrative proceeding covered by this indemnity shall be paid
by Company in advance, with the understanding and agreement
hereby made by Indemnitee, or made by its acceptance of any such
advancement, that in the event it shall ultimately be determined
that Indemnitee was not entitled to be indemnified, or was not
entitled to be fully indemnified, that the Indemnitee shall repay
to Company such amount, or the appropriate portion thereof, so
paid or advanced.
(e) Company shall be entitled to assume the defense of
any legal or administrative proceeding for which indemnification
is owing under this Section 7.17. Company will not be liable for
any settlement effected without its prior written consent, which
will not be unreasonably withheld.
ARTICLE VIII
Termination, Amendment and Waiver
8.1. Termination. (a) Anything contained herein to
the contrary notwithstanding, this Agreement may be terminated
and the Transactions contemplated hereby abandoned at any time
prior to the Closing Date:
(i) by mutual written consent of Parent, Holdings, the
Other Investors and the Company;
(ii) by Parent and Holdings if any of the conditions
set forth in Section 4.1 shall have become incapable of
fulfillment, and shall not have been waived by Parent and
Holdings;
(iii) by Company if any of the conditions set forth in
Section 4.2 shall have become incapable of fulfillment, and
shall not have been waived by the Company;
(iv) by the Other Investors if any of the conditions
set forth in Section 4.3 shall have become incapable of
fulfillment, and shall not have been waived by the Other
Investors; or
(v) by any Party if Closing shall not have occurred on
or prior to December 31, 1995;
provided, however, that the Party seeking termination pursuant to
clause (ii), (iii) or (iv) is not in material breach of any of
its representations, warranties, covenants or agreements
contained in this Agreement.
(b) In the event of termination pursuant to this
Section 8.1, written notice thereof shall forthwith be given to
the other Parties and the Transactions shall be terminated,
without further action by any Party.
8.2. Effect of Termination. In the event of
termination of this Agreement as provided in Section 8.1, the
Parties shall no longer have any further liabilities or
obligations under this Agreement, except under Section 7.4,
Section 7.5 (which shall terminate one year from the termination
of this Agreement), this Section 8.2 and Article IX and except to
the extent that such termination results from the wilful and
material breach by a Party of any of its representations,
warranties, covenants or agreements set forth in this Agreement
or any of the Ancillary Agreements. Upon such termination the
warrants held by the Parties that were cancelled pursuant to
Section 2.3(c) shall be reissued and a proportionate amount of
warrants shall be issued to Holdings based on the amount of
Interim Notes, New Borrower Notes and Existing Grantor Trust
Indebtedness then outstanding.
8.3. Amendment. This Agreement may be amended by the
Parties at any time before or after any required approval of
matters presented in connection with this Agreement by the
stockholders of the Company; provided, however, that, after any
such approval, there shall be made no amendment that by law
requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties.
8.4. Extension; Waiver. At any time prior to the
Closing, the Parties may (a) extend the time for the performance
of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant
to this Agreement or (c) subject to the proviso of Section 8.3,
waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a
Party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such Party.
The failure of any Party to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such
rights.
8.5. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to
Section 8.1, an amendment of this Agreement pursuant to
Section 8.3 or an extension or waiver pursuant to Section 8.4
shall, in order to be effective, require in the case of Parent,
Holdings, Grantor Trust or the Other Investors, action by its
board of directors, trustees or authorized officers or the duly
authorized designee of its board of directors, trustees or
authorized officers or, in the case of the Company, action by a
majority of its entire Board of Directors.
ARTICLE IX
General Provisions
9.1. Survival of Warranties and Certain Agreements.
(a) All agreements, representations, and warranties made herein
shall survive the execution and delivery of this Agreement and
the consummation of the Transactions.
(b) Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of the parties set
forth in Sections 7.4 shall survive the consummation of the
Transactions and the termination of this Agreement.
9.2. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by cable, facsimile transmission,
telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 9.2):
(i) If to Parent or Holdings, to:
Corimon, S.A.C.A.
Calle Hans Neumann
Edificio Corimon
Los Cortijos de Lourdes
Apartado 3654
Caracas 1010-A, Venezuela
Attention: Arthur W. Broslat
Facsimile: (582) 203-5757
with a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attention: Frank H. Golay, Jr.
Facsimile: (213) 683-0457
(ii) If to Grantor Trust, to:
Standard Brands Paint Collateral Trust
c/o Karl Savryn, Trustee
Dornbush, Mensch, Mandelstam & Schaeffer
74 Third Avenue, 11th Floor
New York, New York 10017
Facsimile: (212) 753-7673
(iii) If to Investor1, to:
Fidelity Capital & Income Fund
c/o Fidelity Management and Research Co.
82 Devonshire Street - F7E and F7D
Boston, Massachusetts 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Facsimile: (617) 476-3316 and 476-7774
If to Investor2, to:
Kodak Retirement Income Plan Trust Fund
c/o Fidelity Management Trust Company
82 Devonshire Street - F7E and F7D
Boston, Massachusetts 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Facsimile: (617) 476-3316 and 476-7774
with a copy to:
Goodwin Procter & Hoar
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Laura Hodges Taylor
Facsimile: (617) 523-1231
(iv) If to Investor3, to:
Transamerica Life Insurance and Annuity Co.
c/o Transamerica Realty Services, Inc.
1150 South Olive Street, Suite 2200
Los Angeles, CA 90015
Attention: Lyman Lokken
Facsimile: (213) 741-6917
(v) If to Investor4, to:
Transamerica Occidental Insurance Co.
c/o Transamerica Realty Services, Inc.
1150 South Olive Street, Suite 2200
Los Angeles, CA 90015
Attention: Lyman Lokken
Facsimile: (213) 741-6917
(vi) If to Investor5, to:
Sun Life Insurance Co.
1 Sun America Center
Century City, CA 90067
Attention: Robert Sydow
Facsimile: (310) 772-6150
(vii) If to Investor6, to:
Anchor National Life Insurance Co.
1 Sun America Center
Century City, CA 90067
Attention: Robert Sydow
Facsimile: (310) 772-6150
(viii) If to the Company, to:
Standard Brands Paint Company
4300 West 190th Street
Torrance, CA 90509-2956
Attention: Ronald I. Scharman
Facsimile: (310) 371-8770
9.3. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement.
9.4. Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Ancillary Agreements, and the other
agreements and instruments referred to herein and therein,
(a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter of this
Agreement and the Ancillary Agreements and (b) are not intended
to confer upon any person other than the parties and their
permitted successors and assigns any rights or remedies.
9.5. Assignment. None of the Parties shall assign
this Agreement or any of its rights, interests or obligations
hereunder, in whole or in part (including by operation of law in
connection with a merger, or sale of substantially all the
assets, of Company, Parent, Holdings, the Other Investors or
otherwise), without the prior written consent of the other
Parties, except that each of the Parties (other than Company) may
assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement to any Affiliate
(other than Company) of such Party who agrees in writing to be
bound by the terms of this Agreement and the Ancillary
Agreements, but no such assignment shall relieve such Party of
any of its obligations under this Agreement and except that each
of Investor1, Investor2 and the Grantor Trust Subsidiaries may
assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement as they relate to
Sections 5.1(k), 5.1(aa) and 7.16, but no such assignment shall
relieve any of Investor1, Investor2 or the Grantor Trust
Subsidiaries of any of their obligations under this Agreement.
Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns. Any attempted
assignment in violation of this Section 9.5 shall be void.
9.6. Severability. If any term or provision of this
Agreement or the application thereof to any party or set of
circumstances shall, in any jurisdiction and to any extent, be
finally held invalid or unenforceable, such term or provision
shall only be ineffective as to such jurisdiction, and only to
the extent of such invalidity or unenforceability, without
invalidating or rendering unenforceable any other terms or
provisions of this Agreement or under any other circumstances,
and the parties shall negotiate in good faith a substitute
provision which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a
position as nearly comparable as possible to the position it
would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
9.8. Enforcement. The Parties agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement or any of the Ancillary Agreements were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and the Ancillary Agreements and to
enforce specifically the terms and provisions of this Agreement
and the Ancillary Agreements in any Federal or state court
located in the State of New York, this being in addition to any
other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal or state court
located in the State of New York in the event any dispute arises
out of this Agreement, any of the Ancillary Agreements or any of
the Transactions, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement, any of the Ancillary
Agreements or any of the Transactions in any court other than a
Federal or state court sitting in the State of New York. The
Parties agree to accept service of process in connection with any
such action or proceeding in any manner permitted for a notice
hereunder.
However, anything in this Agreement to the contrary
notwithstanding, in the case of any legal proceeding specifically
relating to one of the Ancillary Agreements, which itself
contains specific choice of law, forum selection or jurisdiction
provisions, which is or would be inconsistent with this Section
9.8, then in such case the provisions contained in such Ancillary
Agreement shall control, and this Section 9.8 shall not be
applicable thereto.
INVESTMENT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
STANDARD BRANDS PAINT COMPANY
By __________________________
Name:
Title:
CORIMON, S.A.C.A.
By __________________________
Name:
Title:
CORIMON CORPORATION
__________________________
Name:
Title:
TRANSAMERICA LIFE INSURANCE AND
ANNUITY
CO.
By __________________________
Name:
Title:
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE
COMPANY
By __________________________
Name:
Title:
SUN LIFE INSURANCE COMPANY OF
AMERICA
By __________________________
Name:
Title:
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By __________________________
Name:
Title:
STANDARD BRANDS PAINT COLLATERAL
TRUST
By __________________________
Name:
Title:
KODAK RETIREMENT INCOME PLAN TRUST
FUND
By __________________________
Name:
Title:
FIDELITY CAPITAL & INCOME FUND
By __________________________
Name:
Title:
Investor1 is a portfolio of a Massachusetts business trust. A
copy of Investor1's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. Each of the
Parties acknowledges and agrees that this agreement is not
executed on behalf of or binding upon any of the trustees,
officers, directors or shareholders of Investor1 or Investor2
individually, but is binding only upon the assets and property of
Investor1 and Investor2. With respect to all obligations of
Investor1 arising out of this Agreement, each of the Parties
shall look for payment or satisfaction of any claim solely to the
assets and property of Investor1 and Investor2. Each of the
Parties are expressly put on notice that the rights and
obligations of each series of shares of each of Investor1 and
Investor2 under its Declaration of Trust are separate and
distinct from those of any and all other series.
SCHEDULE 3.2
DEBT EXCHANGE
Name
New
Shares
Preferred
Shares
Holdings
15,972,332
190,288
Investor1
1,216,595
851,616
Investor2
228,807
160,165
Investor3
131,422
91,995
Investor4
131,422
91,995
Investor5
131,422
91,995
Investor6
131,422
91,995
17,943,422
1,570,049
SCHEDULE 5.1(t)
Kodak Retirement Income Plan or the Committee established
thereunder.
EXHIBIT A TO INVESTMENT AGREEMENT
AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF
STANDARD BRANDS PAINT COMPANY
The first paragraph of Article IV of the Certificate of
Incorporation of Standard Brands Paint Company is amended such
that said paragraph shall read as follows:
"The Corporation is authorized to issue two classes of
shares of stock to be designated, respectively, "Common
Stock" and "Preferred Stock." The total number of shares
which the Corporation shall have authority to issue is one
hundred five million (105,000,000) shares, consisting of one
hundred million (100,000,000) shares of common stock having
$.01 par per share ("Common Stock") and five million
(5,000,000) shares of preferred stock having $.01 par value
per share ("Preferred Stock"). Upon the amendment of this
Article IV effected by this Amendment, each 10 outstanding
shares of Common Stock will be converted into 1 share of
Common Stock, provided that no fractional shares may be
issued pursuant to such change. The Corporation may, at its
option, pay cash for any fractional shares or round such
fractional shares up to the nearest whole number of shares."
EXHIBIT C TO STOCK AND NOTE PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of February 14, 1995
(this "Agreement"), among Corimon, S.A.C.A., a Venezuelan
corporation ("Parent"), Corimon Corporation, a Delaware
corporation ("Holdings"), and Fidelity Capital & Income Fund, a
portfolio of a Massachusetts business trust ("Investor1").
RECITALS
WHEREAS, Parent, Holdings and Investor1 entered into the
Stock and Note Purchase Agreement, dated as of the date hereof,
pursuant to which Investor1 will own $9,939,175 aggregate
principal amount of Put Notes of Holdings (the "Put Notes");
WHEREAS, pursuant to the terms and conditions of the Put
Notes, such notes may be purchased, put or called for common
shares, nominal value Bs. 10 each, of Parent (the "Parent Common
Shares");
WHEREAS, pursuant to a Put Agreement, to be dated as of
February 15, 1995, Parent may deliver certain Parent Common
Shares to the parties thereto and such Parent Common Shares shall
be entitled to the rights contained herein;
NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein and for
other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Securities Subject to this Agreement
(a) Definitions. The terms "Registrable Securities" and
"Restricted Securities" shall each refer to the Parent Common
Shares.
The term "Target Effective Date" means the date 45 days
after the earlier of (i) the Target Filing Date or (ii) the date
on which the Shelf Registration Statement is filed with the
Commission.
The term "Target Effective Period" shall have the meaning
set forth in Section 2(a).
The term "Target Filing Date" means the date 30 days after
the delivery of Parent Common Shares to Investor1 under the Stock
and Note Purchase Agreement.
(b) Restricted Securities. For the purposes of this
Agreement, Restricted Securities will cease to be Restricted
Securities when (i) a registration statement filed with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"),
covering such Restricted Securities has been declared effective
and they have been disposed of pursuant to such effective
registration statement, or (ii) such Restricted Securities have
been sold pursuant to Rule 144 or Rule 144A under the Securities
Act.
(c) Registrable Securities. Registrable Securities will
cease to be Registrable Securities when they cease to be
Restricted Securities.
2. Shelf Registration
(a) Filing; Effectiveness. As soon as practicable but not
later than the Target Filing Date, Parent shall prepare and file
with the Commission a "shelf" registration statement (the
"Registration Statement") on the appropriate form for an offering
to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (or such successor rule or similar provision then
in effect) covering all of the Registrable Securities. Parent
shall use its best efforts to have the Registration Statement
declared effective on or before the Target Effective Date and to
keep such Registration Statement continuously effective for a
period (the "Target Effective Period") of 36 months following the
date on which such Registration Statement is declared effective.
Investor1 shall be permitted to withdraw all or any part of the
Registrable Securities from a Registration Statement at any time
prior to the effective date of such Registration Statement or
elect not to have such securities included under such
Registration Statement, but to the extent Investor1 so withdraws
or elects, it shall be deemed to have waived its rights hereunder
to have such Securities registered under such Registration
Statement.
(b) Supplements; Amendments. Parent agrees, if necessary
in the sole judgment of Parent, to supplement or amend the
Registration Statement, as required by the rules, regulations or
instructions applicable to the registration form used by Parent
for such Registration Statement or by the Securities Act or as
requested (which request may result in the filing of a supplement
or amendment) by Investor1 to which such Registration Statement
relates, and Parent agrees to furnish to the holders of
Registrable Securities and their counsel and any managing
underwriter copies of any such supplement or amendment prior to
its being used and/or filed with the Commission.
(c) Liquidated Damages. If the Registration Statement is
not filed on or before the Target Filing Date, Parent shall pay
liquidated damages to Investor1 in an amount equal to $0.01 per
100 shares of the Registrable Securities per week beginning with
the week including the Target Filing Date. If the Registration
Statement is filed but has not become effective on or before the
Target Effective Date, Parent shall pay liquidated damages to
Investor1 in an amount equal to $0.01 per 100 shares of the
Registrable Securities per week beginning with the week including
the Target Effective Date. The weekly liquidated damages
associated with a late filing or a late declaration of
effectiveness shall increase by an amount equal to $0.01 per 100
shares of the Registrable Securities 90 days after the Target
Filing Date or the Target Effective Date, as the case may be, and
shall thereafter increase by an amount equal to $0.01 per
100 shares of the Registrable Securities at the end of each
subsequent 90 day period for so long as the Registration
Statement is not filed or declared effective, as the case may be.
If a stop order is imposed or if for any other reason the
effectiveness of the Registration Statement is suspended
(including without limitation 5(o)) during the Target Effective
Period, then Parent shall pay liquidated damages to Investor1 in
an amount equal to $0.01 per 100 shares of the Registrable
Securities per week beginning with the week including the day on
which such stop order is imposed or effectiveness is otherwise
suspended. The weekly liquidated damages associated with a
suspension of the effectiveness of the Registration Statement
shall increase by an amount equal to $0.01 per 100 shares of the
Registrable Securities 90 days after the stop order was imposed
or the effectiveness of the Registration Statement was otherwise
suspended, and shall thereafter increase by an amount equal to
$0.01 per 100 shares of the Registrable Securities at the end of
each subsequent 90 day period for so long as the effectiveness
remains suspended. Liquidated damages shall be deemed to
commence accruing on the first day of the week in which the event
triggering such liquidated damages occurs.
The liquidated damages to be paid to Investor1 pursuant to
this Section 2(c) shall cease to accrue, (i) with respect to the
liquidated damages for failure to file on or prior to the Target
Filing Date, on the first Friday after the Registration Statement
is filed (but if the Registration Statement is filed on a Friday,
then that day), (ii) with respect to the liquidated damages for
failure to have the Registration Statement declared effective on
or prior to the Target Effective Date, on the first Friday after
the Registration Statement is declared effective (but if the
Registration Statement is declared effective on a Friday, then
that day), or (iii) with respect to the liquidated damages for
the suspension of effectiveness, on the first Friday after the
reinstatement of effectiveness of the Registration Statement (but
if the effectiveness of the Registration Statement is reinstated
on a Friday, then that day).
Parent shall pay the liquidated damages due with respect to
any Registrable Securities at the end of each week during which
such damages accrue. Liquidated damages shall be paid to
Investor1 by wire transfer in immediately available funds to the
accounts designated by Investor1.
(d) Effective Registration. A registration will not be
deemed to have been effected as a Registration Statement unless
the Registration Statement with respect thereto has been declared
effective by the Commission and Parent has complied in all
material respects with its obligations under this Agreement with
respect thereto; provided, however, that if after it has been
declared effective, the offering of Registrable Securities
pursuant to a Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the
Commission or any other governmental agency or court, such
Registration Statement will be deemed not to have become
effective during the period of such interference (and liquidated
damages shall accrue and be payable under Section 2(c)) until the
offering of Registrable Securities pursuant to such Registration
Statement may legally resume. If a registration requested
pursuant to this Section 2 is deemed not to have been effected
then Parent shall continue to be obligated to effect a
registration pursuant to this Section 2.
(e) Selection of Underwriter. If Investor1 so elects, the
offering of Registrable Securities pursuant to a Registration
Statement of Registrable Securities shall be in the form of an
underwritten offering. If Investor1 so elects, Investor1 shall
select one or more nationally recognized firms of investment
bankers acceptable to Parent to act as the book-running managing
underwriter or underwriters in connection with such offering and
shall select any additional investment bankers and managers
acceptable to Parent to be used in connection with the offering.
3. Piggy-Back Registration
If at any time Parent proposes to file a registration
statement under the Securities Act with respect to an offering by
Parent of Parent Common Shares or Parent ADSs (other than a
registration statement on Form F-4 or S-8, or any form
substituted therefor, or filed in connection with an exchange
offer or an offering of securities solely to Parent's existing
stockholders) (the "Piggy-Back Registration"), then Parent shall
in each case give written notice of such proposed filing to
Investor1 as soon as practicable but in no event less than
30 business days before the anticipated filing date, and such
notice shall offer Investor1 the opportunity to register such
number of shares of Registrable Securities as Investor1 may
request. Parent shall use its reasonable efforts to cause the
managing underwriter or underwriters of the proposed offering to
permit Investor1, in the event Investor1 has given Parent notice
(which may be given by telephone, to be confirmed promptly in
writing, or by telex) within 10 business days after receipt of
such notice of its desire to include the Registrable Securities
held by it in such offering on the same terms and conditions as
included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering determine in good
faith that the total amount of Registrable Securities that
Investor1 intends to include in such offering would adversely
effect the success of such offering, then the number of shares of
Registrable Securities to be offered for the account of Investor1
shall be reduced or excluded in its entirety, as the case may be,
to the extent necessary to reduce the total amount of shares of
Registrable Securities to be included in such offering to the
amount recommended by such managing underwriters. In the event
that the contemplated distribution does not involve an
underwritten public offering, such determination that the
inclusion of such Registrable Securities shall adversely affect
the success of the offering shall be made in good faith by the
Board of Directors of Parent in its sole and absolute judgment.
No registration effected under this Section 3, and no
failure to effect a registration under this Section 3 shall
relieve Parent of its obligation to effect a registration upon
the request of Investor1 pursuant to Section 2. No failure to
effect a registration under this Section 3 and to complete the
sale of Registrable Securities in connection therewith shall
relieve Parent of any other obligation under this Agreement,
including without limitation, Parent's obligations under
Sections 6 and 7.
4. Holdback Agreement
If reasonably requested by the managing underwriter or
underwriters for any public offering of Registrable Securities
being made pursuant to a Registration Statement (collectively,
the "Registration Statement"), Parent will (i) not publicly sell
or distribute any securities similar to those being registered,
or any securities convertible into or exchangeable or exercisable
for such securities (other than any such sale or distribution of
such securities in connection with any merger or consolidation by
Parent or any subsidiary thereof, or the acquisition by Parent or
a subsidiary thereof of the capital stock or substantially all of
the assets of any other person, or by reason of the existence of
previously issued and outstanding convertible securities, options
or warrants), during the time reasonably requested by the
underwriter, not to exceed 14 business days prior to, and during
the 180-day period beginning on, the effective date of any
Registration Statement in which Investor1 is participating or the
commencement of a public distribution of the Registrable
Securities pursuant to such Registration Statement; provided,
however, that in no event shall this clause prevent Parent from
selling or distributing any securities registered under the
Securities Act on Form F-4 or Form S-8 or any successor form, and
(ii) use reasonable efforts to cause each other holder of
privately placed securities similar to those being registered to
agree not to effect any public sale or distribution of any such
securities during the periods described in clause (i) above, in
each case including a sale pursuant to Rule 144 or Rule 144A
under the Securities Act (except as part of any such
registration, if permitted).
5. Registration Procedures
In connection with any sale of Registrable Securities
pursuant to a Registration Statement, the Company will as
promptly as practicable:
(a) prepare and file with the Commission a
Registration Statement on the appropriate form under the
Securities Act, which form shall comply as to form in all
material respects with the requirements of the applicable
form and include all financial statements required by the
Commission to be filed therewith, and use its best efforts
to have such Registration Statement declared effective and
remain effective in accordance with the provisions of this
Agreement; provided, however, that, prior to filing a
Registration Statement or prospectus relating to Registrable
Securities or any amendments or supplements thereto, Parent
shall furnish to Investor1, Investor1's counsel and the
underwriters, if any, copies of all such documents proposed
to be filed, which documents will be subject to the review
of Investor1's counsel and the underwriters, if any, and
Parent will not, unless required by law, file any
Registration Statement or amendment thereto or any
prospectus or any supplement thereto relating to Registrable
Securities to which Investor1 or the underwriters with
respect to such Registrable Securities, if any, shall
object; provided, however, that any such objection to the
filing of any Registration Statement or amendment thereto or
any prospectus or supplement thereto shall be made by
written notice (the "Objection Notice") delivered to Parent
no later than ten business days after the party or parties
asserting such objection (the "Objecting Party") receives
copies of the documents that the Company proposes to file.
The Objection Notice shall set forth the objections and the
specific areas in the documents where such objections arise.
Parent shall have five business days after receipt of the
Objection Notice to correct such deficiencies to the
reasonable satisfaction of the Objecting Party; provided,
however, that nothing contained herein shall prevent the
Company from filing documents within the time periods
specified under the Securities Act or the terms of this
Agreement;
(b) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration
Statement effective for as long as such registration is
required to remain effective pursuant to the terms hereof;
shall cause the prospectus contained in the Registration
Statement to be supplemented by any required prospectus
supplement, and, as so supplemented, to be filed pursuant to
Rule 424 under the Securities Act; and shall comply with the
provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities
covered by such Registration Statement during the applicable
period in accordance with the intended methods of
disposition set forth in such Registration Statement or
supplement to the prospectus;
(c) promptly notify Investor1, counsel to Investor1
and any underwriter and (if requested by any such person)
confirm such notice in writing, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been
filed and, with respect to a Registration Statement or any
post-effective amendment, when the same has become
effective, (ii) of any request by the Commission or any
state securities authority for amendments and supplements to
a Registration Statement and prospectus or for additional
information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any
proceedings for that purpose, (iv) of the issuance by any
state securities commission or other regulatory authority of
any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under
state securities or "blue sky" laws or the initiation of any
proceedings for that purpose, and (v) if, between the
effective date of a Registration Statement and the closing
of any sale of Registrable Securities covered thereby, the
representations and warranties of Parent contained in any
underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering cease to
be true and correct in all material respects;
(d) use its best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration
Statement, and if one is issued use its best efforts to
obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest
possible moment;
(e) if requested by the managing underwriter or
underwriters, if any, by Investor1 or its counsel,
incorporate in a prospectus supplement or post-effective
amendment such information as such managing underwriter or
underwriters request, or Investor1's counsel reasonably
requests, to be included therein, including, without
limitation, with respect to the Registrable Securities being
sold by Investor1 to such underwriter or underwriters, the
purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of an
underwritten offering of the Registrable Securities to be
sold in such offering, and make all required filings of such
prospectus supplement or post-effective amendment; provided,
however, that Parent need not include such information if it
deems it misleading or inappropriate or does not receive an
indemnity with respect to such information;
(f) as promptly as practicable after filing with the
Commission of any document which is incorporated by
reference into a Registration Statement (in the form in
which it was incorporated), deliver a copy of each such
document to Investor 1 and the counsel to Investor1
identified in writing;
(g) cooperate with Investor1 and the managing
underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (which shall
not bear any restrictive legends unless required under
applicable law) representing securities sold under a
Registration Statement, and enable such securities to be in
such denominations and registered in such names as the
managing underwriter or underwriters, if any, or Investor1
may request and keep available and make available to
Parent's transfer agent or depositary prior to the
effectiveness of such Registration Statement a supply of
such certificates;
(h) provide a CUSIP number for all Registrable
Securities covered by a Registration Statement not later
than the effective date of such Registration Statement;
(i) cooperate with Investor1 and each underwriter
participating in the disposition of Registrable Securities
and their respective counsel in connection with any filings
required to be made with the National Association of
Securities Dealers, Inc. ("NASD");
(j) during the period when the prospectus is required
to be delivered under the Securities Act, promptly file all
documents required to be filed with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act");
(k) appoint a transfer agent and registrar or
depositary for all Registrable Securities covered by a
Registration Statement not later than the effective date of
such Registration Statement;
(l) in connection with an underwritten offering,
participate, to the extent reasonably requested by the
managing underwriter for the offering or Investor1, in
customary efforts to sell the securities under the offering,
including without limitation, participating in "road shows;"
(m) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue
sky laws of such jurisdictions as Investor1 shall reasonably
request, use its best efforts to keep each such registration
or qualification (or exemption therefrom) effective during
the period in which the Registration Statement is required
to be kept effective, and do any and all other acts and
things that may be necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions
of the Registrable Securities owned by Investor1; provided,
however, that Parent will not be required to (i) qualify
generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph
(m), (ii) subject itself to general taxation in any such
jurisdiction where it is not then so subject, or
(iii) consent to general service of process in any such
jurisdiction;
(n) use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be
registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the
business and operations of Parent to enable Investor1 to
consummate the disposition of such Registrable Securities;
(o) notify Investor1 at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of
which the prospectus included in the Registration Statement
contains an untrue statement of a material fact required to
be stated therein or necessary to make the statements
therein not misleading, and Parent will prepare and file
with the Commission a supplement or amendment to such
prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus
will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(p) enter into customary agreements (including an
underwriting agreement in customary form) and take such
other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable
Securities (Investor1 may, at its option, require that any
or all of the representations, warranties and covenants of
Parent to or for the benefit of any underwriters also be
made to and for the benefit of Investor1);
(q) make reasonably available for inspection by
Investor1, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the managing
underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents
and properties of Parent (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause Parent's
officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection
with the Registration Statement. Records and other
information that Parent determines, in good faith, to be
confidential shall be identified as confidential prior to
delivery of such records or information to the Inspectors,
and if Parent so notifies the Inspectors that such records
and information are confidential, such records and
information shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records in the opinion of counsel
reasonably acceptable to Parent is necessary to avoid or
correct a misstatement or omission in the Registration
Statement or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of
competent jurisdiction; Investor1 agrees that it will, upon
learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to Parent and
allow Parent, at Parent's expense, to undertake appropriate
action to prevent disclosure of the Records deemed
confidential;
(r) if the offering is an underwritten public
offering, use its best efforts to obtain a "cold comfort"
letter from Parent's independent public accountants in
customary form and covering such matters of the type
customarily covered by "cold comfort" letters as Investor1
or the managing underwriter reasonably request;
(s) use its best efforts to obtain an opinion or
opinions from counsel for Parent in customary form and
covering such matters of the type customarily covered by
opinions as Investor1 or the managing underwriter reasonably
request;
(t) otherwise comply with all applicable rules and
regulations of the Commission and any other governmental,
quasi-governmental or private body to which Parent or the
transactions contemplated by this Agreement is subject, and
make available to its security holders, as soon as
reasonably practicable, an earnings statement, which
earnings statement shall satisfy the provisions of section
11(a) of the Securities Act.
Parent may require Investor1 to furnish to Parent, and the
registration rights of Investor1 hereunder shall be subject to
Investor1 furnishing, such information regarding the distribution
of such Registrable Securities as Parent may from time to time
reasonably request in writing.
Investor1 agrees that, upon receipt of any notice from
Parent of the happening of any event of the kind described in
Section 5(o) hereof, Investor1 will forthwith discontinue
disposition of Registrable Securities pursuant to the
Registration Statement until Investor1's receipt of the copies of
the supplemented or amended prospectus contemplated by Section
5(o) hereof and, if so directed by Parent, such holder will
deliver to Parent (at Parent's expense) all copies, other than
permanent file copies then in Investor1's possession, of the
prospectus covering such Registrable Securities current at the
time of receipt of such notice. In the event Parent shall give
any such notice, Parent shall extend the period during which the
Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days during the period from and
including the date of the giving of such notice pursuant to
Section 5(o) hereof to and including the date when Investor1
shall have received the copies of the supplemented or amended
prospectus contemplated by Section 5(o) hereof.
All underwriting discounts, selling commissions and expenses
of underwriters will be borne by Investor1.
If any Registration Statement refers to Investor1 by name or
otherwise as the holder of any securities of Parent, then
Investor1 shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to
Investor1, to the effect that the holding by Investor1 of such
securities is not to be construed as a recommendation by
Investor1 of the investment quality of Parent's securities
covered thereby and that such holding does not imply that
Investor1 will assist in meeting any future financial
requirements of Parent, or (ii) in the event that such reference
to Investor1 by name or otherwise is not required by the
Securities Act or any similar Federal or state "blue sky" statute
and the rules and regulations thereunder then in force, the
deletion of the reference to Investor1.
6. Registration Expenses
Parent will pay all expenses incident to Parent's
performance of or compliance with this Agreement, including,
without limitation, all costs and expenses of registration
hereunder, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), fees and expenses
of the counsel and accountants for Parent (including the
reasonable expenses of any special audit and "cold comfort"
letters required by or incident to such performance), opinions of
counsel and all other costs and expenses of Parent incident to
the preparation, printing and filing under the Securities Act of
the Registration Statement (and all amendments and supplements
thereto) and furnishing copies thereof and of the prospectus
included therein. In addition, Parent will reimburse Investor1
for the reasonable fees and expenses of not more than one counsel
chosen by Investor1.
7. Indemnification and Contribution.
(a) Indemnification by Parent. Parent agrees to indemnify
and hold harmless, to the full extent permitted by law,
Investor1, its officers, directors, trustees, employees, agents
and investment advisers, and each person who controls Investor1
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with,
or is controlled by, Investor1, together with the partners,
officers, directors, trustees, stockholders, employees and agents
of such controlling person (collectively, the "Investor1
Controlling Persons"), from and against all losses, claims,
damages, liabilities and expenses (including without limitation
any legal or other fees and expenses incurred by Investor1 or any
such Investor1 Controlling Person in connection with defending or
investigating any action or claim in respect thereof)
(collectively, the "Investor1 Damages") to which Investor1, its
officers, directors, trustees, employees, agents and investment
advisers, and any such Investor1 Controlling Person may become
subject under the Securities Act or otherwise, insofar as such
Investor1 Damages (or proceedings in respect thereof) arise out
of or are caused by any untrue statement or alleged untrue
statement of material fact or any omission or alleged omission of
a material fact required to be stated in the Registration
Statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case
of a prospectus, in the light of the circumstances under which
they were made) not misleading, except insofar as such Investor1
Damages arise out of or are caused by any untrue statement or
alleged untrue statement or omission or alleged omission
contained in any information or affidavit with respect to
Investor1 so furnished in writing by Investor1 expressly for use
therein (or any amendment or supplement thereto); provided,
however, that Parent shall not be liable to Investor1 under this
Section 7(a) to the extent that any such Investor1 Damages were
caused by the fact that Investor1 sold securities to a person as
to whom it shall be established that there was not sent or given,
at or prior to the written confirmation of such sale, a copy of
the prospectus as then amended or supplemented if, and only if,
(i) Parent has previously furnished copies of such amended or
supplemented prospectus to Investor1 and (ii) such Investor1
Damages were caused by any untrue statement or omission or
alleged untrue statement or omission contained in the prospectus
so delivered which was corrected in such amended or supplemented
prospectus. In connection with an underwritten offering, Parent
shall agree to indemnify the underwriters thereof, their officers
and directors and each person who controls such underwriters
(within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) on similar terms as provided
above with respect to the indemnification of Investor1; provided,
however, if pursuant to an underwritten public offering of
Registrable Securities, Parent and any underwriters enter into an
underwriting agreement or purchase agreement relating to such
offering that contains provisions relating to indemnification
between Parent and such underwriters such provision shall be
deemed to govern indemnification as between Parent and the
underwriters.
(b) Indemnification by Investor1. Investor1 will furnish
to Parent in writing such information and affidavits with respect
to Investor1 as Parent reasonably requests for use in connection
with the Registration Statement or any prospectus or any
amendment thereof and/or supplement thereto and agrees to
indemnify and hold harmless, to the full extent permitted by law,
Parent, its officers, directors, stockholders, employees, agents
and investment advisors, and each person who controls Parent
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with,
or is controlled by, Parent, together with the officers,
directors, stockholders, employees and agents of such controlling
person (called the "Parent Controlling Person") from and against
all losses, claims, damages, liabilities and expenses (including
without limitation any legal or other fees and expenses incurred
by Parent or any such Parent Controlling Person in connection
with defending or investigating any action or claim in respect
thereof) (collectively, the "Parent Damages") to which Parent,
its officers, directors, stockholders, employees, agents and
investment advisers, and any such Parent Controlling Person may
become subject under the Securities Act or otherwise, insofar as
such Parent Damages (or proceedings in respect thereof) arise out
of or are caused by any untrue statement or alleged untrue
statement of material fact or any omission or alleged omission of
a material fact required to be stated in the Registration
Statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case
of a prospectus, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the
extent, that such Parent Damages arise out of or are caused by
any untrue statement or alleged untrue statement or omission or
alleged omission is contained in any information or affidavit
with respect to Investor1 so furnished in writing by Investor1
expressly for use therein (or any amendment or supplement
thereto); provided, however, that Investor1 shall not be
obligated to Parent under this Section 7(b) to the extent that
such Parent Damages were caused by the failure of Parent to
promptly amend or take action to correct or supplement any such
Registration Statement or prospectus on the basis of corrected or
supplemental information provided in writing by Investor1 to
Parent expressly for such purpose. In no event shall the
liability of Investor1 hereunder be greater in amount than the
dollar amount of the proceeds (net of underwriting commissions
and fees) received by Investor1 upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder agrees to give prompt
written notice to the indemnifying party after the receipt by
such person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made
in writing for which such person will claim indemnification or
contribution pursuant to this Agreement and, upon request of the
indemnified party, permit the indemnifying party to assume the
defense thereof and retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and shall
pay the fees and disbursements of such counsel relating to such
proceeding; provided, however, that failure by such person
entitled to indemnification to give prompt written notice shall
not prejudice such person's right of indemnification granted
hereunder, except to the extent the indemnifying party is
prejudiced thereby. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the indemnifying party fails promptly to
assume the defense of such proceeding or fails to employ counsel
reasonably satisfactory to such indemnified party, or (iii) the
named parties to any such proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying
parties or an affiliate of the indemnifying party or such
indemnified party, and there may be one or more defenses
available to such indemnified party that are differet from or
additional to the indemnifying party, in which case, if such
indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel of its choice at the expense
of the indemnifying party, the indemnifying party shall not have
the right to assume the defense thereof and such counsel shall be
at the expense of the indemnifying party, it being understood,
however, that unless there exists a conflict among indemnified
parties, the indemnifying party shall not, in connection with any
one such proceeding or separate but substantially similar or
related proceedings in the same jurisdiction, arising out of the
same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such
indemnified party. The indemnifying party will not be subject to
any liability for any settlement made without its consent, which
shall not be unreasonably withheld but, if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any
indemnified party is a party, and indemnity could have been
sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of
such proceeding.
(d) Contribution. If the indemnification provided for in
this Section 7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect (i) the relative benefits received by Parent on the one
hand and Investor1 on the other hand from the offering of such
Registrable Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7(c), any legal
or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
Notwithstanding the provisions of this Section 7(d),
Investor1 shall not be required to contribute any amount in
excess of the amount by which the total price at which the
Registrable Securities of Investor1 were offered to the public
less underwriting discounts and commissions exceeds the amount of
any damages which Investor1 has otherwise been required to pay by
reason of such untrue statement or omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the second preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to
the full extent provided in Sections 7(a) and (b) without regard
to the relative fault of said indemnifying party or indemnified
party or any other equitable consideration provided for in this
Section 7(d).
The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in
equity.
8. Rule 144
Parent covenants that it will file the reports required to
be filed by Parent under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission
thereunder (or, if Parent is not required to file such reports,
it will, upon the request of Investor1, make publicly available
other information so long as necessary to permit sales under
Rule 144 under the Securities Act), and it will take such further
action as Investor1 may reasonably request, all to the extent
required from time to time to enable Investor1 to sell
Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time
to time, and any similar rule or regulation hereafter adopted by
the Commission. Upon the request of Investor1, Parent will
deliver to Investor1 a written statement as to filings made by
Parent with the Commission.
9. Rule 144A
Parent covenants that it will file all reports required to
be filed by it under the Securities Act and the Exchange Act, and
the rules and regulations adopted by the Commission thereunder
(or if Parent is not required to file such reports, it will, upon
the request of Investor1, make available other information so
long as necessary to permit sales of the Registrable Securities
pursuant to Rule 144A under the Securities Act), all to the
extent as may be required from time to time to enable Investor1
to sell its Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule
144A, as such rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission.
The parties acknowledge that Registrable Securities may not
currently be eligible for resale pursuant to Rule 144A.
10. Miscellaneous
(a) No Inconsistent Agreements. Parent has not and will
not hereafter enter into any agreement with respect to its
securities that is inconsistent with the rights granted to
Investor1 in this Agreement or otherwise conflicts with the
provisions hereof.
(b) Remedies. Parent and Investor1, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of
its or his rights under this Agreement. Parent and Investor1
agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by any of them of the
provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance that a remedy at
law would be adequate.
(c) Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed by Parent and
Investor1.
(d) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing (and shall be
deemed to have been duly given upon receipt) by delivery in
person, by cable, facsimile transmission, telegram or telex or by
registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10(d)):
(i) if to Parent or Holdings, to:
Corimon, S.A.C.A.
Calle Hans Neumann
Edificio Corimon
Los Cortijos de Lourdes
Apartado 3654
Caracas 1010-A, Venezuela
Attention: Arthur W. Broslat
Facsimile: (582) 203-5757
with a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attention: Frank H. Golay, Jr.
Facsimile: (213) 683-0457
(ii) if to Investor1, to:
Fidelity Capital & Income Fund
c/o Fidelity Management and Research Co.
82 Devonshire Street - F7E and F7D
Boston, Massachusetts 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Facsimile: (617) 476-3316 and
(617) 476-7774
with a copy to:
Goodwin Procter & Hoar
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Laura Hodges Taylor
Facsimile: (617) 523-1231
(e) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of
each of the parties hereto including, without limitation and
without the need for an express assignment, subsequent holders of
Registrable Securities. If any transferee of any holder of
Registrable Securities shall acquire Registrable Securities in
any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable
Securities, such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF. All actions
and proceedings arising out of or relating to this agreement
shall be brought by the parties and heard and determined only in
a Federal or State court located in the State of New York and the
parties hereto consent to jurisdiction before and waive any
objections of venue to the New York courts. The parties hereto
agree to accept service of process in connection with any such
action or proceeding in any manner permitted for a notice
hereunder.
(i) Severability. If any one or more of the provisions
contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability
of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent
permitted by law.
(j) Entire Agreement. This Agreement is intended by the
parties to be a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.
(k) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement or where any provision
hereof is validly asserted as a defense, the successful party
shall, to the extent permitted by applicable law, be entitled to
recover reasonable attorneys' fees in addition to any other
available remedy.
(l) Further Assurances. Each party shall cooperate and
take such action as may be reasonably requested by another party
in order to carry out the provisions and purposes of this
Agreement and the transactions contemplated hereby.
EXHIBIT C TO STOCK AND NOTE PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
CORIMON, S.A.C.A.
By __________________________
Name:
Title:
CORIMON CORPORATION
By __________________________
Name:
Title:
EXHIBIT C TO STOCK AND NOTE PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
FIDELITY CAPITAL & INCOME FUND
By ___________________________
Name:
Title:
Investor1 is a portfolio of a Massachusetts business trust. A
copy of Investor1's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. Each of the
parties to this Agreement acknowledges and agrees that this
Agreement is not executed on behalf of or binding upon any of the
trustees, officers, directors or shareholders of Investor1
individually, but is binding only upon the assets and property of
Investor1. With respect to all obligations of Investor1 arising
out of this Agreement, each of the parties shall look for payment
or satisfaction of any claim solely to the assets and property of
Investor1. Each of the parties are expressly put on notice that
the rights and obligations of each series of shares of Investor1
under its Declaration of Trust are separate and distinct from
those of any and all other series.
THIS DOCUMENT HAS BEEN SET UP FOR AUTOMATIC TABLE OF CONTENTS
GENERATION.
PUT AGREEMENT
Among
CORIMON, S.A.C.A.,
a Venezuelan corporation
and
FIDELITY CAPITAL & INCOME FUND, KODAK RETIREMENT INCOME PLAN
TRUST FUND, TRANSAMERICA LIFE INSURANCE AND ANNUITY CO.,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, SUN LIFE
INSURANCE COMPANY OF AMERICA, ANCHOR NATIONAL LIFE INSURANCE
COMPANY, LIBRA INVESTMENTS, INC.
Dated as of February 15, 1995
TABLE OF CONTENTS
ARTICLE I
Definitions
1.1. Definitions 1
1.2. Other Definitions. 1
1.3. Interpretation 2
ARTICLE II
Put Rights
2.1. Put of Investor1 and Investor2 Common Shares 2
2.2. Put of Preferred Shares 2
ARTICLE III
Representations and Warranties
3.1. Representations and Warranties of Parent 2
3.2. Representations and Warranties of the Other
Investors 3
ARTICLE IV
General Provisions
4.1. Effectiveness; Termination 3
4.2. Amendments; Waivers 3
4.3. Notices 4
4.4. Counterparts 5
4.5. Entire Agreement; No Third-Party Beneficiaries 5
4.6. Assignment 5
4.7. Severability 6
4.8. Governing Law 6
PUT AGREEMENT dated as of February 15, 1995 (this
"Agreement"), among Corimon, S.A.C.A., a Venezuelan corporation
("Parent"), Fidelity Capital & Income Fund ("Investor1"), Kodak
Retirement Income Plan Trust Fund ("Investor2"), Transamerica
Life Insurance and Annuity Co., a North Carolina corporation
("Investor3"), Transamerica Occidental Life Insurance Company, a
California corporation ("Investor4"), Sun Life Insurance Company
of America, an Arizona corporation ("Investor5"), Anchor National
Life Insurance Company, a California corporation ("Investor6"
and, together with Investor1, Investor 2, Investor3, Investor4
and Investor5, the "Other Investors") and Libra Investments, Inc.
("Libra").
RECITALS
WHEREAS, simultaneously with the execution and delivery
of this Agreement, each of Parent, the Other Investors, Standard
Brands Paint Company, a Delaware corporation ("Company"), and
certain other parties have entered into the Investment Agreement,
dated as of the date hereof (the "Investment Agreement"); and
WHEREAS, Parent, the Other Investors, Libra and Company
desire to establish in this Agreement certain terms and
conditions concerning certain put rights and related matters.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained
herein and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1. Definitions. For purposes of this Agreement:
"Fair Market Value" means, as of any date of
determination, (i) in the case of a security, the average of the
closing sale prices of such security during the 20-day trading
period immediately preceding such date of determination on the
principal United States securities exchange registered under the
Exchange Act on which such security is listed or, if such
security is not listed on any such exchange, the average of the
closing sale prices or the closing bid quotations of such
security during the 20-day trading period preceding such date of
determination on the Nasdaq National Market or any comparable
system then in use or, if no such quotations are available, the
fair market value of such security as of such date of
determination as reasonably determined in good faith by the board
of directors of Parent, provided that if the Other Investors deem
such determination unreasonable and the parties are unable to
agree, they will agree on an independent party to make such
determination; and (ii) in the case of property other than cash
or a security, the fair market value of such property on such
date of determination as determined in good faith by a majority
of the directors of Parent.
"Parent Common Shares" means common shares, nominal
value Bs. 10 each, of Parent.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of the date hereof, by and among
Holdings, Grantor Trust, the Other Investors, Libra and Company.
"Stock and Note Purchase Agreement" means the Stock and
Note Purchase Agreement, dated as of February 14, 1995, among
Parent, Holdings and Investor1.
1.2. Other Definitions. For purposes of this
Agreement, terms used herein but not otherwise defined shall have
the meanings set forth in Section 1.1 of the Investment
Agreement.
1.3. Interpretation. The rules of interpretation set
forth in Section 1.2 of the Investment Agreement shall apply to
this Agreement, and the provisions thereof shall be deemed to be
incorporated by reference herein.
ARTICLE II
Put Rights
2.1. Put of Investor1, Investor2 and Libra Common
Shares. Unless the New Shares held by Investor1, Investor2 and
Libra shall have been registered under the Securities Act in
accordance with the terms of the Registration Rights Agreement,
until the latest date required to be registered thereunder, then
at any time after the second anniversary of the Closing Date and
prior to the fifth anniversary of the Closing Date, Investor1,
Investor2 or Libra may require Parent to purchase the New Shares
held by them at a cash purchase price of $0.89 per share, as
adjusted for any stock dividend, stock split, reverse stock split
or other subdivision or combination of the outstanding shares of
Common Stock. To implement such a put, Investor1, Investor2 or
Libra shall deliver written notice of the same to Parent. The
date of the put will be the date the written notice is delivered
to Parent. The closing of such put shall take place twenty (20)
business days after the date of the put, at which time (a)
Investor1, Investor2 or Libra shall, as applicable, deliver to
Parent the New Shares held by them, and (b) Parent shall deliver
to Investor1, Investor2 or Libra, as applicable, the purchase
price for such New Shares by wire transfer of immediately
available funds to a bank account designated by Investor1,
Investor2 or Libra, as applicable.
2.2. Put of Preferred Shares. In the event six
quarterly dividends have been not declared or declared and unpaid
on the Preferred Shares, each of the Other Investors may require
Parent to purchase all of the Preferred Shares held by it at a
purchase price of $4.46 per share, without adjustment for
accumulated and unpaid dividends. The purchase price to be paid
by Parent shall consist of not less than 50% in cash and the
remainder, at Parent's option, in cash or equivalent amount of
Parent Common Shares, the latter being valued for this purpose at
Fair Market Value. To implement such a put, the Other Investor
shall deliver written notice of the same to Parent. The date of
the put will be the date the written notice is delivered to
Parent. The closing of such put shall take place twenty (20)
business days after the date of the put, at which time (a) the
Other Investor shall deliver to Parent the Preferred Shares held
by it, and (b) Parent shall deliver to the Other Investor the
purchase price for such Preferred Shares (i) in cash, by wire
transfer of immediately available funds to a bank account or
accounts designated by the Other Investor and/or (ii) in Parent
Common Shares. If practicable, the Parent Common Shares shall be
delivered in the form of Parent ADSs and the provisions herein
shall be adjusted as necessary to reflect the form of securities
delivered, either Parent ADSs or Parent Common Shares. All
Parent Common Shares and Parent ADSs shall be entitled to the
same registration rights as contained in the Registration Rights
Agreement described in the Stock and Note Purchase Agreement.
ARTICLE III
Representations and Warranties
3.1. Representations and Warranties of Parent. Parent
represents and warrants to the Other Investors as follows:
(a) Authority. Parent has the requisite power and
authority to enter into this Agreement.
(b) Validity. This Agreement has been duly
authorized, executed and delivered by Parent and constitutes a
valid and legally binding agreement of Parent enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights and to general equity principles.
3.2. Representations and Warranties of the Other
Investors and Libra. Each of Other Investors and Libra represent
and warrant, with respect to such Person only, severally and not
jointly, to Parent as follows:
(a) Authority. Such Person has the requisite power
and authority to enter into this Agreement.
(b) Validity. This Agreement has been duly
authorized, executed and delivered by such Person and constitutes
a valid and legally binding agreement of such Person enforceable
against such Person in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(c) Ownership of New Shares and Preferred Shares.
Such Person will, upon exercise of the put, have good and valid
title to the New Shares or Preferred Shares to be delivered by
them hereunder, free and clear of all liens, encumbrances,
equities and claims; and, upon delivery of the New Shares and
Preferred Shares and payment therefor pursuant to Article II
hereof, good and valid title to such securities free and clear of
all liens, encumbrances, equities or claims, will pass to Parent.
ARTICLE IV
General Provisions
4.1. Effectiveness; Termination. This Agreement shall
become effective on the Closing Date. This Agreement shall
terminate prior to the Closing Date at such time that the
Investment Agreement is terminated in accordance with its terms.
This Agreement shall terminate after the Closing Date upon the
earliest to occur of any of the following events:
(a) the mutual written consent of Parent, the Other
Investors and Libra; or
(b) the expiration of ten (10) years from the Closing
Date.
The rights of any Other Investor or Libra under this
Agreement shall terminate when such party no longer beneficially
owns any New Shares or Preferred Shares, as applicable.
4.2. Amendments; Waivers. (a) This Agreement may not
be amended except by an instrument in writing signed on behalf of
each of the parties.
(b) Any agreement on the part of a party to any waiver
shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to
assert any of its rights under this Agreement shall not
constitute a waiver of such rights.
4.3. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by cable, facsimile transmission,
telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 4.3):
(i) If to Parent, to:
Corimon, S.A.C.A.
Calle Hans Neumann
Edificio Corimon
Los Cortijos de Lourdes
Apartado 3654
Caracas 1010-A, Venezuela
Attention: Arthur W. Broslat
Facsimile: (582) 203-5757
with a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attention: Frank H. Golay, Jr.
Facsimile: (213) 683-0457
(ii) If to Investor1, to:
Fidelity Capital & Income Fund
c/o Fidelity Management Trust Company
82 Devonshire Street - F7E and F7D
Boston, Massachusetts 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Facsimile: (617) 476-3316 and 476-7774
If to Investor2, to:
Kodak Retirement Income Plan Trust Fund
c/o Fidelity Management Company
82 Devonshire Street - F7E and F7D
Boston, Massachusetts 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Facsimile: (617) 476-3316 and 476-7774
with a copy to:
Goodwin Procter & Hoar
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Laura Hodges Taylor
Facsimile: (617) 523-1231
(iii) If to Investor3, to:
Transamerica Life Insurance and Annuity Co.
c/o Transamerica Realty Services, Inc.
1150 South Olive Street, Suite 2200
Los Angeles, California 90015
Attention: Lyman Lokken
Facsimile: (213) 741-6917
(iv) If to Investor4, to:
Transamerica Occidental Insurance Co.
c/o Transamerica Realty Services, Inc.
1150 South Olive Street, Suite 2200
Los Angeles, California 90015
Attention: Lyman Lokken
Facsimile: (213) 741-6917
(v) If to Investor5, to:
Sun Life Insurance Company of America
1 Sun America Center
Century City, California 90067
Attention: Robert Sydow
Facsimile: (310) 772-6150
(vi) If to Investor6, to:
Anchor National Life Insurance Co.
1 Sun America Center
Century City, California 90067
Attention: Robert Sydow
Facsimile: (310) 772-6150
(vii) If to Libra, to:
Libra Investments, Inc.
11766 Wilshire Boulevard, Suite 870
Los Angeles, California 90025
Attention: General Counsel
Facsimile: (310) 996-9560
4.4. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement.
4.5. Entire Agreement; No Third-Party Beneficiaries.
The Investment Agreement, this Agreement, the other Ancillary
Agreements and the agreements contemplated hereby and thereby
(a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral among the
parties hereto with respect to the subject matter hereof and
thereof and (b) are not intended to confer upon any person other
than the parties and their permitted successors and assigns any
rights or remedies.
4.6. Assignment. None of the parties to this
Agreement shall assign any of its rights or obligations hereunder
without the prior written consent of the other parties hereto,
except that Parent may assign all or any of its rights and
obligations hereunder to any Subsidiary or Affiliate of Parent;
provided that no such assignment shall relieve Parent of its
obligations hereunder. In particular, no purchaser of any New
Shares or Preferred Shares shall be deemed to be a successor or
assignee of any party hereto, the rights hereunder being intended
solely for the parties hereto and not being transferable.
4.7. Severability. If any term or provision of this
Agreement or the application thereof to either party or set of
circumstances shall, in any jurisdiction and to any extent, be
finally held invalid or unenforceable, such term or provision
shall only be ineffective as to such jurisdiction, and only to
the extent of such invalidity or unenforceability, without
invalidating or rendering unenforceable any other terms or
provisions of this Agreement or under any other circumstances,
and the parties shall negotiate in good faith a substitute
provision which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a
position as nearly comparable as possible to the position it
would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
4.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF. All
actions and proceedings arising out of or relating to this
Agreement shall be brought by the parties and heard and
determined only in a Federal or State court located in the State
of New York and the parties hereto consent to jurisdiction before
and waive any objections of venue to the New York courts. The
parties hereto agree to accept service of process in connection
with any such action or proceeding in any manner permitted for a
notice hereunder.
PUT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
CORIMON, S.A.C.A.
By ___________________________
Name:
Title:
TRANSAMERICA LIFE INSURANCE
AND ANNUITY CO.
By ___________________________
Name:
Title:
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By ___________________________
Name:
Title:
SUN LIFE INSURANCE COMPANY OF
AMERICA
By ___________________________
Name:
Title:
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By ___________________________
Name:
Title:
LIBRA INVESTMENTS, INC.
By ___________________________
Name:
Title:
PUT AGREEMENT
FIDELITY CAPITAL & INCOME FUND
By ___________________________
Name:
Title:
KODAK RETIREMENT INCOME PLAN TRUST
FUND
By ___________________________
Name:
Title:
Investor1 is a portfolio of a Massachusetts business trust. A
copy of Investor1's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. Each of the
Parties acknowledges and agrees that this agreement is not
executed on behalf of or binding upon any of the trustees,
officers, directors or shareholders of Investor1 or Investor2
individually, but is binding only upon the assets and property of
Investor1 and Investor2. With respect to all obligations of
Investor1 arising out of this Agreement, each of the Parties
shall look for payment or satisfaction of any claim solely to the
assets and property of Investor1 and Investor2. Each of the
Parties are expressly put on notice that the rights and
obligations of each series of shares of each of Investor1 and
Investor2 under its Declaration of Trust are separate and
distinct from those of any and all other series.
