SCHEDULE 13D
Amendment No. 2
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: 1,433,413
Item 8: None
Item 9: 9,063,720
Item 10: None
Item 11: 9,063,720
Item 13: 41.41%
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 9,497,507 Shares of common stock pursuant to
the Company's plan of reorganization filed under Chapter 11 of the United
States Bankruptcy Code (the "Joint Plan of Reorganization"). The Shares
were received as a distribution in partial exchange for the Company's bank
debt. 1,683,400 of these Shares were in turn immediately distributed to
Martin S. Ackerman for services rendered in advising the Fidelity Fund with
respect to the reorganization of the Company. Proceeds from 183,800 Shares
sold aggregated approximately $903,937. As described in Item 5(c) below,
warrants to purchase 394,547 Shares were cancelled on February 15, 1995.
The Fund managed by FMTC received 1,786,213 Shares of common stock
pursuant to the Company's Joint Plan of Reorganization. The Shares were
received as a distribution in partial exchange for the Company's bank debt.
316,600 of these Shares were in turn immediately distributed to Martin S.
Ackerman as described above. Proceeds from 36,200 Shares sold aggregated
approximately $178,711. As described in Item 5(c) below, warrants to purchase
74,203 Shares were cancelled on February 15, 1995.
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. 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.
Except as set forth in the following paragraphs, 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.
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 will acquire 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 are:
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 will constitute approximately 76.1% of the Company's
outstanding common stock, for $14 million. The new Shares are 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 2,242,928 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
to be issued are priced at the same price per share as the Shares being 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, is
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 currently has 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 October 31, 1994 of approximately $95 million will be disposed of
and consolidated long-term debt of the Company of approximately $77 million
will be released.
The consummation of the Restructuring is subject to a number of
conditions, including approval by the stockholders of the Company. The date
of the closing under the Investment Agreement, which is currently contemplated
to occur in April 1995, is referred to herein as the "Effective Date." On the
Effective Date, after giving effect to the Restructuring, the Fidelity Fund
and the Fund would own 1,979,626 and 372,148 Shares, respectively, and 851,616
and 160,165 shares of the Preferred Stock, respectively, representing 9.6% and
1.8%, respectively, or 26.5% and 5.0%, respectively, on a fully-diluted basis,
of the Shares (post-Reverse Stock Split).
Pursuant to a Stockholders Agreement, to which neither the Fidelity Fund
nor the Fund is a party, entered into upon execution of the Investment
Agreement, Corimon Corporation appointed three new members of the Board of
Directors of the Company, and will have the right on the Effective Date to
appoint seven of the Company's ten directors. In addition, the Fidelity Fund
and the Fund, and each of TLIAC, TOLIC, SAFI and ANLIC, have agreed with
Corimon Corporation, and have granted their irrevocable proxies (see Exhibit
2) to Corimon Corporation, to vote their shares (i) in favor of the
Restructuring, (ii) against any action or agreement that would compete with,
impede or interfere with or attempt to discourage or inhibit the timely
consummation of the Restructuring, (iii) except for the Restructuring, against
any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets or
securities of the Company or its subsidiaries that would be inconsistent with
the transactions contemplated by the Investment Agreement and (iv) as to any
matter related to the election or removal of directors, as directed by Corimon
Corporation. The proxies expire upon consummation of the Restructuring or
termination of the Investment Agreement.
The Fidelity Fund, the Fund, TLIAC, TOLIC, SAFI and ANLIC have also
agreed not to transfer, sell, offer, exchange, pledge or otherwise dispose of
or encumber any of their respective Shares without the prior written consent
of the Company and Corimon Corporation and prior notice to the other parties,
except under limited circumstances. The Company and Corimon Corporation 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. Each of the Fidelity Fund, the
Fund, TLIAC, TOLIC, SAFI and ANLIC has also agreed not to purchase or
otherwise acquire beneficial ownership of any Shares, and not to acquire the
right to vote or share in the voting of any Shares, unless such party agrees
to deliver to Corimon Corporation immediately after such purchase or
acquisition an irrevocable proxy with respect to such acquired Shares
substantially similar to the proxies already delivered to Corimon Corporation.
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
3 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 4 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 filings 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 contrued 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 9,063,720 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, 7,630,307 Shares, or approximately 34.02% of the
outstanding Shares of the Company, and through FMTC, the managing agent for
the Fund, 1,433,413 Shares, or approximately 6.39% 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 9,063,720 Shares, or approximately 40.41% 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 7,630,307 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 1,433,413 Shares and sole power to vote
or to direct the voting of 1,433,413 Shares, and no power to vote or to direct
the voting of Shares owned by the Fund. Voting of all Shares is subject to
the terms of the Investment Agreement and related proxy described above.
(c) Immediately prior to entering into the Investment Agreement, the
Fidelity Fund and the Fund acquired approximately $8.7 million and $1.6
million, respectively, aggregate principal amount of indebtedness of the
Company (which indebtedness is expected to be converted into Shares and
Preferred Stock pursuant to the Investment Agreement as described in Item 4
above) in an exchange transaction with a grantor trust formed by the Company
on June 14,1993 (the "Grantor Trust"), pursuant to which the Grantor Trust
distributed to the Fidelity Fund and the Fund all of its assets in
consideration of the cancellation of an aggregate of $16.7 million principal
amount of Grantor Trust indebtedness held by the Fidelity Fund and the Fund.
In connection with the exchange transaction, a guarantee by the Company of
$2.5 million of certain Grantor Trust indebtedness issued to the Fidelity Fund
and the Fund was cancelled.
In connection with the Investment Agreement, and pursuant thereto,
each of the parties thereto agreed to cancel all of the warrants to purchase
Shares held by them, all of which were exerciseable at a price substantially
above the market price of the Common Stock. This resulted in the cancellation
by the Fidelity Fund and the Fund of warrants to purchase 394,547 and 74,203
Shares, respectively (pre-Reverse Stock Split). All of such warrants will be
reissued to the former holders thereof (including the Fidelity Fund and the
Fund) in the event the Investment Agreement is terminated without the
consummation of the Restructuring.
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 - Proxy
Exhibit 3 - Registration Rights Agreement
Exhibit 4 - 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: February 27, 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
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. Definitions 1
1.2. Interpretation 8
ARTICLE II
Interim Funding
2.1. Note Purchase Agreement 8
2.2. Grantor Trust Transactions 9
2.3. Investment Agreement and Ancillary Funding Agreements 9
2.4. Directors and By-Laws 9
2.5. Funding 9
ARTICLE III
Purchase and Sale of Shares
3.2. Exchange of Debt and Issuance of Shares 10
3.3. Advisor Fees 10
3.4. Fidelity Note Purchase Agreement. 10
3.5. Property Transfer 10
3.6. Leases and Other Ancillary Agreements 10
3.7. Closing 10
ARTICLE IV
Conditions to Funding and Closing
4.1. Conditions of Parent and Holdings with Respect to the Funding and
Closing 11
4.2. Conditions of Company with Respect to the Funding and Closing
12
4.3. Conditions of the Other Investors and
Grantor Trust with Respect to the Funding and Closing 13
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of Company 14
5.2. Representations and Warranties of Parent and Holdings 23
5.3. Representations 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. Preparation of the Proxy Statement; Stockholders Meeting 28
7.2. Access to Information; Confidentiality 28
7.3. Reasonable Efforts; Notification; Consent 28
7.4. Fees and Expenses 29
7.5. Public Announcements 30
7.6. Stockholder Litigation 30
7.7. Employment Arrangements 30
7.8. Reporting Company 30
7.9. NYSE Listing 30
7.10. Liquidating Property Trust Leases and Property Transfer 30
7.11. Agreement to Vote Shares 30
7.12. No Voting Trusts 30
7.13. No Proxy Solicitations 30
7.14. Transfer and Encumbrance 30
7.15. Additional Purchases 31
7.16. Covenants Relating to Post-Funding Tax Matters 31
7.17. Environmental Indemnity, Etc. 32
ARTICLE VIII
Termination, Amendment and Waiver
8.1. Termination 33
8.2. Effect of Termination 33
8.3. Amendment 34
8.4. Extension; Waiver 34
8.5. Procedure for Termination, Amendment, Extension or Waiver 34
ARTICLE IX
General Provisions
9.1. Survival of Warranties and Certain Agreements 34
9.2. Notices 34
9.3. Counterparts 36
9.4. Entire Agreement; No Third-Party Beneficiaries 36
9.5. Assignment 36
9.6. Severability 37
9.7. GOVERNING LAW 37
9.8. Enforcement 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 representations,
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 Agreements.
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
jurisdiction, 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 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 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 pre-
ferred 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 nonassess-
able 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 accounting 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 Subsidi-
aries 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. Sect. 9601, et seq.), or the
Federal Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sect. 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, certificates 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 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 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 relationships
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 Incorpo-
ration 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 INVESTMENT AGREEMENT
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Arthur W. Broslat and Roland F. Breault and each of them as proxies (the
"Proxy Holders"), with power of substitution and resubstitution, to vote all
shares of Common Stock, par value $.01 per share, of Standard Brands Paint
Company, a Delaware corporation ("Company"), owned by the undersigned (i) at
the special meeting (the "Special Meeting") of Stockholders of Company to be
held to act on the Proposals and the Transactions and at any adjournment
thereof, and (ii) at any other meeting of Stockholders of Company or consent
in lieu of meeting held or effected prior to completion of the Special
Meeting, FOR approval and adoption of the Proposals and the Transactions, as
described and defined in the Investment Agreement, dated as of February 15,
1995 (the "Investment Agreement"), by and among Company, the undersigned and
the other parties thereto, and AGAINST any action or agreement that would
compete with, impede, interfere with or attempt to discourage or inhibit the
timely consummation of the Transactions or 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 AS TO ANY MATTER related to the
election or removal of directors, in the discretion of the Proxy Holders.
This proxy is coupled with an interest, revokes all prior proxies granted by
the undersigned and is irrevocable until such time as the Investment Agreement
terminates or is terminated in accordance with its terms or the Closing occurs
thereunder. Terms used herein but not otherwise defined have their respective
meanings set forth in Section 1.1 of the Investment Agreement.
Dated February 15, 1995
__________________________________
(Signature)
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.
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.
