<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
July 24, 1998
THOMAS INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-5426 61-0505332
(Commission File Number) (IRS Employer Identification
No.)
4360 Brownsboro Road, Suite
300 Louisville, Kentucky 40207
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code
502/893-4600
<PAGE>
ITEM 5. Other Events.
On April 28, 1998, the registrant, Thomas Industries Inc. ("Thomas"), entered
into the following agreements: (1) Master Transaction Agreement dated April 28,
1998 by and between Thomas and The Genlyte Group Incorporated ("Genlyte"); (2)
Limited Liability Company Agreement of GT Lighting, LLC dated April 28, 1998 by
and among Thomas, Genlyte and GT Lighting, LLC (the "Company"); and (3)
Capitalization Agreement dated April 28, 1998 by and among the Company and
Thomas and certain of its Affiliates. In addition, Genlyte and the Company
entered into the Capitalization Agreement dated April 28, 1998 by and between
the Company and Genlyte, which is integral to the transaction contemplated by
the foregoing agreements and is included herein. Copies of the above are filed
herewith.
On July 8, 1998, the Company changed its name to Genlyte Thomas Group LLC
pursuant to a Certificate of Amendment to Certificate of Formation of GT
Lighting, LLC.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
2.1 Master Transaction Agreement dated April 28, 1998 by and between
Thomas Industries Inc. ("Thomas") and The Genlyte Group
Incorporated ("Genlyte").
2.2 Limited Liability Company Agreement of GT Lighting, LLC dated
April 28, 1998 by and among Thomas, Genlyte and GT Lighting, LLC
(the "Company").
2.3 Capitalization Agreement dated April 28, 1998 by and among the
Company and Thomas and certain of its Affiliates.
2.4 Capitalization Agreement dated April 28, 1998 by and between the
Company and Genlyte.
Registrant will furnish supplementally a copy of any omitted schedule to any of
the agreements listed above to the Securities and Exchange Commission upon
request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THOMAS INDUSTRIES INC.
(Registrant)
By: /s/ Phillip J. Stuecker
Phillip J. Stuecker, Vice President of
Finance, Chief Financial Officer, and Secretary
Dated: July 24, 1998
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EXHIBIT 2.1
MASTER TRANSACTION AGREEMENT
BY AND BETWEEN
THOMAS INDUSTRIES INC.
AND
THE GENLYTE GROUP INCORPORATED
<PAGE>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II RELATED AGREEMENTS AND CLOSING . . . . . . . . . . . . . . . . 4
2.1. Related Agreements . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THOMAS . . . . . . . . . . . 5
3.1. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3. Due Organization . . . . . . . . . . . . . . . . . . . . . . . 6
3.4. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 6
3.5. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 6
3.6. Information Supplied for Joint Proxy Statement . . . . . . . . 6
3.7. Representations and Warranties . . . . . . . . . . . . . . . . 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GENLYTE. . . . . . . . . . . 7
4.1. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2. Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3. Due Organization . . . . . . . . . . . . . . . . . . . . . . . 7
4.4. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 7
4.5. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 8
4.6. Information Supplied for Joint Proxy Statement . . . . . . . . 8
4.7. Representations and Warranties . . . . . . . . . . . . . . . . 8
ARTICLE V ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 8
5.1. Interim Conduct of Business. . . . . . . . . . . . . . . . . . 8
5.2. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3. Stockholders' Approvals . . . . . . . . . . . . . . . . . . . 11
5.4. Agreement To Cooperate . . . . . . . . . . . . . . . . . . . . 12
5.5. Public Statements . . . . . . . . . . . . . . . . . . . . . . 12
5.6. Notifications . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7. Joint Proxy Statement; Stockholders Meetings . . . . . . . . . 12
5.8. Alternative Proposals. . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF THOMAS. . . . . . . . . 14
6.1. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . 14
6.2. Accuracy of Warranties and Performance of Covenants. . . . . . 14
6.3. No Pending Action . . . . . . . . . . . . . . . . . . . . . . 14
6.4. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . 14
6.6. Condition of Business and Assets . . . . . . . . . . . . . . . 14
6.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10. Related Agreements . . . . . . . . . . . . . . . . . . . . . . 15
6.11. Satisfaction of Counsel . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF GENLYTE. . . . . . .. . 15
7.1. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . 15
7.2. Accuracy of Warranties and Performance of Covenants. . . . . . 15
7.3. No Pending Action . . . . . . . . . . . . . . . . . . . . . . 16
7.4. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . 16
7.6. Condition of Business and Assets . . . . . . . . . . . . . . . 16
7.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.8. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.11. Related Agreements . . . . . . . . . . . . . . . . . . . . . . 17
7.12. Satisfaction of Counsel . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII TERMINATION BY PARTIES . . . . . . . . . . . . . . . . . . . . 17
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2. Termination Fees . . . . . . . . . . . . . . . . . . . . . . . 19
8.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 21
9.1. Amendments and Waiver . . . . . . . . . . . . . . . . . . . . 21
9.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.5. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 22
9.7. Entire Transaction . . . . . . . . . . . . . . . . . . . . . . 22
9.8. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 23
9.9. Other Rules of Construction . . . . . . . . . . . . . . . . . 23
9.10. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . 23
9.11. Authorship . . . . . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement is made and entered into this 28th day of
April, 1998 by and between THOMAS INDUSTRIES INC., a Delaware corporation
("THOMAS"), and THE GENLYTE GROUP INCORPORATED, a Delaware corporation
("GENLYTE").
WHEREAS, upon the terms and subject to the conditions set forth herein, the
parties will form and capitalize GT Lighting, LLC, a Delaware limited liability
company (the "COMPANY"), to engage in the business, operations and activities
related to the manufacture, sale, marketing and distribution of consumer,
commercial, industrial and outdoor lighting (collectively, the "BUSINESS")
pursuant to a Limited Liability Company Agreement dated April 28, 1998 by and
among Thomas, Genlyte and the Company (the "LLC AGREEMENT");
WHEREAS, upon the terms and subject to the conditions set forth herein and
in the Related Agreements, the Company will acquire the assets to be contributed
by and assume certain liabilities of (i) Thomas pursuant to the Capitalization
Agreement dated April 28, 1998 by and between the Company and Thomas (the
"THOMAS CAPITALIZATION AGREEMENT") and (ii) Genlyte pursuant to the
Capitalization Agreement dated April 28, 1998, by and between the Company and
Genlyte (the "GENLYTE CAPITALIZATION AGREEMENT" and together with the Thomas
Capitalization Agreement, the "CAPITALIZATION AGREEMENTS"); and
WHEREAS, the parties desire to make certain representations and warranties
to one another and provide for the coordination of the closing of all the
transactions contemplated by this Agreement and the Related Agreements;
NOW, THEREFORE, in consideration of the premises and promises herein
contained, the parties agree as set forth below:
ARTICLE I
DEFINITIONS
1.1. DEFINED TERMS. For purposes of this Agreement, unless the
language or context clearly indicates that a different meaning is intended, the
words, terms and phrases defined in this Section have the meanings set forth
below:
(A) "AFFILIATE" means, when used with reference to a
specified Person, any Person that directly or indirectly through one
or more intermediaries controls or is controlled by or is under common
control with the specified Person.
(B) "AGREEMENT" means this Master Transaction Agreement, as
amended from time to time, including all schedules and exhibits hereto
and documents referred to herein or therein.
(C) "ALTERNATIVE PROPOSAL" has the meaning assigned to such
term in Section 5.8(b).
(D) "ALTERNATIVE TRANSACTION" has the meaning assigned to
such term in Section 5.8(a).
(E) "BUSINESS" has the meaning assigned to such term in the
preamble.
(F) "BUSINESS DAY" means any day on which commercial banks
in the City of New York, New York, are open for business.
(G) "CAPITALIZATION AGREEMENTS" has the meaning assigned to
such term in the preamble.
(H) "CHANGE OF CONTROL" shall mean with respect to a party
the occurrence of any of the following events: (i) an acquisition
(whether directly from such party or otherwise) of any voting
securities of such party (the "VOTING SECURITIES") by any "PERSON" (as
the term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act), immediately after which such Person has or would have
"BENEFICIAL OWNERSHIP" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty-five percent (25%) or more of the
combined voting power of such party's then outstanding Voting
Securities; (ii) the individuals who, as of the date hereof, are
members of the Board of Directors of such party (the "INCUMBENT
BOARD"), cease for any reason to constitute at least seventy-five
percent (75%) of the Board of Directors; provided, however, a "Change
of Control" shall not be deemed to occur if any of such individuals
voluntarily fail to stand for re-election or resign or if the
aggregate number of Directors is reduced so long as, after giving
effect to such failure to stand for re-election, resignation or
reduction, at least seventy-five percent (75%) of the remaining
Directors are members of the Incumbent Board; provided, further
<PAGE>
however, that if the election, or nomination for election, by such
party's stockholders of any new director was approved by a vote of at
least seventy-five percent (75%) of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered a member
of the Incumbent Board; provided further, however, that an individual
shall not be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "ELECTION CONTEST" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
of Directors (a "PROXY CONTEST") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;
(iii) the consummation of, or agreement to consummate: (A) a merger,
consolidation, share exchange or reorganization of such party in which
the stockholders of such party, as a group, cease to hold a majority
equity interest in the surviving entity; (B) a liquidation or
dissolution of or appointment of a receiver, rehabilitator,
conservator or similar person for, such party; or (C) the sale or
other disposition of all or substantially all of the assets of such
party to any Person (other than a transfer to a subsidiary); or (iv)
any other change in "control" of such party. For purposes of the
immediately preceding clause, the term "control" shall have the
meaning ascribed thereto pursuant to Rule 405 of the rules and
regulations of the SEC promulgated pursuant to the Securities Act of
1933, as amended.
(I) "CLOSING" has the meaning assigned to such term in
Section 2.2.
(J) "CLOSING DATE" has the meaning assigned to such term in
Section 2.2.
(K) "COMPANY" means GT Lighting, LLC, a Delaware limited
liability company.
(L) " CONTRACT" has the meaning assigned to such term in
the Genlyte Capitalization Agreement and the Thomas Capitalization
Agreement, as the case may be.
(M) "CONTRIBUTED ASSETS" means the Thomas Contributed
Assets and the Genlyte Contributed Assets.
(N) "CONTRIBUTED BUSINESSES" means the Thomas Contributed
Business and the Genlyte Contributed Business.
(O) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(P) "GENLYTE" means The Genlyte Group Incorporated, a
Delaware corporation.
(Q) "GENLYTE AGREEMENTS" has the meaning assigned to such
term in Section 4.1.
(R) "GENLYTE CAPITALIZATION AGREEMENT" has the meaning
assigned to such term in the preamble.
(S) "GENLYTE CONTRIBUTED ASSETS" means the assets to be
contributed by Genlyte pursuant to the Genlyte Capitalization
Agreement.
(T) "GENLYTE CONTRIBUTED BUSINESS" means the Business of
Genlyte as defined in the Genlyte Capitalization Agreement.
(U) "GENLYTE REPRESENTATIVES" has the meaning assigned to
such term in Section 5.2(a).
(V) "INTEREST" has the meaning assigned to such term in the
LLC Agreement.
(W) "JOINT PROXY STATEMENT" means the Joint Proxy Statement
of Thomas and Genlyte to be filed with the SEC under the Exchange Act,
pursuant to which each of Thomas and Genlyte will seek stockholder
approval of the transactions contemplated hereby.
(X) "LAWS" means any federal, state, local or foreign law,
rule, regulation, judgment, code, ruling, statute, order or ordinance
or other requirement.
(Y) "MATERIAL ADVERSE EFFECT" means any adverse
circumstance or consequence that, individually or in the aggregate,
has an effect that is material to the financial condition, results of
operations, assets or business of the Contributed Business of the
party at issue taken as a whole.
<PAGE>
(Z) "PERSON" means any individual, partnership, limited
liability company, corporation, cooperative, trust, estate, joint
venturer or other entity.
(AA) "POTENTIAL ACQUIROR" has the meaning assigned to such
term in Section 5.8(b).
(BB) "RELATED AGREEMENTS" means the Thomas Agreements and
the Genlyte Agreements.
(CC) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(DD) "SEC" means the Securities and Exchange Commission.
(EE) "THOMAS" means Thomas Industries Inc., a Delaware
corporation.
(FF) "THOMAS AGREEMENTS" has the meaning assigned to such
term in Section 3.1.
(GG) "THOMAS CAPITALIZATION AGREEMENT" has the meaning
assigned to such term in the preamble.
(HH) "THOMAS CONTRIBUTED ASSETS" means the assets to be
contributed by Thomas pursuant to the Thomas Capitalization Agreement.
(II) "THOMAS CONTRIBUTED BUSINESS" means the Business as
defined in the Thomas Capitalization Agreement.
(JJ) "THOMAS REPRESENTATIVES" has the meaning assigned to
such term in Section 5.2(a).
ARTICLE II
RELATED AGREEMENTS AND CLOSING
2.1. RELATED AGREEMENTS. (a) The LLC Agreement, the Thomas
Capitalization Agreement and the Genlyte Capitalization Agreement are being
executed and delivered simultaneously herewith.
(b) In addition, at Closing, the parties will execute and deliver all of
the other documents and agreements required to be delivered on or prior to
Closing pursuant to this Agreement and the Related Agreements.
2.2. CLOSING. The contribution of assets to and the assumption of
liabilities by, the Company and the issuance of the Interests to Thomas and
Genlyte contemplated by the Capitalization Agreements and the LLC Agreement (the
"CLOSING") shall take place at the offices of McCarter & English, LLP on the
fifth business day following the satisfaction or waiver of all conditions to the
obligations of the parties to the transactions contemplated hereby commencing at
10:00 a.m., local time on such date, or at such other date or time or other
place as the parties may mutually agree upon in writing, such date being
hereinafter referred to as the "CLOSING DATE"; provided, however, that either
Thomas or Genlyte shall have the right, in their sole discretion, to delay the
Closing for any reasonable reason and for any reasonable period of time.
Notwithstanding the foregoing, if all of the conditions to Closing as set forth
in Articles VI and VII have been satisfied, the Closing shall occur no later
than December 31, 1998. Upon consummation, the Closing shall be deemed to take
place as of the opening of business on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THOMAS
Thomas hereby represents and warrants to Genlyte as of the date hereof and
as of the Closing Date, as set forth below. The representations and warranties
set forth below shall survive the Closing.
3.1. AUTHORITY. Thomas has full capacity, right, corporate power and
authority, without the consent of any other Person, to execute and deliver this
Agreement, the LLC Agreement, the Thomas Capitalization Agreement, the Services
Agreement and any other agreement to which it is a party (collectively, the
"THOMAS AGREEMENTS"), and to carry out the transactions contemplated hereby and
thereby. Except with respect to the approval of the stockholders of Thomas, all
corporate and other acts or proceedings required to be taken by Thomas to
authorize the execution, delivery and performance of this Agreement, the Thomas
Agreements and the documents to be delivered at Closing and all transactions
contemplated hereby and thereby have been duly and properly taken.
3.2. VALIDITY. This Agreement and the Thomas Agreements have been,
and the documents to be delivered at Closing will be, duly executed and
<PAGE>
delivered by Thomas and constitute lawful, valid and legally binding obligations
of Thomas, enforceable in accordance with their respective terms. The execution
and delivery of this Agreement and the Thomas Agreements and the consummation of
the transactions contemplated hereby and thereby will not result in the creation
of any lien, charge or encumbrance of any kind or the termination or
acceleration of any indebtedness or other obligation of Thomas and are not
prohibited by, do not violate or conflict with any provision of, do not
constitute a default under or a breach of and do not impair the rights under (a)
the Certificate of Incorporation or By-laws of Thomas, (b) any Contract, (c) any
order, writ, injunction, decree or judgment of any court or governmental agency,
or (d) any Law applicable to Thomas. No approval, authorization, consent or
other order or action of or filing with any court, administrative agency or
other governmental authority is required for the execution and delivery by
Thomas of this Agreement and the Thomas Agreements or the consummation by Thomas
of the transactions contemplated hereby and thereby, except as set forth in
Schedule 3.1.3 of the Thomas Capitalization Agreement.
3.3. DUE ORGANIZATION. Thomas is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware,
and has full corporate power and authority and all requisite licenses, permits
and franchises to own, lease and operate its assets and to carry on its
business.
3.4. BROKERS AND FINDERS. Except for the fees and expenses payable to
Salomon Smith Barney, which fees are reflected in its agreement with Thomas (a
true and correct copy of which has been provided to Genlyte), Thomas has not
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of Thomas to pay any finder's fees, brokerage
or agent commissions or other like payments in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable to Salomon
Smith Barney, there is no claim for payment by Thomas of any investment banking
fees, finder's fees, brokerage or agent commissions or other like payments in
connection with the negotiations related to this Agreement or the consummation
of the transactions contemplated hereby.
3.5. OPINION OF FINANCIAL ADVISOR. The financial advisor of Thomas,
Salomon Smith Barney, has rendered an opinion to the Board of Directors of
Thomas to the effect that, as of the date thereof, the Interest to be received
by Thomas pursuant to the Thomas Capitalization Agreement is fair from a
financial point of view to Thomas; it being understood and acknowledged by
Genlyte that such opinion has been rendered for the benefit of the Board of
Directors of Thomas and is not intended to, and may not, be relied upon by
Genlyte or its Affiliates.
3.6. INFORMATION SUPPLIED FOR JOINT PROXY STATEMENT. None of the
information supplied or to be supplied by Thomas for inclusion or incorporation
by reference in the Joint Proxy Statement to be filed with the SEC by Thomas and
Genlyte in connection with the stockholder meetings of Thomas and Genlyte to be
held in connection with this Agreement and the transactions contemplated hereby
will, at the date mailed to stockholders, or at the time of such meetings,
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 the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will, as of its mailing date, comply as
to form in all material respects with all Laws, including the Exchange Act and
the rules and regulations promulgated thereunder, except that no representation
is made by Thomas with respect to information supplied by Genlyte or the
stockholders of Genlyte for inclusion therein.
3.7. REPRESENTATIONS AND WARRANTIES The representations and
warranties of Thomas set forth in the Thomas Capitalization Agreement are true
and correct; provided, however, that following the Closing Date, the remedies
for breach of such representations and warranties shall be governed by the
Thomas Capitalization Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GENLYTE
Genlyte hereby represents and warrants to Thomas as of the date hereof and
as of the Closing Date, as set forth below. The representations and warranties
set forth below shall survive the Closing.
4.1. AUTHORITY. Genlyte has full capacity, right, corporate power and
authority, without the consent of any other Person, to execute and deliver this
Agreement, the LLC Agreement, the Genlyte Capitalization Agreement, the Services
Agreement and any other agreement to which it is a party (collectively, the
"GENLYTE AGREEMENTS"), and to carry out the transactions contemplated hereby and
thereby. Except with respect to the approval of the stockholders of Genlyte,
all corporate and other acts or proceedings required to be taken by Genlyte to
authorize the execution, delivery and performance of this Agreement, the Genlyte
Agreements and the documents to be delivered at Closing and all transactions
contemplated hereby and thereby have been duly and properly taken.
<PAGE>
4.2. VALIDITY. This Agreement and the Genlyte Agreements have been,
and the documents to be delivered at Closing will be, duly executed and
delivered by Genlyte and constitute lawful, valid and legally binding
obligations of Genlyte, enforceable in accordance with their respective terms.
The execution and delivery of this Agreement and the Genlyte Agreements and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation of any lien, charge or encumbrance of any kind or the
termination or acceleration of any indebtedness or other obligation of Genlyte
and are not prohibited by, do not violate or conflict with any provision of, do
not constitute a default under or a breach of and do not impair the rights under
(a) the Certificate of Incorporation or By-laws of Genlyte, (b) any Contract,
(c) any order, writ, injunction, decree or judgment of any court or governmental
agency, or (d) any Law applicable to Genlyte. No approval, authorization,
consent or other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution and
delivery by Genlyte of this Agreement and the Genlyte Agreements or the
consummation by Genlyte of the transactions contemplated hereby and thereby,
except as set forth in Schedule 3.1.3 of the Genlyte Capitalization Agreement.
4.3. DUE ORGANIZATION. Genlyte is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware,
and has full corporate power and authority and all requisite licenses, permits
and franchises to own, lease and operate its assets and to carry on its
business.
4.4. BROKERS AND FINDERS. Except for the fees and expenses payable to
Donaldson, Lufkin & Jenrette Securities Corporation, which fees are reflected in
its agreement with Genlyte (a true and correct copy of which has been provided
to Thomas), Genlyte has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Genlyte to pay any finder's fees, brokerage or agent commissions or other like
payments in connection with the transactions contemplated hereby. Except for
the fees and expenses paid or payable to Donaldson, Lufkin & Jenrette Securities
Corporation, there is no claim for payment by Genlyte of any investment banking
fees, finder's fees, brokerage or agent commissions or other like payments in
connection with the negotiations related to this Agreement or the consummation
of the transactions contemplated hereby.
4.5. OPINION OF FINANCIAL ADVISOR. The financial advisor of Genlyte,
Donaldson, Lufkin & Jenrette Securities Corporation, has rendered an opinion to
the Board of Directors of Genlyte to the effect that the consideration to be
received by Genlyte pursuant to the Genlyte Capitalization Agreement is fair
from a financial point of view to Genlyte; it being understood and acknowledged
by Thomas that such opinion has been rendered for the benefit of the Board of
Directors of Genlyte and is not intended to, and may not, be relied upon by
Thomas or its Affiliates.
4.6. INFORMATION SUPPLIED FOR JOINT PROXY STATEMENT. None of the
information supplied or to be supplied by Genlyte for inclusion or incorporation
by reference in the Joint Proxy Statement to be filed with the SEC by Thomas and
Genlyte in connection with the stockholder meetings of Thomas and Genlyte to be
held in connection with this Agreement and the transactions contemplated hereby
will, at the date mailed to stockholders, or at the time of such meetings,
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 the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will, as of its mailing date, comply as
to form in all material respects with all Laws, including the Exchange Act and
the rules and regulations promulgated thereunder, except that no representation
is made by Genlyte with respect to information supplied by Thomas or the
stockholders of Thomas for inclusion therein.
4.7. REPRESENTATIONS AND WARRANTIES The representations and
warranties of Genlyte set forth in the Genlyte Capitalization Agreement are true
and correct; provided, however, that following the Closing Date, the remedies
for breach of such representations and warranties shall be governed by the
Genlyte Capitalization Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. INTERIM CONDUCT OF BUSINESS. (a) From the date hereof until the
Closing, each of Thomas and Genlyte shall preserve, protect and maintain their
respective Contributed Business consistent with prior practice and in the
ordinary course of business. Without limiting the generality of the foregoing,
from the date hereof until the Closing, except for transactions expressly
approved in writing by the other party or pursuant to Section 5.8, Thomas and
Genlyte shall, with respect to their respective Contributed Business:
(i) maintain inventories at current levels, except sales in
the ordinary course of business, and maintain the properties of their
<PAGE>
Contributed Business and Contributed Assets in good repair, order and
condition, reasonable wear and tear excepted;
(ii) maintain and keep in full force and effect all
insurance on assets and property or for the benefit of employees of
the Contributed Business, all liability and other casualty insurance,
and all bonds on personnel of the Contributed Business, presently
carried;
(iii) except as set forth on Schedule 5.1, not merge or
consolidate with or agree to merge or consolidate with, nor purchase
or agree to purchase all or substantially all of the assets of, nor
otherwise acquire, any corporation, partnership, or other business
organization or division thereof;
(iv) except as set forth on Schedule 5.1, not sell, lease or
otherwise dispose of or agree to sell, lease or otherwise dispose of,
or grant an option with respect to, any of the Contributed Business'
assets, properties, rights or claims, except for inventory and other
assets sold in the ordinary course of business;
(v) preserve intact the organization and reputation of the
Contributed Business and use its reasonable commercial efforts to keep
available the services of the present executives, employees and agents
of the Contributed Business and preserve the good will of suppliers,
customers and others having business relationships with the
Contributed Business;
(vi) pay accounts payable and other obligations of the
Contributed Business when they become due and payable in the ordinary
course of business consistent with prior practice;
(vii) not grant any security interest, lien, charge,
encumbrance or claim on any assets of the Contributed Business, except
in the ordinary course of business and consistent with prior practice;
(viii) maintain the Contributed Business' books, accounts and
records in the usual, regular and ordinary manner on a basis
consistent with prior years;
(ix) not enter into, amend or terminate, or agree to enter
into, amend or terminate any Contract; provided, however, that the
foregoing shall not prohibit the termination or extension of any
Contract necessary to the Contributed Business arising in the ordinary
course of business and consistent with past practice;
(x) except as set forth on Schedule 5.1, not declare, set
aside or pay any dividend or make any other distribution with respect
to their capital stock or the capital stock of their respective
Affiliates, except dividends made in the ordinary course;
(xi) perform in all material respects all of its obligations
under all Contracts and other agreements and instruments relating to
or affecting the Contributed Business or its assets, and comply in all
material respects with all Laws applicable to the Assets, except where
non-performance or non-compliance would not have a Material Adverse
Effect;
(xii) not enter into, amend or terminate any employment,
bonus, severance or retirement contract or arrangement, nor increase
any salary or other form of compensation payable or to become payable
to any executives or employees of the Contributed Business other than
in the ordinary course of business;
(xiii) not take any action or intentionally omit to take any
action, which action or omission would result in a breach of any of
the representations and warranties set forth under the Genlyte
Capitalization Agreement or the Thomas Capitalization Agreement, as
the case may be, or in the failure or inability of the parties to
consummate the transactions contemplated hereby; or
(xiv) not incur or become subject to, nor agree to incur or
become subject to, any debt, obligation or liability, contingent or
otherwise, except for borrowings under or refinancing of, the existing
credit facilities of Thomas or Genlyte, as the case may be, up to the
existing borrowing limit on the date hereof, current liabilities and
contractual obligations in the ordinary course.
(b) Nothing contained in this Agreement shall give Thomas, directly or
indirectly, rights to control or direct Genlyte's Contributed Business. Prior
to the Closing Date, Genlyte shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
Contributed Business.
<PAGE>
(c) Nothing contained in this Agreement shall give Genlyte, directly or
indirectly, rights to control or direct Thomas' Contributed Business. Prior to
the Closing Date, Thomas shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
Contributed Business.
5.2. ACCESS.
(a) Subject to applicable law, Genlyte shall afford to Thomas and its
accountants, counsel, financial advisors and other representatives (the "THOMAS
REPRESENTATIVES") and Thomas shall afford to Genlyte and its accountants,
counsel, financial advisors and other representatives (the "GENLYTE
REPRESENTATIVES") full access during normal business hours with reasonable
notice throughout the period prior to the Closing Date to all of their
respective properties, books, contracts, commitments and records and, during
such period, shall furnish promptly to one another (i) a copy of each report,
schedule and other document filed with or received by any of them from the SEC
in connection with the transactions contemplated by this Agreement and (ii) such
other information concerning their respective businesses, properties and
personnel as Thomas or Genlyte, as the case may be, shall reasonably request;
provided, however, that no investigation pursuant to this Section 5.2 shall
amend or modify any representations or warranties made herein or in the Related
Agreements or the conditions to the obligations of the respective parties to
consummate the transactions contemplated hereby and thereby. Thomas shall hold
and shall use its reasonable commercial efforts to cause the Thomas
Representatives to hold, and Genlyte shall hold and shall use its reasonable
commercial efforts to cause Genlyte Representatives to hold, in strict
confidence all non-public documents and information furnished to Thomas or to
Genlyte, as the case may be, in connection with the transactions contemplated by
this Agreement, except that (i) Thomas and Genlyte may disclose such information
as may be necessary in connection with seeking any required approvals, consents
or financings, and (ii) each of Thomas and Genlyte may disclose any information
that it is required by Law or judicial or administrative order to disclose.
Neither Thomas nor Genlyte shall use or knowingly permit the use of such non-
public information or other confidential or proprietary knowledge of the other
party for any purpose other than in connection with the transactions
contemplated hereby without the prior consent of the other parties hereto;
provided, that any information that is otherwise publicly available, without
breach of this provision, or has been obtained from a third party without a
breach of such third party's duties, shall not be subject to this Section
5.2(a).
(b) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to the other all non-public
written material provided pursuant to this Section 5.2 and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other writings
prepared by Thomas or Genlyte based on the information in such material shall be
destroyed (and Thomas and Genlyte shall use their respective reasonable
commercial efforts to cause their advisors and representatives to similarly
destroy their documents, memoranda and notes), and such destruction (and
reasonable commercial efforts) shall be certified in writing by an authorized
officer supervising such destruction. The last two sentences of Section 5.2(a)
and the provisions of Section 5.2(b) shall survive any termination of this
Agreement.
5.3. STOCKHOLDERS' APPROVALS. (a) Subject to the fiduciary duties of
the Board of Directors of Thomas under applicable Law, Thomas shall, as promptly
as practicable, submit the transactions contemplated by this Agreement and the
Thomas Agreements for the approval of its stockholders at a meeting of
stockholders and shall use its reasonable best efforts to obtain stockholder
approval and adoption of the transactions contemplated by this Agreement and the
Thomas Agreements. Subject to the fiduciary duties of the Board of Directors of
Thomas under applicable Law, such meeting of stockholders shall be held as soon
as practicable. Thomas shall use its reasonable best efforts to cause the Joint
Proxy Statement to be mailed to its stockholders at the earliest practicable
date. Subject to the fiduciary duties of the Board of Directors of Thomas under
applicable Law, Thomas shall, through its Board of Directors, recommend to its
stockholders approval of the transactions contemplated by this Agreement.
(b) Subject to the fiduciary duties of the Board of Directors of Genlyte
under applicable Law, Genlyte shall, as promptly as practicable, submit the
transactions contemplated by this Agreement and the Genlyte Agreements for the
approval of its stockholders at a meeting of stockholders and shall use its
reasonable best efforts to obtain stockholder approval and adoption of the
transactions contemplated by this Agreement and the Genlyte Agreements. Subject
to the fiduciary duties of the Board of Directors of Genlyte under applicable
Law, such meeting of stockholders shall be held as soon as practicable. Genlyte
shall use its reasonable best efforts to cause the Joint Proxy Statement to be
mailed to its stockholders at the earliest practicable date. Subject to the
fiduciary duties of the Board of Directors of Genlyte under applicable Law,
Genlyte shall, through its Board of Directors, recommend to its stockholders
approval of the transactions contemplated by this Agreement.
<PAGE>
5.4. AGREEMENT TO COOPERATE. Subject to the terms and conditions
herein provided and subject to the fiduciary duties of the respective boards of
directors of Genlyte and Thomas, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable best efforts to obtain all necessary or
appropriate waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of Thomas and Genlyte and their
respective Affiliates, all necessary or appropriate waivers, consents and
approvals, to effect all necessary filings and submissions and to lift any
injunction or other legal bar to the transactions contemplated hereby and
contemplated by the Related Agreements. Each party agrees to use all reasonable
efforts to comply with each of their respective covenants and agreements
contained in the Related Agreements.
5.5. PUBLIC STATEMENTS. The parties shall consult with each other
prior to issuing any press release or any written public statement with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any such press release or written public statement prior to such consultation.
5.6. NOTIFICATIONS. Each party shall notify the other party and keep
it advised as to (a) any litigation or administrative proceeding that is either
pending or, to its knowledge, threatened against such party which challenges the
transactions contemplated hereby; (b) any material damage to or destruction of
its Contributed Business; (c) any breach of its own representations and
warranties set forth herein or in any of the Related Agreements; and (d) any
fact of which such party has knowledge that indicates that any condition to
Closing is reasonably likely not to be satisfied in a timely fashion. No
disclosure by any party pursuant to this Section 5.6, however shall be deemed to
amend or supplement any schedules or to prevent or cure any misrepresentations,
breach of warranty or breach of covenant contained herein or in the Related
Agreements.
5.7. JOINT PROXY STATEMENT; STOCKHOLDERS MEETINGS. Thomas and Genlyte
shall promptly prepare and file with the SEC the Joint Proxy Statement in
preliminary form. Each party shall use its commercially reasonable efforts to
respond to any comments of the SEC staff with respect thereto, in order to
permit mailing to stockholders of the definitive Joint Proxy Statement as
promptly as practicable. Prior to the date of approval of the transactions
contemplated hereby by their respective stockholders, each of Thomas and Genlyte
shall correct promptly any information provided by it to be used specifically in
the Joint Proxy Statement that shall have become false or misleading in any
material respect and shall take all steps necessary to file with the SEC and
have cleared by the SEC any amendment or supplement to the Joint Proxy Statement
so as to correct the same and to cause the Joint Proxy Statement as so corrected
to be disseminated to the stockholders of Thomas and Genlyte, in each case, to
the extent required by applicable Law.
5.8. ALTERNATIVE PROPOSALS. Each of Thomas and Genlyte hereby agree
that:
(a) After the date hereof and prior to the Closing Date or earlier
termination of this Agreement, such party shall not, and shall not permit any of
its Affiliates to, and such party shall, and shall cause each of its Affiliates
to, cause each officer, director and employee of such party and its Affiliates,
and each attorney, accountant, investment banker, financial advisor and other
agent retained by them, not to, directly or indirectly, initiate, solicit or
encourage or take any other action to knowingly facilitate or intentionally
engage in any discussion in relation to, any inquiries or the submission of any
proposal or offer to acquire or operate all or any material part of its
Contributed Business or to acquire any Person (including such party) that
directly or indirectly owns all or any part of its Contributed Business, whether
by merger, share exchange, purchase of stock, purchase of assets, tender offer,
joint venture or otherwise, and whether for cash, securities or any other
consideration or combination thereof, if such transaction would be materially
inconsistent with or preclusive of the transactions contemplated hereby (any
such inconsistent or preclusive transaction being referred to herein as an
"ALTERNATIVE TRANSACTION"). Such party will immediately cease and cause to be
terminated any existing initiation, solicitation, encouragement, discussions or
negotiations with parties other than the other party hereto with respect to
Alternative Transactions.
(b) Notwithstanding the provisions of Section 5.8(a), in response to
a proposal for an Alternative Transaction (an "ALTERNATIVE PROPOSAL") that is
unsolicited and made after the date hereof and prior to the stockholder vote,
(i) such party may engage in discussions or negotiations regarding such
Alternative Proposal with the Person who makes such Alternative Proposal (a
"POTENTIAL ACQUIROR"); and (ii) such party may furnish to any Potential Acquiror
(subject to the execution of a confidentiality agreement containing
confidentiality provisions substantially similar to the confidentiality
provision of this Agreement or any other confidentiality agreements between the
parties) confidential or non-public information concerning such party or its
Affiliates, if such party's Board of Directors, after consulting with its
<PAGE>
outside legal counsel and receiving the written advice of such counsel,
determines in good faith that the failure to provide such confidential or non-
public information to or negotiate with, a Potential Acquiror would be
reasonably likely to constitute a breach of its fiduciary duty to such party's
stockholders. It is understood and agreed by the parties that negotiations and
other activities conducted in accordance with this Section 5.8(b) shall not
constitute a violation of Sections 5.1 or 5.8(a).
(c) Such party shall immediately notify the other party of its
receipt of any Alternative Proposal or any request for confidential or non-
public information relating to such party or its Affiliates in connection with
an Alternative Proposal or for access to the properties, books or records of
such party or any Affiliate by any Person that it is considering making, or has
made, an Alternative Proposal and prior to providing such access shall obtain a
confidentiality agreement with such Person.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THOMAS
Each and all of the obligations of Thomas to consummate the transactions
contemplated by this Agreement and the Related Agreements are subject to
fulfillment prior to or at the Closing of the following conditions:
6.1. STOCKHOLDER APPROVAL. The transactions contemplated by this
Agreement and the Related Agreements shall have been approved and adopted by the
requisite vote of the stockholders of Thomas and Genlyte under applicable Law.
6.2. ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Genlyte contained herein and in the Related
Agreements shall be true, correct and accurate in all respects (in the case of
any representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty without any
materiality qualification) as if made on and as of the Closing Date. The
Company and Genlyte shall have performed all of the obligations and complied in
all material respects with each and all of the covenants, agreements and
conditions required to be performed or complied with on or prior to the Closing
pursuant to this Agreement and the Related Agreements.
6.3. NO PENDING ACTION. No court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling Genlyte and Thomas shall use their commercially reasonable efforts to
lift), in each case temporarily or permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and the
Related Agreements.
6.4. CONSENTS. All consents by third parties that are required for
the consummation of the transactions contemplated hereby, or that are required
in order to prevent a breach of or a default under or a termination of any
Contract, shall have been obtained or provided for, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company following the
Closing Date.
6.5. REGULATORY APPROVALS. All regulatory agencies shall have taken
such action as may be required to permit the consummation of the transactions
contemplated hereby and such actions shall remain in full force and effect and
shall be reasonably satisfactory in form and substance to Thomas and its
counsel.
6.6. CONDITION OF BUSINESS AND ASSETS. The Contributed Businesses and
the Contributed Assets shall not have been adversely affected in any way by any
act of God, fire, flood, accident, war, labor disturbance, legislation (proposed
or enacted), or other event or occurrence, whether or not covered by insurance,
and there shall have been no change in the Contributed Assets or the Contributed
Businesses, their financial condition or prospects, taken as a whole, which
would have a Material Adverse Effect thereon.
6.7. LITIGATION. Neither Thomas nor the Company nor any of the
Contributed Assets shall have been made a party or subject to any litigation
related to Genlyte or its Affiliates, which is reasonably expected to have a
Material Adverse Effect.
6.8. FINANCING. The Company shall have in place on or prior to the
Closing Date, a credit facility, including a working capital line of credit, in
an amount which is appropriate given the outstanding indebtedness of the Company
on the Closing Date, the contemplated growth, including acquisitions, and the
nature and size of the Company, on such terms as are reasonably acceptable to
Thomas and Genlyte.
6.9. INSURANCE. The Company shall have in place general liability,
workers' compensation, product liability and directors and officers insurance
<PAGE>
policies and other insurance policies reasonably necessary to operate the
Business, which are in amounts and subject to deductibles and self-insured
retentions customarily maintained for businesses of the size of the Company in
the industry in which it competes.
6.10. RELATED AGREEMENTS. All of the conditions precedent contained in
any of the Related Agreements shall have been satisfied or waived and the
Closing or effectiveness of the Related Agreements shall occur simultaneously
with the Closing.
6.11. SATISFACTION OF COUNSEL. All corporate and other actions and
proceedings in connection with the transactions contemplated hereby, all
resolutions, documents and instruments incidental thereto, and all other related
legal matters, shall be reasonably satisfactory in form and substance to counsel
for Thomas, and Thomas shall have received all such resolutions, documents and
instruments, or copies thereof, certified if requested, as its counsel shall
have requested.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF GENLYTE
Each and all of the obligations of Genlyte to consummate the transactions
contemplated by this Agreement and the Related Agreements are subject to
fulfillment prior to or at the Closing of the following conditions:
7.1. STOCKHOLDER APPROVAL. The transactions contemplated by this
Agreement and the Related Agreements shall have been approved and adopted by the
requisite vote of the stockholders of Thomas and Genlyte under applicable Law.
7.2. ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Thomas contained herein and in the Related
Agreements shall be true, correct and accurate in all respects (in the case of
any representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty without any
materiality qualification) as if made on and as of the Closing Date. The
Company and Thomas shall have performed all of the obligations and complied in
all material respects with each and all of the covenants, agreements and
conditions required to be performed or complied with on or prior to the Closing
pursuant to this Agreement and the Related Agreements.
7.3. NO PENDING ACTION. No court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling Genlyte and Thomas shall use their commercially reasonable efforts to
lift), in each case temporarily or permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and the
Related Agreements.
7.4. CONSENTS. All consents by third parties that are required for
the consummation of the transactions contemplated hereby, or that are required
in order to prevent a breach of or a default under or a termination of any
Contract, shall have been obtained or provided for, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company following the
Closing Date.
7.5. REGULATORY APPROVALS. All regulatory agencies shall have taken
such action as may be required to permit the consummation of the transactions
contemplated hereby and such actions shall remain in full force and effect and
shall be reasonably satisfactory in form and substance to Genlyte and its
counsel.
7.6. CONDITION OF BUSINESS AND ASSETS. The Contributed Businesses and
the Contributed Assets shall not have been adversely affected in any way by any
act of God, fire, flood, accident, war, labor disturbance, legislation (proposed
or enacted), or other event or occurrence, whether or not covered by insurance,
and there shall have been no change in the Contributed Assets or the Contributed
Businesses, their financial condition or prospects, taken as a whole, which
would have a Material Adverse Effect thereon.
7.7. LITIGATION. Neither Genlyte nor the Company nor any of the
Contributed Assets shall have been made a party or subject to any litigation
related to Thomas or its Affiliates, which is reasonably expected to have a
Material Adverse Effect.
7.8. FINANCING. The Company shall have in place on or prior to the
Closing Date, a credit facility, including a working capital line of credit, in
an amount which is appropriate given the outstanding indebtedness of the Company
on the Closing Date, the contemplated growth, including acquisitions, and the
nature and size of the Company, on such terms as are reasonably acceptable to
Thomas and Genlyte.
<PAGE>
7.9. INSURANCE. The Company shall have in place general liability,
workers' compensation, product liability and directors and officers insurance
policies and other insurance policies reasonably necessary to operate the
Business, which are in amounts and subject to deductibles and self-insured
retentions customarily maintained for businesses of the size of the Company in
the industry in which it competes.
7.10. AUDITED FINANCIAL STATEMENTS. The audited financial statements
of Thomas' Contributed Business for the three years ended December 31, 1997
shall have been completed and shall not be materially different from the
unaudited financial statements of Thomas' Contributed Business for the three-
year period ended December 31, 1997, which unaudited financial statements have
been provided to Genlyte.
7.11. RELATED AGREEMENTS. All of the conditions precedent contained in
any of the Related Agreements shall have been satisfied or waived and the
Closing or effectiveness of the Related Agreements shall occur simultaneously
with the Closing.
7.12. SATISFACTION OF COUNSEL. All corporate and other actions and
proceedings in connection with the transactions contemplated hereby, all
resolutions, documents and instruments incidental thereto, and all other related
legal matters, shall be reasonably satisfactory in form and substance to counsel
for Genlyte, and Genlyte shall have received all such resolutions, documents and
instruments, or copies thereof, certified if requested, as its counsel shall
have requested.
ARTICLE VIII
TERMINATION BY PARTIES
8.1. TERMINATION. This Agreement and the Related Agreements may be
terminated and the transactions contemplated herein and therein may be abandoned
at any time prior to the Closing:
(a) by mutual written consent of the parties hereto;
(b) [intentionally omitted];
(c) by either Thomas or Genlyte in the event that the
Closing does not occur for any reason on or before December 31, 1998;
provided, however, that if the Closing does not occur due to the act
or omission of one of the parties, that party may not terminate this
Agreement pursuant to the provisions of this Section;
(d) by Thomas, upon approval of the Thomas Board of
Directors, if prior to stockholder approval (i) without violation of
Section 5.8, Thomas shall have received after the date hereof an
Alternative Proposal, (ii) the Thomas Board of Directors shall have
determined, in the exercise of its good faith judgment and after
consultation with its legal counsel and receipt of a written opinion
from its financial advisors, that the Alternative Transaction
contemplated by such Alternative Proposal (if consummated pursuant to
its terms) would be more favorable from a financial point of view to
Thomas or its stockholders, as applicable, than the transactions
contemplated by this Agreement and (iii) Thomas shall have given
Genlyte at least five (5) Business Days' prior written notice of the
material terms and conditions of such Alternative Proposal and of its
intention to terminate this Agreement pursuant to this provision, in
order to effect such Alternative Proposal; provided, however, that
such termination under this clause (d) shall not be effective, and
Thomas shall not be entitled to enter into a definitive agreement
providing for an Alternative Transaction, until Thomas has made
payment to Genlyte of the fee required to be paid pursuant to Section
8.2(a);
(e) by Genlyte, upon approval of the Genlyte Board of
Directors, if prior to stockholder approval (i) without violation of
Section 5.8, Genlyte shall have received after the date hereof an
Alternative Proposal, (ii) the Genlyte Board of Directors shall have
determined, in the exercise of its good faith judgment and after
consultation with its legal counsel and receipt of a written opinion
from its financial advisors, that the Alternative Transaction
contemplated by such Alternative Proposal (if consummated pursuant to
its terms) would be more favorable from a financial point of view to
Genlyte or its stockholders, as applicable, than the transactions
contemplated by this Agreement and (iii) Genlyte shall have given
Thomas at least five (5) Business Days' prior written notice of the
material terms and conditions of such Alternative Proposal and of its
intention to terminate this Agreement pursuant to this provision, in
order to effect such Alternative Proposal; provided, however, that
such termination under this clause (e) shall not be effective, and
Genlyte shall not be entitled to enter into a definitive agreement
<PAGE>
providing for an Alternative Transaction, until Genlyte has made
payment to Thomas of the fee required to be paid pursuant to Section
8.2(b);
(f) by Thomas, if the Genlyte Board of Directors or
committee thereof shall have resolved to accept or recommended to the
Genlyte stockholders an Alternative Proposal or shall have withdrawn
or adversely modified or taken a public position materially
inconsistent with its approval or recommendation to the stockholders
of Genlyte of the transactions contemplated hereby or shall not have
submitted this Agreement and the Genlyte Agreements and the
transactions contemplated hereby and thereby for the approval of its
stockholders at a meeting of stockholders or used its reasonable best
efforts to obtain such stockholder approval;
(g) by Genlyte, if the Thomas Board of Directors or
committee thereof shall have resolved to accept or recommended to the
Thomas stockholders an Alternative Proposal or shall have withdrawn or
adversely modified or taken a public position materially inconsistent
with its approval or recommendation to the stockholders of Thomas of
the transactions contemplated hereby or shall not have submitted this
Agreement and the Thomas Agreements and the transactions contemplated
hereby and thereby for the approval of its stockholders at a meeting
of stockholders or used its reasonable best efforts to obtain such
stockholder approval;
(h) by Thomas, if (i) a Change of Control of Genlyte shall
have occurred, (ii) Genlyte shall have entered into a definitive
agreement providing for, or publicly announced its intention to
effect, any transaction involving a Change of Control of Genlyte or
(iii) a tender offer or exchange offer shall have been commenced or
publicly announced that, if consummated, would have the effect of a
Change of Control of Genlyte;
(i) by Genlyte, if (i) a Change of Control of Thomas shall
have occurred, (ii) Thomas shall have entered into a definitive
agreement providing for, or publicly announced its intention to
effect, any transaction involving a Change of Control of Thomas or
(iii) a tender offer or exchange offer shall have been commenced or
publicly announced that, if consummated, would have the effect of a
Change of Control of Thomas; or
(j) by either party, if the approval of the stockholders of
such party or the other party contemplated by Section 5.3 is not
obtained at the applicable stockholders meeting, including
adjournments thereof.
Any right of termination set forth above shall be exercised by written notice
from the terminating party to the other party.
8.2. TERMINATION FEES.
(a) If this Agreement is terminated by Thomas pursuant to Section
8.1(d) or by Genlyte pursuant to Section 8.1(g) or (i), then Thomas shall pay
Genlyte a fee of $4.5 million plus documented expenses of Genlyte, which
expenses shall not exceed $2.0 million in the aggregate; provided, however, that
no fee shall be payable following a termination of this Agreement pursuant to
Section 8.1(i)(iii) unless and until the relevant tender offer or exchange offer
has been consummated and a Change of Control of Thomas has occurred.
(b) If this Agreement is terminated by Genlyte pursuant to Section
8.1(e) or by Thomas pursuant to Section 8.1(f) or (h), then Genlyte shall pay
Thomas a fee of $6.5 million plus documented expenses of Thomas, which expenses
shall not exceed $2.0 million in the aggregate; provided, however, that no fee
shall be payable following a termination of this Agreement pursuant to Section
8.1(h)(iii) unless and until the relevant tender offer or exchange offer has
been consummated and a Change of Control of Genlyte has occurred.
(c) If this Agreement is terminated by Thomas due to the failure of
Genlyte to obtain stockholder approval as set forth in Section 8.1(j), then
Genlyte shall pay Thomas a fee of $3.25 million plus documented expenses of
Thomas, which expenses shall not exceed $2.0 million in the aggregate.
(d) If this Agreement is terminated by Genlyte due to the failure of
Thomas to obtain stockholder approval as set forth in Section 8.1(j), then
Thomas shall pay Genlyte a fee of $2.25 million plus documented expenses of
Genlyte, which expenses shall not exceed $2.0 million in the aggregate.
(e) If (i) this Agreement is terminated prior to the occurrence of
the Closing for any reason other than pursuant to Section 8.1(a), (ii) prior to
such date as is 270 days after such termination there shall occur a Change of
Control of a party or a party shall enter into a definitive agreement providing
for, or shall publicly announce its intention to effect, any transaction
involving a Change of Control of such party or involving the sale or other
<PAGE>
disposition of all or substantially all of the Contributed Business or
Contributed Assets of such party (including by transfer to a joint venture or
similar arrangement) to or with an unaffiliated Person or a tender offer or
exchange offer shall have been commenced or publicly announced that, if
consummated, would result in a Change of Control of such party and (iii) no fee
has previously been paid by such party pursuant to Section 8.2(a) or (b), then
upon (and subject to) the occurrence of such Change of Control or the
consummation of such transaction, to the extent applicable, Thomas will pay to
Genlyte the fee and documented expenses set forth in Section 8.2(a) in the event
of a Change of Control of Thomas and, to the extent applicable, Genlyte will pay
to Thomas the fee and documented expenses set forth in Section 8.2(b) in the
event of a Change of Control of Genlyte, less the amount of any fee previously
paid pursuant to this Section 8.2 as a result of the failure to obtain
stockholder approval.
Any such amount shall be paid in cash by wire transfer in immediately
available funds, (i) in the case of Section 8.1(d) or (e) or Section 8.2(c) or
(d), at or prior to the termination referred to therein and (ii) in the case of
Section 8.1(f), (g), (h) or (i) or Section 8.2(e), not later than five (5)
Business Days after the obligation to make such payment arises.
If one party fails to promptly pay to the other any fee due under this
Section 8.2, the defaulting party shall pay the costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid.
In no event will either Thomas or Genlyte be entitled to receive more than
$6.5 million or $4.5 million, as the case may be, plus documented expenses in
each case of up to $2.0 million pursuant to this Section 8.2. This Section 8.2
is the sole and exclusive remedy with respect to a termination of this Agreement
and the transactions contemplated hereby pursuant to Sections 8.1(d), (e), (f),
(g), (h), (i) and (j) and Section 8.2(e). In the event this Agreement is
terminated and the termination fee is paid pursuant to Section 8.2, this Section
8.2 shall be the sole and exclusive remedy with respect to such termination and
any other claim for breach of contract and representation and warranty and
failure to perform or satisfy any covenant, agreement or other obligation
contained in this Agreement or the Related Agreements.
Notwithstanding the foregoing, in the event this Agreement is terminated
pursuant to Section 8.1(c), the party not entitled to terminate under Section
8.1(c) shall have no rights under this Section 8.2(e).
8.3. EFFECT OF TERMINATION. In the event of any termination of this
Agreement as provided above, this Agreement shall forthwith become wholly void
and of no further force and effect and there shall be no liability on the part
of any party, its Affiliates or their respective officers or directors;
provided, however, that upon any such termination the obligations of the parties
with respect to this Article VIII (including Section 8.2), the last two
sentences of Section 5.2(a), Sections 3.4, 3.6, 4.4, 4.6, 5.2(b) and 9.3 and the
Confidentiality Agreement previously entered into by and between Thomas and
Genlyte shall remain in full force and effect and if the Company has been formed
the parties shall dissolve it, or shall cause it to be dissolved; and provided,
further, that subject to the last paragraph of Section 8.2 nothing herein will
relieve any party from liability for damages for any breach of covenants or
representations and warranties of this Agreement prior to Closing.
ARTICLE IX
GENERAL PROVISIONS
9.1. AMENDMENTS AND WAIVER.
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
9.2. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
<PAGE>
(a) If to Genlyte:
The Genlyte Group Incorporated
2345 Vauxhall Road
P.O. Box 3148
Union, NJ 07083-1948
Attention: Larry K. Powers
Telecopy No.: (908) 810-4535
With a copy to:
McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey
Attention: Bart J. Colli, Esq.
Telecopy No.: (973) 624-7070
(b) If to Thomas:
Thomas Industries Inc.
4360 Brownsboro Road
Louisville, Kentucky 40232
Attention: Timothy C. Brown
Telecopy No.: (502) 895-6618
With a copy to:
McDermott, Will & Emery
227 West Monroe Street
Suite 4400
Chicago, Illinois 60606-5096
Attention: Michael R. Fayhee, P.C.
Telecopy No.: (312) 984-7700
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of
receipt.
9.3. EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated herein, including fees of counsel, investment
bankers and accountants. The expenses incurred in connection with printing and
filing (but not preparing) the Joint Proxy Statement shall be shared equally by
Thomas and Genlyte. The provisions of this Section shall survive any
termination of this Agreement.
9.4. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.5. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be given meaning and do not form a part
of this Agreement.
9.6. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties named herein and their respective successors and
permitted assigns. This Agreement shall not be assigned by either party hereto
without the express prior written consent of the other party and any attempted
assignment, without such consents, shall be null and void. This Agreement does
not create any rights, claims or benefits inuring to any person that is not a
party hereto nor create or establish any third-party beneficiary hereto.
9.7. ENTIRE TRANSACTION. This Agreement and the agreements and
documents referred to herein contain the entire agreement and understanding
among the parties with respect to the transactions contemplated hereby and
supersede all other agreements, understandings and undertakings among the
parties on the subject matter hereof. All exhibits and schedules hereto are
hereby incorporated by reference and made a part of this Agreement.
9.8. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the state of
Delaware, without giving effect to conflict of laws rules.
9.9. OTHER RULES OF CONSTRUCTION. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "OR" is not
exclusive. The word "INCLUDING" shall mean including, without limitation. The
term "ORDINARY COURSE" means the ordinary course of the business consistent with
the past practice of the respective Contributed Business. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
<PAGE>
9.10. PARTIAL INVALIDITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
9.11. AUTHORSHIP. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over construction of
this Agreement shall be decided without regard to events of authorship or
negotiation.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
THOMAS INDUSTRIES INC.
By:
Its:
THE GENLYTE GROUP INCORPORATED
By:
Its:
<PAGE>
LIST OF SCHEDULES
TO THE
MASTER TRANSACTION AGREEMENT
BETWEEN
THOMAS INDUSTRIES INC.
AND
THE GENLYTE GROUP INCORPORATED
DATED AS OF APRIL 28, 1998
Schedule 5.1: Activities Not Conducted in the Ordinary Course of Business
<PAGE>
EXHIBIT 2.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
GT LIGHTING, LLC
<PAGE>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II FORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1. Formation and Duration . . . . . . . . . . . . . . . . . . . . 9
2.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Principal Office, Registered Office and Registered Agent . . . 10
2.4. Purpose of Company . . . . . . . . . . . . . . . . . . . . . . 10
2.5. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7. Qualification in Other Jurisdictions . . . . . . . . . . . . . 10
2.8. No State-Law Partnership . . . . . . . . . . . . . . . . . . . 10
2.9. Effective Date and Termination. . . . . . . . . . . . . . . . 10
ARTICLE III MEMBERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Initial Members. . . . . . . . . . . . . . . . . . . . . . . . 11
3.2. Admission of Additional Members . . . . . . . . . . . . . . . 11
3.3. Agreements with Members or Affiliates . . . . . . . . . . . . 11
3.4. Authority to Execute Documents to be Filed Under the Act . . . 11
3.5. Powers of the Members . . . . . . . . . . . . . . . . . . . . 11
3.6. Liability of Members . . . . . . . . . . . . . . . . . . . . . 11
3.7. Acts of Members . . . . . . . . . . . . . . . . . . . . . . . 11
3.8. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 12
3.9. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . 12
3.10. Location and Conduct of the Meetings; Adjournment . . . . . . 12
3.11. Waiver of Notice of Meeting . . . . . . . . . . . . . . . . . 13
3.12. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14. Action Without a Meeting . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV CAPITALIZATION OF THE COMPANY. . . . . . . . . . . . . . . . . 13
4.1. Initial Capital Contributions. . . . . . . . . . . . . . . . . 13
4.2. Additional Capital Contributions . . . . . . . . . . . . . . . 14
4.3. Capital Withdrawal Rights, Interest and Priority . . . . . . . 14
4.4. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 14
4.5. Section 754 Election . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V PROFIT AND LOSS ALLOCATIONS . . . . . . . . . . . . . . . . . . . . 15
5.1. Profits and Losses . . . . . . . . . . . . . . . . . . . . . . 15
5.2. General Provisions . . . . . . . . . . . . . . . . . . . . . . 15
5.3. Special Provisions . . . . . . . . . . . . . . . . . . . . . . 16
5.4. Code section704(c) Allocations . . . . . . . . . . . . . . . . 17
5.5. Allocations Relating to Taxable Issuance of Interests . . . . 17
ARTICLE VI DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2. Mandatory Distributions . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1. Management Board . . . . . . . . . . . . . . . . . . . . . . . 19
7.2. Initial Management Board . . . . . . . . . . . . . . . . . . . 19
7.3. Authority of the Management Board . . . . . . . . . . . . . . 19
7.4. Action by the Management Board . . . . . . . . . . . . . . . . 20
7.5. Approval Required for Certain Matters . . . . . . . . . . . . 20
7.6. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . 21
7.7. Salary and Expenses . . . . . . . . . . . . . . . . . . . . . 21
7.8. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . 21
7.9. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 21
7.10. Action Without a Meeting . . . . . . . . . . . . . . . . . . . 22
7.11. Telephone Meeting . . . . . . . . . . . . . . . . . . . . . . 22
7.12. Records of Action . . . . . . . . . . . . . . . . . . . . . . 22
7.13. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . 22
7.14. Reliance on Books . . . . . . . . . . . . . . . . . . . . . . 22
7.15. Standard of Care; Liability . . . . . . . . . . . . . . . . . 22
7.16. Chairman of the Board . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1. Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX INDEMNIFICATION AND INSURANCE. . . . . . . . . . . . . . . . . 25
9.1. Indemnification and Advancement of Expenses. . . . . . . . . . 25
9.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3. Limit on Liability of Members . . . . . . . . . . . . . . . . 27
ARTICLE X TRANSFERS, WITHDRAWALS AND DEADLOCK . . . . . . . . . . . . . . . . 27
10.1. General Restriction on Transfers and Withdrawals . . . . . . . 27
10.2. Assignees and Substitute Members . . . . . . . . . . . . . . . 27
10.3. Effect of Admission as a Substitute Member . . . . . . . . . . 28
10.4. Put Right . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.5. Change of Control . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
10.6. Deadlock . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7. Offer Right . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.8. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.9. Appraised Value . . . . . . . . . . . . . . . . . . . . . . . 30
10.10. Assignability and Financing. . . . . . . . . . . . . . . . . . 31
10.11. Limited Applicability. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XI DISSOLUTION AND TERMINATION. . . . . . . . . . . . . . . . . . 32
11.1. Term; Events Causing Dissolution . . . . . . . . . . . . . . . 32
11.2. Distributions Upon Dissolution . . . . . . . . . . . . . . . . 33
11.3. Certificate of Cancellation . . . . . . . . . . . . . . . . . 34
ARTICLE XII ACCOUNTING AND BANK ACCOUNTS . . . . . . . . . . . . . . . . . 34
12.1. Books and Records . . . . . . . . . . . . . . . . . . . . . . 34
12.2. Financial Reports . . . . . . . . . . . . . . . . . . . . . . 35
12.3. Tax Returns and Elections . . . . . . . . . . . . . . . . . . 35
12.4. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5. Right of Inspection . . . . . . . . . . . . . . . . . . . . . 35
12.6. Financial Accounting . . . . . . . . . . . . . . . . . . . . . 36
12.7. LIFO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIII COVENANTS NOT TO COMPETE . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 37
14.1. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2. Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3. Due Organization . . . . . . . . . . . . . . . . . . . . . . . 37
14.4. Securities Law Matters . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XV MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 38
15.1. Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . 38
15.2. Amendments and Waiver . . . . . . . . . . . . . . . . . . . . 39
15.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.6. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 40
15.8. Entire Transaction . . . . . . . . . . . . . . . . . . . . . . 41
15.9. Other Rules of Construction. . . . . . . . . . . . . . . . . . 41
15.10. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . 41
15.11. Nature of Interest in the Company. . . . . . . . . . . . . . . 41
15.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 41
15.13. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . 41
15.14. Negotiation between Senior Executives. . . . . . . . . . . . . 42
15.15. Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . 42
15.16. Effect of Inconsistencies with the Act . . . . . . . . . . . . 42
15.17. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 42
15.18. Authorship . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.19. Thomas and Affiliates. . . . . . . . . . . . . . . . . . . . . 43
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
GT LIGHTING, LLC
This Limited Liability Company Agreement is made and entered into this
28th day of April, 1998, by and among GT LIGHTING, LLC, a Delaware limited
liability company (the "COMPANY"), THOMAS INDUSTRIES INC., a Delaware
corporation ("THOMAS") and THE GENLYTE GROUP INCORPORATED, a Delaware
corporation ("GENLYTE"). Thomas and Genlyte being all of the initial members of
the Company and hereinafter referred to individually as a "MEMBER" or
collectively as the "MEMBERS."
WHEREAS, the Company was formed on April 24, 1998, pursuant to a
Certificate of Formation dated April 24, 1998, as a limited liability company
under the Delaware Limited Liability Company Act, as amended (the "ACT"), but
has not yet conducted any business;
WHEREAS, the Company was organized to engage in the business,
operations and activities related to the manufacture, sale, marketing and
distribution of consumer, commercial, industrial and outdoor lighting
(collectively, the "BUSINESS");
WHEREAS, the Company is being capitalized with certain assets of
Thomas and Genlyte and certain of their respective Affiliates pursuant to the
Capitalization Agreements; and
WHEREAS, Thomas and Genlyte, as the Members, wish to adopt this
Agreement (as defined below) as the limited liability company agreement of the
Company;
NOW, THEREFORE, in consideration of the premises and promises herein
contained, the parties agree as set forth below:
ARTICLE I
DEFINITIONS
1.1. DEFINED TERMS. For purposes of this Agreement, unless the
language or context clearly indicates that a different meaning is intended, the
words, terms and phrases defined in this Section have the meanings set forth
below:
(A) "ACT" has the meaning assigned to such term in the
preamble.
(B) "ADDITIONAL CAPITAL CONTRIBUTION" means any Capital
Contribution by Members other than the initial Capital Contributions
as set forth in Section 4.1.
(C) "ADJUSTED CAPITAL ACCOUNT DEFICIT" means (for United
States federal income tax purposes) with respect to any Member the
deficit balance, if any, in such Member's Capital Account as of the
end of any Fiscal Year after giving effect to the following
adjustments:
(i) Credit to such Capital Account the sum of (i)
any amount which such Member is obligated to restore to such
Capital Account pursuant to any provision of this Agreement,
plus (ii) any amount equal to such Member's share of Company
Minimum Gain as determined under Regulation section1.704-
2(g)(1) and such Member's share of Member Nonrecourse Debt
Minimum Gain as determined under Regulation section1.704-
2(i)(5), plus (iii) any amounts which such Member is deemed
to be obligated to restore pursuant to Regulation
section1.704-1(b)(2)(ii)(c);
(ii) Debit to such Capital Account the items
described in Regulation section1.704-1(b)(2)(ii)(d)(4), (5)
and (6); and
(iii) Credit or Debit to such Capital Account any
other items required or permitted to be credited or debited
under section704 of the Code and the Regulations thereunder.
(D) "AFFILIATE" means, when used with reference to a
specified Person, any Person that directly or indirectly through one
or more intermediaries controls or is controlled by or is under common
control with the specified Person.
(E) "AGREEMENT" means this Limited Liability Company
Agreement, as amended from time to time, including all schedules and
exhibits hereto and documents referred to herein or therein.
<PAGE>
(F) "APPRAISED VALUE" has the meaning assigned to such term
in Section 10.9(a).
(G) "APPRAISER'S REPORT" has the meaning assigned to such
term in Section 10.9(b).
(H) "ASSET VALUE" with respect to Company assets means:
(i) with respect to any asset contributed to the
Company by a Member, the gross fair market value of such
asset on the date contributed;
(ii) with respect to any asset distributed by the
Company to a Member, the gross fair market value of such
asset on the date distributed by the Company to any Member;
(iii) upon the occurrence of the following events:
(A) the admission of a Member to, or the increase of the
Interest of an existing Member in, the Company in exchange
for a Capital Contribution; (B) full or partial redemption
of a Member's Interest; or (C) the liquidation of the
Company under Regulation section1.704-1(b)(2)(ii)(g); the
Asset Value shall be adjusted to equal the gross fair market
value of such assets, as determined by mutual consent of the
Members on the date such event occurs; provided, however,
that the Company shall redetermine Asset Value upon the
occurrence of any event described in this Section
1.1(h)(iii); or
(iv) the Basis of the asset in all other
circumstances.
For purposes of this Section 1.1(h), the gross fair market
value of any asset shall be determined by the unanimous
consent of the Members. If the Members cannot agree on the
Asset Value for purposes of this Section 1.1(h), the Members
shall enter into an appraisal process substantially similar
to the process set forth in Section 10.9.
(I) "BASIS" with respect to an asset means the adjusted
basis from time to time of such asset for United States federal income
tax purposes.
(J) "BENEFICIAL OWNERSHIP" has the meaning assigned to such
term in Section 1.1(q).
(K) "BUSINESS" has the meaning assigned to such term in the
preamble.
(L) "BUSINESS DAY" means any day on which commercial banks
in the City of New York, New York, are open for business.
(M) "CAPITAL ACCOUNTS" means the Capital Accounts of the
Members established in accordance with Section 4.4 hereof.
(N) "CAPITAL CONTRIBUTION" means the aggregate amount of
cash and the Asset Value of any property other than cash contributed
to the Company by a Member in accordance with Article IV hereof.
(O) "CAPITALIZATION AGREEMENTS" means the Genlyte
Capitalization Agreement and the Thomas Capitalization Agreement.
(P) "CERTIFICATE" means the Certificate of Formation of the
Company filed with the Secretary of State of Delaware, as amended or
restated from time to time.
(Q) "CHANGE OF CONTROL" shall mean with respect to a party
the occurrence of any of the following events: (i) an acquisition
(whether directly from such party or otherwise) of any voting
securities of such party (the "VOTING SECURITIES") by any "PERSON" (as
the term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act), immediately after which such Person has or would have
"BENEFICIAL OWNERSHIP" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty-five percent (25%) or more of the
combined voting power of such party's then outstanding Voting
Securities; (ii) the individuals who, as of the date hereof, are
members of the Board of Directors of such party (the "INCUMBENT
BOARD"), cease for any reason to constitute at least seventy-five
percent (75%) of the Board of Directors; provided, however, a "Change
of Control" shall not be deemed to occur if any of such individuals
voluntarily fail to stand for re-election or resign or if the
aggregate number of Directors is reduced so long as, after giving
effect to such failure to stand for re-election, resignation or
reduction, at least seventy-five percent (75%) of the remaining
<PAGE>
Directors are members of the Incumbent Board; provided further,
however, that if the election, or nomination for election, by such
party's stockholders of any new director was approved by a vote of at
least seventy-five percent (75%) of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered a member
of the Incumbent Board; provided further, however, that an individual
shall not be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "ELECTION CONTEST" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
of Directors (a "PROXY CONTEST") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;
(iii) the consummation of, or agreement to consummate: (A) a merger,
consolidation, share exchange or reorganization of such party in which
the stockholders of such party, as a group, cease to hold a majority
equity interest in the surviving entity; (B) a liquidation or
dissolution of or appointment of a receiver, rehabilitator,
conservator or similar person for, such party; or (C) the sale or
other disposition of all or substantially all of the assets of such
party to any Person (other than a transfer to a subsidiary); or (iv)
any other change in "control" of such party. For purposes of the
immediately preceding clause, the term "control" shall have the
meaning ascribed thereto pursuant to Rule 405 of the rules and
regulations of the SEC promulgated pursuant to the Securities Act of
1933, as amended.
(R) "CHANGE OF CONTROL DATE" means the date the Change of
Control occurred.
(S) "CLOSING" has the meaning assigned to it in the Master
Transaction Agreement.
(T) "CLOSING DATE" has the meaning assigned to it in the
Master Transaction Agreement.
(U) "CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute to such Code.
(V) "COMPANY" means GT Lighting, LLC, the limited liability
company formed by the filing of the Certificate, as constituted from
time to time.
(W) "CONTRACT" has the meaning assigned to such term in the
Genlyte Capitalization Agreement or the Thomas Capitalization
Agreement, as the case may be.
(X) "CONTRIBUTED ASSETS" has the meaning assigned to such
term in Section 4.1.
(Y) "DEADLOCK" has the meaning assigned to such term in
Section 10.6.
(Z) "DEADLOCK DATE" has the meaning assigned to such term
in Section 10.6.
(AA) "DEFICIENCY" has the meaning assigned to such term in
Section 4.2.
(BB) "DEPRECIATION" for any Fiscal Year or other period
means the cost recovery deduction with respect to an asset for such
year or other period as determined for United States federal income
tax purposes, provided that if the Asset Value of such asset differs
from its Basis at the beginning of such year or other period,
Depreciation shall be determined as provided in Regulation
section1.704-1(b)(2)(iv)(g)(3).
(CC) "DISPUTE" has the meaning assigned to such term in
Section 15.14.
(DD) "EBITDA" means earnings before interest, taxes,
depreciation and amortization of the Company, calculated in accordance
with United States generally accepted accounting principles.
(EE) "EFFECTIVE DATE" has the meaning assigned to such term
in Section 2.9.
(FF) "ESTIMATED QUARTERLY LIABILITY" has the meaning
assigned to such term in Section 6.2(a).
(GG) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
<PAGE>
(HH) "FAIR MARKET VALUE" has the meaning assigned to such
term in Section 10.9(a).
(II) "FISCAL YEAR" means the period from January 1 through
December 31 each year.
(JJ) "GENLYTE" means The Genlyte Group Incorporated, a
Delaware corporation.
(KK) "GENLYTE CAPITALIZATION AGREEMENT" means the
Capitalization Agreement dated April 28, 1998 by and between the
Company and Genlyte.
(LL) "GENLYTE CONTRIBUTED ASSETS" means the assets
contributed by Genlyte to the Company pursuant to the Genlyte
Capitalization Agreement.
(MM) "INCUMBENT BOARD" has the meaning assigned to such term
in Section 1.1(q)
(NN) "INITIAL APPRAISER" has the meaning assigned to such
term in Section 10.9(b).
(OO) "INITIAL MEMBERS" means Thomas and Genlyte.
(PP) "INTEREST" means, with respect to any Member at any
time, the entire interest of such Member in the Company at such time.
Such Interest includes, without limitation, (i) a right of a Member to
receive distributions of revenues, allocations of income and loss and
distributions of liquidation proceeds under this Agreement and
(ii) all management rights, voting rights or rights to consent of a
Member.
(QQ) "ISSUANCE ITEMS" has the meaning assigned to such term
in Section 5.5.
(RR) "LIFO" has the meaning assigned to such term in Section
12.7.
(SS) "LIQUIDATION PROCEEDS" means all property at the time
of liquidation of the Company and all proceeds thereof.
(TT) "LITIGATION" means the case entitled Richard D. Lippe,
et al., as Trustees of the Keene Creditors Trust v. Bairnco
Corporation, et al., 96 Civ. 7600 (DC) (S.D.N.Y.) involving Genlyte,
including any litigation related thereto and the liabilities and legal
fees associated therewith.
(UU) "MANAGEMENT BOARD" means the management board of the
Company, appointed in writing by the Members and established pursuant
to Article VII hereof.
(VV) "MASTER TRANSACTION AGREEMENT" means the Master
Transaction Agreement dated April 28, 1998 by and between Thomas and
Genlyte.
(WW) "MEMBERS" means the Initial Members and Persons who
have been admitted under Section 3.2.
(XX) "MEMBER ASSUMED TAX RATE" has the meaning assigned to
such term in Section 6.2(a).
(YY) "MEMBER TAX LIABILITY" has the meaning assigned to such
term in Section 6.2(a).
(ZZ) "NONCOMPETE PERIOD" has the meaning assigned to such
term in Article XIII.
(AAA) "NON-TRANSFERRING MEMBER" has the meaning assigned to
such term in Section 10.9(b).
(BBB) "OFFER EXERCISE DATE" means the date of the Offer
Exercise Notice.
(CCC) "OFFER EXERCISE NOTICE" has the meaning assigned to
such term in Section 10.7.
(DDD) "OFFER RIGHT" has the meaning assigned to such term in
Section 10.7.
(EEE) "PERCENTAGE INTEREST" means, with respect to any Member
at any time, the percentage as set forth in Schedule 4.1.
<PAGE>
(FFF) "PERSON" means any individual, partnership, limited
liability company, corporation, cooperative, trust, estate or other
entity.
(GGG) "PRELIMINARY FAIR MARKET VALUE" has the meaning
assigned to such term in Section 10.9(b).
(HHH) "PROFITS" and "LOSSES" for any Fiscal Year or other
period means an amount equal to the Company's taxable income for
United States federal income tax purposes for such year or period
determined in accordance with Code section703(a) and the Regulations
thereunder with the following adjustments:
(i) all items of income, gain, loss and deduction
of the Company required to be stated separately shall be
included in taxable income or loss;
(ii) income of the Company exempt from United
States federal income tax shall be treated as taxable
income;
(iii) expenditures of the Company described in Code
section705(a)(2)(B) or treated as such expenditures under
Regulation section1.704-1(b)(2)(iv)(i) shall be subtracted
from taxable income;
(iv) in the event of an adjustment to the value of
any asset in accordance with Section 1.1(h)(iii), the amount
of such adjustment shall be treated as gain (if an increase)
or loss (if a decrease) from the disposition of such asset
for the purpose of computing Profits and Losses;
(v) gain or loss resulting from the disposition
of property from which gain or loss is recognized for United
States federal income tax purposes shall be determined with
reference to the Asset Value of such property;
(vi) Depreciation shall be determined based upon
Asset Value instead of as determined for United States
federal income tax purposes; and
(vii) items which are specially allocated under
Section 5.3 of this Agreement shall not be taken into
account.
(III) "PROXY CONTEST" has the meaning assigned to such term
in Section 1.1(q)
(JJJ) "PUT EXERCISE NOTICE" has the meaning assigned to such
term in Section 10.4(a).
(KKK) "PUT PRICE" has the meaning assigned to such term in
Section 10.4(b).
(LLL) "PUT RIGHT" has the meaning assigned to such term in
Section 10.4(a).
(MMM) "REGULATIONS" means the United States federal income
tax regulations, including temporary (but not proposed) regulations,
promulgated under the Code.
(NNN) "RELATED PARTY" shall have the meaning assigned to such
term in Section 10.1.
(OOO) "REPRESENTATIVES" means the persons serving on the
Management Board.
(PPP) "SEC" means the Securities and Exchange Commission.
(QQQ) "SECURITIES LAWS" has the meaning assigned to such term
in Section 14.4.
(RRR) "SERVICES AGREEMENT" means the Services Agreement by
and between the Company and Thomas, in a form mutually acceptable to
the parties.
(SSS) "TAX BOOK LOSS" means, for any Fiscal Year, the sum of
(i) the Company's Losses for such Fiscal Year and (ii) the allocations
made pursuant to Section 5.3 (other than any allocation made pursuant
to Section 5.3(e)) for such Fiscal Year.
(TTT) "TAX YEAR" means the Company's fiscal year for United
States federal income tax purposes and shall be the Fiscal Year.
<PAGE>
(UUU) "TERRITORY" has the meaning assigned to such term in
Article XIII.
(VVV) "THIRD APPRAISER" has the meaning assigned to such term
in Section 10.9(c).
(WWW) "THOMAS" means Thomas Industries Inc., a Delaware
corporation, as well as any of Thomas's wholly-owned subsidiaries
which may, from time to time, hold a portion of Thomas's Interest.
(XXX) "THOMAS CAPITALIZATION AGREEMENT" means the
Capitalization Agreement dated April 28, 1998 by and between the
Company and Thomas.
(YYY) "THOMAS CONTRIBUTED ASSETS" means the assets
contributed by Thomas to the Company pursuant to the Thomas
Capitalization Agreement.
(ZZZ) "TRANSFER" means (a) when used as a verb, to give,
sell, exchange, assign, transfer, pledge, lease, hypothecate or
otherwise dispose of, grant a security interest in or encumber (but
shall not include an assignment, pledge or hypothecation of rights to
receive distributions pursuant to Article VI or otherwise hereunder),
and (b) when used as a noun, the nouns corresponding to such verbs, in
either case voluntarily or involuntarily, by operation or law or
otherwise, including any merger, consolidation or sale or exchange of
securities.
(AAAA) "TRANSFER CLOSING DATE" has the meaning assigned to
such term in Section 10.8
(BBBB) "TRANSFERRING MEMBER" has the meaning assigned to such
term in Section 10.9(b).
(CCCC) "UNDERSIGNED" has the meaning assigned to such term in
Article XIV.
(DDDD) "VALUATION DATE" means the date of the Put Exercise
Notice, the Change of Control Date or the Deadlock Date, as the case
may be.
(EEEE) "VOTING SECURITIES" has the meaning assigned to such
term in Section 1.1(q).
ARTICLE II
FORMATION
2.1. Formation and Duration. The Company was formed under the Act
effective upon the filing of the Certificate with the Secretary of State of
Delaware and shall continue until dissolved pursuant to Article XI. The Members
shall, to the extent required by law, and otherwise the Management Board or
authorized officers of the Company shall, execute all amendments to the
Certificate and do all filing, recording and other acts as may be appropriate
under the Act. The Members hereby adopt this Agreement as the limited liability
company agreement of the Company.
2.2. NAME. The name of the Company is GT LIGHTING, LLC To the extent
permitted by the Act, the Company may conduct its business under one or more
assumed names approved by the Management Board.
2.3. PRINCIPAL OFFICE, REGISTERED OFFICE AND REGISTERED AGENT.
(a) The principal office of the Company shall be located at 4360
Brownsboro Road, Louisville, Kentucky 40232, or at such other place(s) as the
Management Board may determine from time to time.
(b) The location of the registered office and the name of the
registered agent of the Company in the state of Delaware shall be as stated in
the Certificate, as determined from time to time by the Management Board.
2.4. PURPOSE OF COMPANY. The purpose of the Company is to engage in
the Business, any lawful business, purpose or activity for which limited
liability companies may be formed under the Act and any and all activities
necessary or incidental to the foregoing.
2.5. POWERS. The Company shall have all power to do any and all acts
and things necessary, appropriate, advisable or convenient for the furtherance
and accomplishment of the purposes of the Company, including to engage in any
kind of activity and to enter into and perform obligations of any kind necessary
to, or in connection with, or incidental to, the accomplishment of the purposes
of the Company, as long as the activities and obligations may be lawfully
engaged in or performed by a limited liability company under the Act.
<PAGE>
2.6. FISCAL YEAR. The Company's first fiscal year shall begin on the
Effective Date and end on December 31, 1998. The Company's subsequent fiscal
years shall begin on January 1 and end on December 31 of each succeeding year.
2.7. QUALIFICATION IN OTHER JURISDICTIONS. The Management Board shall
have authority to cause the Company to do business in all jurisdictions in which
the Company shall be required to be so qualified.
2.8. NO STATE-LAW PARTNERSHIP. No provisions of this Agreement shall
be deemed or construed to constitute the Company a partnership (including,
without limitation, a limited partnership) or joint venture, or to constitute
any Member or Representative a partner or joint venturer of or with any other
Member or Representative, for any purposes other than federal and state tax
purposes.
2.9. EFFECTIVE DATE AND TERMINATION. This Agreement shall become
effective on the Closing Date (the "EFFECTIVE DATE"). In the event the Closing
does not occur and the Master Transaction Agreement terminates in accordance
with the terms thereof, this Agreement shall not become effective and shall be
null and void and all of the rights and obligations of the parties hereunder
shall also terminate and be null and void and of no force and effect
simultaneously with the termination of the Master Transaction Agreement.
ARTICLE III
MEMBERS
3.1. Initial Members. As of the date hereof, there are no Members
other than the Initial Members, and no other Person has any right to take part
in the ownership of the Company.
3.2. ADMISSION OF ADDITIONAL MEMBERS. Additional Members of the
Company may only be added if the addition of any such proposed additional Member
is made pursuant to Article X, or is approved in writing, prior to such
admission, by all of the then existing Members, and, in either such case, such
proposed additional Member satisfies the requirements of Section 10.2.
3.3. AGREEMENTS WITH MEMBERS OR AFFILIATES. The Company may, subject
to Section 7.5, enter into contracts or other forms of agreement to acquire,
sell or otherwise dispose of goods or services with a Member or any Affiliate of
a Member. The validity of any transaction, contract, agreement, or payment
involving the Company and any Member or Affiliate of any Member otherwise
permitted under the terms of this Agreement shall not be affected by reason of
(a) the relationship between the Company and such Member or Affiliate, or (b)
the approval of said transaction, contract, agreement, or payment by officers,
directors, or employees of such Member or Affiliate or of the Company; provided,
however, that the terms of any such transaction, contract or agreement shall be
on an arm's length basis.
3.4. AUTHORITY TO EXECUTE DOCUMENTS TO BE FILED UNDER THE ACT. The
Management Board or authorized officers of the Company shall have the power and
authority to execute on behalf of the Company any document required or permitted
to be filed by the Company with the Secretary of State of Delaware pursuant to
the terms of the Act.
3.5. POWERS OF THE MEMBERS. Except as otherwise provided herein, no
Member, acting solely in its capacity as a Member, shall act as an agent of the
Company or have any authority to act for the Company.
3.6. LIABILITY OF MEMBERS. Except as explicitly set forth in any
Capitalization Agreement or agreed to in writing by any Member, no Member shall,
nor shall any Representative, stockholder, officer, director or employee of any
Member, be liable for any debts, liabilities or obligations of the Company under
any theory of liability (including indemnification, contribution or
subrogation); provided that each Member shall be responsible:
(a) for the making of any Capital Contribution to the
Company required to be made by such Member pursuant to the terms of
this Agreement or the Genlyte Capitalization Agreement or Thomas
Capitalization Agreement, as the case may be; and
(b) for the amount of any distribution made to such Member
that must be returned to the Company pursuant to the Act.
3.7. ACTS OF MEMBERS. Subject to Article VII, if, and only if, the
Act expressly requires that the Members act, an act of the Members consists of
either:
(a) a vote of the Members holding more than an aggregate of
50% of the Percentage Interests of the Company present at a properly
called meeting of the Members when a quorum is present; provided,
however, that with respect to the matters set forth in Sections 4.2
and 7.5 and for purposes of determining Asset Value, a majority of the
<PAGE>
Members, each of which will be entitled to one vote, will be required;
provided further, however, that this Section 3.7 shall affect Article
VII only to the extent that the Act expressly requires that the
Members act and that such requirement may not be altered by any
agreement by the members of a limited liability company to the
contrary; or
(b) written action without a meeting, as provided in
Section 3.14.
3.8. SPECIAL MEETINGS.
(a) A special meeting of the Members may be called for any purpose or
purposes at any time by the Management Board, or by the Chairman of the Board
and the President.
(b) For any special meeting of the Members not called by an act of
the Management Board, those persons demanding the special meeting must give
written notice to the Management Board specifying the purposes of the meeting.
Within thirty (30) days after the receipt of a demand under this Section, the
Management Board must call a special meeting of the Members. If the Management
Board fails to call the special meeting as required by this Section, the person
or persons making the demand may, at the expense of the Company, call the
meeting by giving the notice described in Section 3.9.
3.9. NOTICE OF MEETINGS. Written notice of each meeting of the
Members, stating the date, time, and place and, in the case of a special
meeting, the purpose or purposes, must be given to every Member at least ten
(10) days and not more than sixty (60) days prior to the meeting. The business
transacted at a special meeting of Members is limited to the purposes stated in
the notice of the meeting.
3.10. LOCATION AND CONDUCT OF THE MEETINGS; ADJOURNMENT.
(a) Each meeting of the Members will be held at the Company's
principal place of business or at some other suitable location as designated by
the Management Board.
(b) The Chairman of the Board or, in his absence, the President,
shall chair each meeting of the Members.
(c) Any meeting of the Members may be adjourned from time to time to
another date and time and, subject to Section 3.10(a), to another place. If at
the time of adjournment the person chairing the meeting announces the date, time
and place at which the meeting will be reconvened, it is not necessary to give
any further notice of the reconvening.
(d) To the extent permitted by law, a Member participating in a
meeting by conference telephone or similar communications equipment by which all
persons participating in the meeting can hear and speak to each other will be
deemed present in person at the meeting and all acts taken by such Member during
his, her or its participation shall be deemed taken at the meeting.
3.11. WAIVER OF NOTICE OF MEETING.
(a) A Member may waive notice of the date, time, place and purpose or
purposes of a meeting of Members. A waiver may be made before, at or after the
meeting, in writing, orally or by attendance.
(b) Attendance by a Member at a meeting is a waiver of notice of that
meeting, unless the Member objects at the beginning of the meeting to the
transaction of business because the meeting is not properly called or convened,
or objects before a vote on an item of business because the item may not
properly be considered at that meeting and does not participate in the
consideration of the item at that meeting.
3.12. PROXIES. A Member may cast or authorize the casting of a vote by
filing a written appointment of a revocable proxy with the Chairman of the Board
or the President of the Company at or before the meeting at which the
appointment is to be effective. The Member may sign or authorize the written
appointment by telecopy or other means of electronic transmission stating, or
submitted with information sufficient to determine, that the Member authorized
the transmission. Any copy, facsimile, telecommunication or other reproduction
of the original of either the writing or the transmission may be used in lieu of
the original, if it is a complete and legible reproduction of the entire
original. A Member may not grant or appoint an irrevocable proxy.
3.13. QUORUM. For any meeting of the Members, a quorum consists of a
majority of the Percentage Interests or the Members as the case may be.
3.14. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken at a meeting of the Members may be taken without a meeting by written
action signed by the Members who own the Percentage Interests equal to the
Percentage Interests or by the necessary number of Members, as the case may be,
<PAGE>
that would be required to take the same action at a meeting of the Members at
which all Members were present. Such written action may specify a prior or
subsequent effective date.
ARTICLE IV
CAPITALIZATION OF THE COMPANY
4.1. Initial Capital Contributions.
(a) On the Effective Date, Thomas shall contribute to the Company the
Thomas Contributed Assets pursuant to the Thomas Capitalization Agreement and
Genlyte shall contribute to the Company the Genlyte Contributed Assets pursuant
to the Genlyte Capitalization Agreement. The Thomas Contributed Assets and the
Genlyte Contributed Assets are hereinafter referred to as the "CONTRIBUTED
ASSETS."
(b) All Capital Contributions of the Members shall be reflected in
the books and records of the Company. Any cash Capital Contribution shall be in
lawful currency of the United States of America. The Contributed Assets shall
be deemed to have the value, in the aggregate, set forth in a Schedule 4.1(a) to
be mutually agreed upon in writing by the Members prior to the Effective Date.
4.2. ADDITIONAL CAPITAL CONTRIBUTIONS. If additional capital is
required by the Company and all of the Members agree that additional capital can
be contributed by the Members, each Member shall have the right, but not the
obligation, to advance as an additional Capital Contribution (the "ADDITIONAL
CAPITAL CONTRIBUTION") its proportionate share, based on the Percentage Interest
of such Member as of the date of contribution, of the total amount of capital
required. If a Member does not contribute to the Company the full amount of its
share of the Additional Capital Contribution that the Member is entitled to
contribute pursuant to this Section 4.2 (the "DEFICIENCY"), the other Members
shall have the right, but not the obligation, to advance, as an Additional
Capital Contribution, their proportionate share, based on the contributing
Members' Percentage Interests, of the Deficiency. The making of any Additional
Capital Contribution by a Member shall not change any Member's Percentage
Interest.
4.3. CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY. Except as
expressly provided in this Agreement:
(a) no Member shall be entitled to withdraw or reduce such
Member's Capital Contribution or any amount from its Capital Account
or to receive any distributions from the Company;
(b) no Member shall be entitled to demand or receive
property other than cash in return for such Member's Capital
Contribution; and
(c) no Member shall be entitled to receive or be credited
with any interest on the balance of such Member's Capital Contribution
or Capital Account at any time.
4.4. CAPITAL ACCOUNTS.
(a) A Capital Account shall be maintained for each Member in
accordance with Regulation sectionsection1.704-1(b) and 1.704-2 and to which the
following provisions apply to the extent not inconsistent with such Regulation:
(i) There shall be credited to each Member's Capital
Account (A) such Member's Capital Contributions; (B) such Member's
distributive share of Profits; (C) any items of income or gain
specially allocated to such Member under Section 5.3 of this
Agreement; and (D) the amount of any Company liabilities (determined
as provided in Code section752(c) and the Regulations thereunder)
assumed by such Member or to which property distributed to such Member
is subject;
(ii) There shall be debited to each Member's Capital Account
(A) the amount of money and the Asset Value of any property
distributed or paid as a redemption to such Member pursuant to this
Agreement; (B) such Member's distributive share of Losses; (C) any
items of expense or loss which are specially allocated to such Member
under Section 5.3 of this Agreement; and (D) the amount of liabilities
(determined as provided in Code section752(c) and the Regulations
thereunder) of such Member assumed by the Company or to which property
contributed to the Company by such Member is subject; and
(iii) The Capital Account of any Transferee (as defined
below) shall include the appropriate portion of the Capital Account of
the Member from which the Transferee's Interest was obtained.
<PAGE>
(b) The Members intend that Capital Accounts be maintained in
accordance with Regulation sectionsection1.704-1(b) and 1.704-2, and to
accomplish that purpose the Members are authorized to modify the manner in which
the Capital Accounts are maintained and adjustments thereto are computed, and to
make any appropriate adjustments thereto, so that Capital Account balances will
be maintained consistent with such Regulation, provided that such modifications
and adjustments will not materially affect the amount distributed to any Member
upon dissolution of the Company.
4.5. SECTION 754 ELECTION. In case of a distribution of property made
in the manner provided in Section 734 of the Code, or in the case of a Transfer
of any interest in the Company permitted by this Agreement made in the manner
provided in Section 743 of such Code, the Management Board, on behalf of the
Company, may file an election under Section 754 of the Code in accordance with
the procedures set forth in the applicable Regulations and shall file such an
election in a timely manner at the request of any Member affected by the
distribution or Transfer.
ARTICLE V
PROFIT AND LOSS ALLOCATIONS
5.1. Profits and Losses. Subject to the special allocation
provisions of Sections 5.3, 5.4 and 5.5 of this Agreement, Profits or Losses of
the Company for any Tax Year shall be allocated to the Members in accordance
with their Percentage Interests.
5.2. GENERAL PROVISIONS.
(a) Except as otherwise provided in this Agreement, the Members'
distributive shares of all items of Company income, gain, loss, and deduction
for United States federal income tax purposes shall be the same as their
distributive shares of Company Profits and Losses.
(b) To the extent permitted by Regulations section1.704-2(i)(6) and
section1.704-2(h), the Members shall endeavor to avoid treating distributions of
cash as being from the proceeds of a Nonrecourse Liability (as defined under
Regulation section1.704-2 (b)(3)) or a Member Nonrecourse Debt (as determined
under Regulation section1.704-2(b)(4)).
(c) If there is a change in any Member's Percentage Interest during a
Tax Year, each Member's distributive share of Profits or Losses or any item
thereof for such Tax Year, shall be determined by the proration method
prescribed by Code section706(d) or the Regulations thereunder.
(d) The Members agree to report their shares of income and loss for
United States federal income tax purposes in accordance with the provisions of
this Article V.
5.3. SPECIAL PROVISIONS.
(a) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article V, if there is a net decrease in Company Minimum Gain (as defined
in Regulation section1.704-2(d)) during any Tax Year, then each Member shall be
allocated such amount of income and gain for such year (and subsequent years, if
necessary) determined under and in the manner required by Regulation
section1.704-2(g)(1) and (g)(3) as is necessary to meet the requirements for a
minimum gain chargeback as provided in Regulation section1.704-2(f).
(b) Member Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Article V except Section 5.3(a), if
there is a net decrease in Member Nonrecourse Debt Minimum Gain (as determined
in accordance with Regulation section1.704-2(i)(5)) attributable to a Member
Nonrecourse Debt (as defined in Regulation section1.704-2(b)(4)) during any Tax
Year, any Member who has a share of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt determined in accordance with
Regulation section1.704-2(i)(5) shall be allocated such amount of income and
gain for such year (and subsequent years, if necessary) determined under and in
the manner required by Regulation section1.704-2(i)(4) as is necessary to meet
the requirements for a minimum gain chargeback as is provided in that
Regulation.
(c) Qualified Income Offset. If a Member unexpectedly receives any
adjustment, allocation or distribution described in Regulation section1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this subsection (c) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Section 5.3 of this Agreement tentatively
have been made as if this subsection (c) were not in this Agreement.
<PAGE>
(d) Limitation on Losses. Notwithstanding any other provision of
this Agreement, Losses allocated to any Member pursuant to this Agreement shall
not exceed the maximum amount of Losses that may be allocated without causing
such Member to have an Adjusted Capital Account Deficit at the end of the Tax
Year for which the allocation is made. Any Loss that cannot be allocated to a
Member as a result of the limitation contained in this subsection (d) shall be
allocated to the other Members to the extent possible; provided, however, that
the Management Board shall have the authority and obligation to specifically
allocate items of Company income and gain for subsequent years in an amount and
manner sufficient to offset the Loss so allocated to the other Members.
(e) Code section754 Adjustment. To the extent that an adjustment to
the Basis of any asset pursuant to Code section734(b) or Code section743(b) is
required to be taken into account in determining Capital Accounts as provided in
Regulation sectionl.704-1(b)(2)(iv)(m), the adjustment shall be treated (if an
increase) as an item of gain or (if a decrease) as an item of loss, and such
gain or loss shall be allocated to the Members consistent with the allocation of
the adjustment pursuant to such Regulation.
(f) Nonrecourse Deductions. Nonrecourse Deductions (as determined
under Regulation section1.704-2(c)) for any Tax Year shall be allocated to the
Members in accordance with their Percentage Interests.
(g) Member Nonrecourse Deductions. Any Member Nonrecourse Deduction
(as defined in Regulation sectionl.704-2(i)(2)) shall be allocated pursuant to
Regulation section1.704-2(i) to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which it is attributable.
(h) Purpose and Application. The purpose and the intent of the
special allocations provided for in this Section 5.3 are to comply with the
provisions of Regulations sectionl.704-1(b) and sectionl.704-2, and such special
allocations are to be made so as to accomplish that result. However, to the
extent possible, the Members in allocating items of income, gain, loss, or
deduction among the Members shall take into account the special allocations in
such a manner that the net amount of allocations to each Member shall be the
same as such Member's distributive share of Profits and Losses would have been
had the events requiring the special allocations not taken place. The Members
shall apply the provisions of this Section 5.3 in whatever order they reasonably
believe will minimize any economic distortion that otherwise might result from
the application of the special allocations.
5.4. CODE section704(C) ALLOCATIONS. Solely for United States
federal, state, and local income tax purposes and not with respect to
determining any Member's Capital Account, distributive shares of Profits,
Losses, other items, or distributions, a Member's distributive share of income,
gain, loss, or deduction with respect to any property (other than money)
contributed to the Company, or with respect to any property, the Asset Value of
which was adjusted as provided in subsection (iii) of the definition of Asset
Value shall be determined in accordance with the principles set forth in
Regulations under Section 704(c) of the Code and the Regulations thereunder.
5.5. ALLOCATIONS RELATING TO TAXABLE ISSUANCE OF INTERESTS. For
United States federal income tax purposes, any income, gain, loss or deduction
realized by the Company as a direct or indirect result of the issuance of any
Interest by the Company (the "ISSUANCE ITEMS") shall be allocated among the
Members so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Member, shall
be equal to the net amount that would have been allocated to each such Member if
the Issuance Items had not been realized.
ARTICLE VI
DISTRIBUTIONS
6.1. Distributions. Subject to Sections 6.2 and 7.5, distributions
shall be made at such time and in such amounts as determined by the Management
Board and shall be made among the Members in cash or other property in
proportion to their respective Percentage Interests. Notwithstanding anything
to the contrary herein provided, no distribution hereunder shall be permitted to
the extent prohibited by the Act.
6.2. MANDATORY DISTRIBUTIONS. Notwithstanding the above, the Company
shall make the following distributions to its Members:
(a) The Company, upon advice of and review by its
independent accountants, shall determine in good faith the projected
aggregate Member Tax Liability (as defined below) for each fiscal year
or other period computed on a quarterly basis (the "ESTIMATED
QUARTERLY LIABILITY"). The Company shall distribute to each of the
Members an amount equal to the Estimated Quarterly Liability
attributable to such Member's Percentage Interest in the Company not
earlier than fourteen (14) days prior nor later than two (2) days
prior to the date on which such Member's attributable share of such
<PAGE>
Estimated Quarterly Liability is due and payable. Any shortfall in
distributions attributable to a difference between the actual Member
Tax Liability and the Estimated Quarterly Liability previously
distributed to the Member for a Fiscal Year shall be distributed no
later than March 13 of the year following such Fiscal Year. The
"MEMBER TAX LIABILITY" with respect to a taxable year means, for each
Member, the product of (x) the net income or net loss of the Company,
calculated as the items of income (other than tax-exempt income), loss
and deduction described in Section 703(a) of the Code allocable to
such Member for United States federal income tax purposes for the
taxable year, reduced by the sum of net losses or deductions (if any)
allocated to such Member by reason of its Percentage Interest in the
Company in prior taxable years and which have not previously reduced
the net income of the Company allocated to such Member for purposes of
calculating the Member Tax Liability, and (y) the Member's Assumed Tax
Rate.
The "MEMBER'S ASSUMED TAX RATE" shall equal:
A + B
where "A" equals the maximum United States federal income tax rate for
taxable income of corporations filing a return under Section 1 of the
Code, and "B" equals the weighted average effective state and local
tax rate for taxable income of the Members allocated to each Member by
reason of their ownership interest in the Company; and
(b) subject to the provisions of the Act and the terms of
the primary credit facility of the Company, distributions (exclusive
of the tax distributions set forth in Section 6.2(a)) to each of its
Members so that Thomas receives at least an aggregate of $3,000,000
and Genlyte receives at least an aggregate of $6,375,000 per Fiscal
Year from the Company beginning in Fiscal Year 1999; provided,
however, that prior to any distribution under this Section 6.2(b), the
Management Board shall first consult with the Company's tax counsel.
ARTICLE VII
MANAGEMENT
7.1. Management Board. The Company shall have a Management Board
consisting of six (6) Representatives, two (2) of whom shall be appointed by
Thomas and four (4) of whom shall be appointed by Genlyte, (each such person
being referred to as a "REPRESENTATIVE"). Such Representatives shall
collectively be referred to as the "MANAGEMENT BOARD." In the event of the
removal, resignation or death of a Representative, the vacancy promptly shall be
filled by the Member who appointed the departing Representative. The
appointment of each Representative on the Management Board subsequent to the
initial Representatives named in Section 7.2 hereof shall be evidenced by an
appointment, and acceptance of the appointment, in a writing delivered to the
Company by the Member entitled to appoint such Representative. Each
Representative will serve on the Management Board at the pleasure of the Member
appointing him or her, and may be removed and replaced with a substitute at any
time, with or without cause, by such Member. Each Representative shall be an
officer, director or high-ranking management employee of the appointing Member.
7.2. INITIAL MANAGEMENT BOARD. The initial Representatives shall be
Timothy C. Brown and another director of Thomas to be appointed by Thomas prior
to the Effective Date (appointed by Thomas) and Larry K. Powers, Avrum Drazin,
Fred Heller and David Engelman (appointed by Genlyte).
7.3. AUTHORITY OF THE MANAGEMENT BOARD. (a) Except as otherwise
expressly provided in this Article VII, this Agreement and except for situations
in which the approval of the Members is expressly required by provisions of the
Act, the Management Board shall manage and conduct the business and affairs of
the Company and have the exclusive authority (without the need of separate
approval of the Members) to make all decisions regarding the management and
affairs of the Company and to authorize all things necessary, proper, or
desirable to carry out the Business, including the right to make and enter into
any contracts, enter into any transactions, and make and obtain any commitments
on behalf of the Company to conduct or further the Business.
(b) Subject to the foregoing, the day to day operation of the Company
shall be under the direction of the President, who shall report and be
responsible to the Management Board. The Management Board may delegate such of
the above functions as it deems appropriate and necessary to conduct the daily
operations of the Company. Subject to the provisions of this Agreement, the
Management Board may adopt regulations and policies governing the conduct of its
duties.
7.4. ACTION BY THE MANAGEMENT BOARD. Each Representative shall have
one vote in Management Board decisions. Action by the Management Board requires
either:
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(a) a resolution approved by the affirmative vote of a
majority of the Representatives at a meeting of the Representatives,
scheduled by a prior act of the Representatives or called upon at
least three (3) Business Days' written notice signed by a
Representative (subject to a Representative's right to waive notice);
or
(b) a written action, signed by all Representatives (such
written action may specify a prior or subsequent effective date).
7.5. APPROVAL REQUIRED FOR CERTAIN MATTERS. Notwithstanding Section
7.4, the following shall require the approval of at least a majority of the
Representatives, including, in all instances, approval by at least one
Representative appointed by Thomas:
(a) removal of Larry K. Powers as President and/or Chief
Executive Officer of the Company or selection of a President or Chief
Executive Officer of the Company other than Larry K. Powers;
(b) removal of Timothy C. Brown as Chairman of the Board of
the Company;
(c) a material change in the nature of the Business;
(d) except as provided in Sections 10.4, 10.5, 10.6, 10.7,
10.10(c) or 11.2, acquisition of assets or of equity interests by or
on behalf of the Company and its subsidiaries individually or, in the
case of a series of related transactions, in the aggregate, in excess
of $25,000,000;
(e) except as provided in Sections 10.4, 10.5, 10.6, 10.7,
10.10(c) and 11.2, sale, exchange, assignment, transfer, lease or
other disposition of assets of the Company in excess of $25,000,000;
(f) except as provided in Sections 10.4, 10.5, 10.6 and
10.7, the sale, pledge, lease, encumbrance or granting of a security
interest in all or substantially all of the Company's assets unless
pursuant to the incurrence of indebtedness for money borrowed for
which approval is not required pursuant to Section 7.5(h);
(g) except as provided in Sections 10.4, 10.5, 10.6, 10.7,
10.10(c) and 11.2, a consolidation or merger of the Company with or
into any other Person;
(h) except as provided in Sections 10.4, 10.5, 10.6, 10.7
and 10.10(c), incurrence of indebtedness for money borrowed (net of
cash and cash equivalents) by the Company and its subsidiaries in
excess of three times EBITDA for the four (4) calendar quarters
immediately preceding the quarter in which the indebtedness is to be
incurred;
(i) any amendment to (i) this Agreement or (ii) the
Company's Certificate (unless a Member is required by the Act to file
such amendment to correct any false statement in the Certificate or
this Agreement and except in connection with any action permitted to
be taken by the Company or Genlyte pursuant to Sections 10.4, 10.5,
10.6, 10.7 and 10.10(c));
(j) any voluntary liquidation, dissolution or termination
of the Company pursuant to Article XI below, except as provided in
Sections 10.4, 10.5, 10.6, 10.7 or 10.10(c);
(k) any split, combination, reclassification or, except as
otherwise contemplated by this Agreement, redemption of any Interests;
(l) except as provided in Sections 10.4, 10.5, 10.6, 10.7
and 10.10(c), the admission or removal of any Member and the issuance
by the Company of any additional Interests or other equity interests
(including any interests convertible into equity interests) of the
Company;
(m) distributions in amounts less than the amounts required
by Section 6.2; and
(n) any transactions between the Company and Genlyte or
Thomas or their Affiliates, other than pursuant to the Services
Agreement and other than loans by either Member to the Company to the
extent permitted by the Company's credit facility and other
agreements, the terms of which loans are at least as favorable to the
Company as the terms of the Company's then current primary credit
facility.
<PAGE>
To the extent required by applicable law, the matters set forth in Sections
7.5, 10.4, 10.5, 10.6, 10.7 and 10.10(c) may also be subject to approval by the
stockholders of Thomas and Genlyte.
7.6. PLACE OF MEETINGS. The Management Board may hold its meetings at
the principal business office of the Company or at such other place as it may
from time to time determine.
7.7. SALARY AND EXPENSES. Representatives serving on the Management
Board who are not employees or officers of the Company may receive compensation
for serving as a Representative as the Management Board may from time to time
determine. All Representatives shall be reimbursed for reasonable expenses
incurred by them in connection with attendance at the Management Board meetings.
7.8. REGULAR MEETINGS. Regular meetings of the Management Board shall
be held at least quarterly on such dates as established in advance by resolution
of the Management Board.
7.9. SPECIAL MEETINGS. Special meetings of the Management Board may
be called by the President, Chairman of the Board or any three (3)
Representatives by written notice sent to each Representative in accordance with
Section 15.3. hereof. Such meeting shall be set for a date no sooner than five
(5) Business Days after the date the notice is sent.
7.10. ACTION WITHOUT A MEETING. Any action which is required or
permitted to be taken at a meeting of the Management Board may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, is signed by all of the Representatives of
each Member and filed with the Company.
7.11. TELEPHONE MEETING. Representatives of the Management Board may
participate in a meeting of the Management Board by means of conference
telephone call or other similar communication equipment whereby all persons
participating in the meeting can hear each other. Participation in the meeting
in this manner constitutes presence in person at the meeting.
7.12. RECORDS OF ACTION. Written records of all action taken by the
Management Board, whether at a regular or special meeting or pursuant to written
consent in accordance with the provisions of Section 7.10, shall be kept at the
principal business office of the Company. Copies of all written approvals of
the Members shall also be kept at such office. The Members shall designate the
person, who may but need not be a Representative, charged with the maintenance
and custody of such records.
7.13. WAIVER OF NOTICE. Whenever any notice is required by the Act,
the Certificate or this Agreement, to be given to any Representative or to any
Member, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, and delivered to
the Company for inclusion in the minutes or filing with the Company's records,
shall be deemed equivalent thereto.
7.14. RELIANCE ON BOOKS. A Representative shall, in the performance of
his or her duties, be fully protected in relying in good faith upon the books of
account or reports made to the Company by any of its officers, or by an
independent certified public accountant, or by a professional or expert selected
with reasonable care by the Management Board, or in relying in good faith upon
other records of the Company.
7.15. STANDARD OF CARE; LIABILITY. Every Representative shall
discharge his or her duties in good faith and in a manner he or she believes to
be in the best interests of the Company and in accordance with this Agreement.
Subject to Section 7.14, a Representative shall not be liable for any monetary
damages to the Company for any breach of such duties except (a) for receipt of a
financial benefit to which the Representative is not entitled; (b) voting for or
assenting to a distribution to Members in violation of this Agreement or the
Act; or (c) a knowing violation of the law. No amendment or repeal of Sections
7.14 or 7.15 shall affect any liability or alleged liability of any
Representative for any acts, omissions or conduct that occurred prior to the
amendment or repeal.
7.16. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
Chairman of the Management Board and shall perform all duties incident to the
office of Chairman of the Board and such other duties as may from time to time
be assigned to the Chairman of the Board by the Management Board.
ARTICLE VIII
OFFICERS
8.1. Appointment. The Management Board shall, from time to time,
appoint one or more individuals to be officers of the Company. The officers of
the Company shall include a President, a Chief Financial Officer, a Secretary
and a Treasurer. Any officers so appointed shall have such authority and
<PAGE>
perform such duties as are set forth herein or as the Management Board may, from
time to time, delegate to them. The Management Board may also appoint other
officers (including one or more Vice Presidents, Assistant Treasurers and one or
more Assistant Secretaries) as may be necessary or desirable. Any two or more
offices may be held by the same person. Each officer shall hold office until
his or her successor shall have been duly elected and qualified, or until his or
her death, or until he or she shall have resigned or have been removed, as
provided in this Section 8.3.
8.2. COMPENSATION. The salaries or other compensation, if any, of
the officers of the Company shall be fixed from time to time by the Management
Board.
8.3. RESIGNATIONS. Any officer of the Company may resign at any time
by giving written notice of resignation to the Company. The notice shall be
sent in accordance with the provisions of Section 15.3, and the resignation of
the officer shall take effect on the deemed date of delivery specified in
Section 15.3, or at such later time as shall be specified in such notice, and,
unless otherwise specified therein the acceptance of such resignation shall not
be necessary to make it effective.
8.4. REMOVAL. Except as set forth in Section 7.5, any officer of the
Company may be removed, either with or without cause, at any time, by the
Management Board.
8.5. OFFICERS. The officers of the Company shall have the following
duties:
(a) President. The President, who may also be the chief
executive officer of the Company, shall perform all duties incident to
the office of President and such other duties as may from time to time
be assigned the President by the Management Board.
(b) Chief Financial Officer. The Chief Financial Officer
shall perform all duties incident to the office of the Chief Financial
Officer and such other duties as may from time to time be assigned to
the Chief Financial Officer by the Management Board or the President.
(c) Vice President. Each Vice President shall perform all
such duties as from time to time may assigned by the Management Board
or the President. At the request of the President or in the event of
his or her inability as a result of death, disability or removal or
refusal to act if required to do so by the Management Board, the Vice
President, or if there shall be more than one, the Vice Presidents in
the order determined by the Management Board (or if there be no such
determination, then the Vice Presidents in the order of their
election), shall perform the duties of the President, and, when so
acting, shall have the powers of and be subject to the restrictions
placed upon the President in respect of the performance of such
duties.
(d) Treasurer. The Treasurer shall: (i) have charge and
custody of, and be responsible for, all the funds and securities of
the Company; (ii) keep full and accurate accounts of receipts and
disbursements in books belonging to the Company; (iii) render to the
Management Board, whenever the Management Board may require, an
account of the financial condition of the Company; and (iv) in
general, perform all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned by the
Management Board or the President.
(e) Secretary. The Secretary shall: (i) keep or cause to
be kept in one or more books provided for the purpose, minutes of all
meetings of the Management Board and the Members; (ii) see that all
notices are duly given in accordance with the provisions of this
agreement and as required by law; (iii) be custodian of the records of
the Company; (iv) see that the required records, books, reports,
statements, certificates and other documents and records required by
law to be kept and filed, are properly kept and filed; and (v) in
general, perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to the
Secretary by the Management Board or the President.
(f) Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order
determined by the Management Board (or if there be no such
determination, then in the order of their election), shall, in the
absence of the Treasurer or in the event of his or her inability as a
result of death, disability or removal or refusal to act if required
to do so by the President, Treasurer or the Management Board, perform
the duties and exercise the powers of the Treasurer and shall perform
such other duties as from time to time may be assigned by the
Management Board or the President.
<PAGE>
(g) Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order
determined by the Management Board (or if there be no such
determination, then in the order of their election), shall, in the
absence of the Secretary or in the event of the Secretary's inability
as a result of death, disability or removal or refusal to act if
required to do so by the President, Secretary or the Management Board,
perform the duties and exercise the powers of the Secretary and shall
perform such other duties as from time to time may be assigned by the
Management Board or the President.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
9.1. Indemnification and Advancement of Expenses.
(a) The Company shall indemnify and hold harmless, to the fullest
extent authorized by law as the same exists, or may hereafter be amended to
permit the Company to provide broader indemnification rights, any Person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he, she or it is or was a
Representative or officer of the Company or officer, employee, representative or
agent of the Company serving at the request of the Company as a director,
officer, manager, employee, representative or agent of another corporation,
limited liability company, general partnership, limited partnership, joint
venture, trust, business trust or other enterprise or entity, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him, her or it in connection with such
action, suit or proceeding if he, she or it acted in good faith and in a manner
he, she or it reasonably believed to be in or not opposed to the best interests
of the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his, her or its conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that such Person did not act in good faith and in a
manner which he, she or it reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his, her or its conduct was
unlawful. Notwithstanding the foregoing, the Company shall not be obligated to
indemnify any Person to the extent that a claim for indemnification arises out
of a breach of the standard of care contained in Section 7.15 of this Agreement.
(b) To the extent that a Representative, officer, employee,
representative or agent of the Company has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Section 9.1(a), or in defense of any claim, issue or matter therein, he, she or
it shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him, her or it in connection therewith.
(c) Any indemnification under this Section 9.1 (unless ordered by a
court of competent jurisdiction) shall be made by the Company only as authorized
in the specific case upon a determination that indemnification of the
Representative, officer, employee, representative or agent is proper in the
circumstances because he, she or it has met the applicable standard of conduct
set forth in Section 9.1(a). Such determination shall be made (i) by the
Management Board by a majority vote of Representatives who were not parties to
such action, suit or proceeding or (ii) if the disinterested Representatives so
direct, by independent legal counsel in a written opinion.
(d) Expenses (including attorneys' fees) incurred by a
Representative in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Representative to repay such amount if it shall ultimately
be determined that he, she or it is not entitled to be indemnified by the
Company pursuant to this Section 9.1. Such expenses (including attorneys' fees)
incurred by other officers, employees, representatives and agents shall be so
paid upon such terms and conditions, if any, as the Management Board deems
appropriate.
(e) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.1 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any agreement, vote of disinterested Representatives or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office.
(f) For purposes of this Section 9.1, any reference to the "Company"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have had power
<PAGE>
and authority to indemnify its directors, officers, managers, members,
employees, representatives or agents, so that any Person who is or was a
director, officer, manager, member, employee, representative or agent of such
constituent entity, or is or was serving at the request of such constituent
entity as a director, officer, manager, employee, representative or agent of
another entity, limited liability company, general partnership, limited
partnership, joint venture, trust, business trust or other enterprise or entity,
shall stand in the same position under the provisions of this Section 9.1 with
respect to the resulting or surviving entity as he, she or it would have with
respect to such constituent entity if its separate existence had continued;
provided, however, that nothing contained herein shall require the Company to
indemnify any director, officer, manager, member, employee, representative or
agent of any Member who is not also a director, officer, manager, member,
employee, representative or agent of the Company.
(g) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.1 shall continue as to a Person who has
ceased to be a Representative, officer, employee, representative or agent and
shall inure to the benefit of the heirs, executors, administrators, successors
and assigns of such Person.
(h) In addition to the foregoing provisions of Article IX, the
Company shall have the power, to the full extent provided by law, to indemnify
any person for any act or omission of such person against all loss, cost, damage
and expense (including attorneys' fees) if such person is determined (in the
manner provided in Section 9.1(c) hereof), to have acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interest of the Company.
(i) Notwithstanding anything in this Article to the contrary, the
Company will not have the obligation of indemnifying any Person with respect to
proceedings, claims or actions initiated or brought voluntarily by such Person
and not by way of defense.
9.2. INSURANCE. The Company may purchase and maintain insurance or
another arrangement on behalf of any Person who is or was a Representative,
officer, employee, representative or agent identified in Section 9.1, or is or
was serving at the request of the Company as a director, officer, manager,
employee, representative or agent of another entity, limited liability company,
general partnership, limited partnership, joint venture, trust, business trust
or other enterprise or entity, against any liability asserted against such
Person or incurred by such Person in such a capacity or arising out of the
status of such a Person, whether or not the Company would have the power to
indemnify such Person against that liability under Section 9.1 or otherwise.
9.3. LIMIT ON LIABILITY OF MEMBERS. The indemnification set forth in
this Article IX shall in no event cause the Members to incur any personal
liability beyond their total net Capital Contributions, nor shall it result in
any liability of the Members to any third Person.
ARTICLE X
TRANSFERS, WITHDRAWALS AND DEADLOCK
10.1. General Restriction on Transfers and Withdrawals. (a) Except as
set forth in Sections 10.4, 10.5, 10.6, 10.7 and 10.10, no Member may Transfer
all or any part of this Agreement or such Member's Interest without the written
approval of each Non-Transferring Member (as hereinafter defined); provided,
however, that a Member may transfer its Interest to its parent, which shall be
Thomas or a wholly-owned subsidiary of Thomas, or a wholly-owned subsidiary
(collectively, "RELATED PARTY") existing as of the date hereof. No Member may
resign or withdraw from the Company except as provided in this Article X,
without the approval of the Non-Transferring Member.
(b) Subject to the Member's rights under Sections 10.4, 10.5, 10.6, 10.7
and 10.10, no transfer which would result in a termination of the Company under
Section 708(b)(1)(B) of the Code shall be effective unless and until approved by
the Non-Transferring Members.
(c) Any purported Transfer of all or any part of this Agreement or an
Interest in violation of the terms of this Agreement shall be null and void and
of no effect. A permitted Transfer shall be effective as of the date specified
in the instruments relating thereto. Any transferee Member desiring to make a
further Transfer shall be subject to all the provisions of this Article X to the
same extent and in the same manner as any Member desiring to make any Transfer.
10.2. ASSIGNEES AND SUBSTITUTE MEMBERS.
(a) Unless and until admitted as a substitute Member as provided
below, a permitted Transferee of a Member's Interest in whole or in part shall
be an assignee with respect to such Interest or portion thereof and shall not be
entitled to participate in the management of the Business and affairs of the
Company or to become or to exercise the rights of a Member, including the right
<PAGE>
to vote, the right to appoint Representatives, the right to require any
information or accounting of the Business or the right to inspect the Company's
books and records or its facilities. Such Transferee shall only be entitled to
receive, to the extent of the Interest Transferred to such Transferee, the share
of distributions, including distributions representing the return of Capital
Contributions, to which the Transferor would otherwise be entitled with respect
to the Transferred Interest or portion thereof.
(b) No Transferee of all or part of a Member's Interest shall become
a substitute Member unless and until:
(i) such Transferee has executed an instrument accepting
and adopting the terms and provisions of the Certificate, this
Agreement and any other documents or agreements executed in connection
herewith; and
(ii) subject to Section 10.5, except in respect of a
Transfer from a Member to a Related Party of such Member, each non-
Transferring Member shall have consented in writing to such Transferee
becoming a substitute Member, which consent shall not be unreasonably
withheld if the conditions set forth in Section 10.2(b)(i) above are
satisfied.
(c) Upon satisfaction of all the foregoing conditions with respect to
a particular Transferee, the Management Board shall cause the books and records
of the Company to reflect the admission of the Transferee as a substitute Member
to the extent of the Interest or portion thereof held by the Transferee.
10.3. EFFECT OF ADMISSION AS A SUBSTITUTE MEMBER. A Transferee who has
become a substitute Member has, to the extent of the Interest Transferred to
such substitute Member, all the right, power and benefit and is subject to all
the restrictions and liabilities of a Member under the Certificate, this
Agreement and the Act. Upon admission of a Transferee as a substitute Member,
the Transferor of the Interest so acquired by the substitute Member shall cease
to be a Member to the extent of such Transferred Interest. A Person shall not
cease to be a Member upon assignment of all such Member's Interest unless and
until the Transferee becomes a substitute Member pursuant to Section 10.2.
10.4. PUT RIGHT.
(a) At any time on or after January 31, 2002, Thomas shall have the
right (a "PUT RIGHT"), but not the obligation, to require the Company to
purchase all, but not less than all, of Thomas's Interest at the applicable Put
Price (as hereinafter defined). Thomas shall exercise the Put Right, if at all,
by giving written notice of exercise (a "PUT EXERCISE NOTICE") to the Company
and the other Members.
(b) The purchase price (the "PUT PRICE") applicable to any purchase
of any Member's Interest shall be equal to the Appraised Value of such Interest
as determined pursuant to Section 10.9.
(c) If the Company cannot secure the necessary financing or consents
with respect to Thomas's exercise of its rights pursuant to Section 10.4(a),
Thomas shall have the right, in its sole discretion and without the need of
approval of any other Member or Representative or of any further action, to
cause the entire Company or the Business to be sold by giving notice to the
Management Board and the Management Board shall proceed to sell the entire
Company or Business as soon as reasonably practicable; provided, however, that a
fairness opinion as to such transaction from a recognized investment banking
firm is delivered to the Management Board.
(d) Notwithstanding the foregoing, at any time after receipt of the
Put Exercise Notice, Genlyte shall have the right, in its sole discretion and
without the need of approval of any other Member or Representative or of any
further action, to cause the entire Company or Business to be sold by giving
notice to the Management Board and the Management Board shall proceed to sell
the entire Company or Business as soon as reasonably practicable; provided,
however, that a fairness opinion as to such transaction from a recognized
investment banking firm is delivered to the Management Board.
10.5. CHANGE OF CONTROL.
(a) In the event of a Change of Control of Thomas, the Company shall
have the right, but not the obligation, to purchase Thomas's Interest at the
Appraised Value. Such right shall be exercised by giving notice to Thomas
within 90 days of the effective date of the Change of Control.
(b) In the event of a Change of Control of Genlyte, Thomas shall have
the right, but not the obligation, to sell its Interest to the Company at the
Appraised Value. Such right shall be exercised by giving notice to the Company
within 90 days of the effective date of the Change of Control.
(c) Notwithstanding the foregoing, if the Company cannot secure the
necessary financing or consents or chooses not to exercise its rights pursuant
<PAGE>
to Section 10.5(a), Genlyte shall have the right, in its sole discretion and
without the need of approval of any other Member or Representative or of any
further action, to cause the entire Company or Business to be sold by giving
notice to the Management Board and the Management Board shall proceed to sell
the entire Company or Business as soon as reasonably practicable; provided,
however, that a fairness opinion as to such transaction from a recognized
investment banking firm is delivered to the Management Board.
(d) If the Company cannot secure the necessary financing or consents
with respect to Thomas's exercise of its rights pursuant to Section 10.5(b),
Thomas shall have the right, in its sole discretion and without the need of
approval of any other Member or Representative or of any further action, to
cause the entire Company or Business to be sold by giving notice to the
Management Board and the Management Board shall proceed to sell the entire
Company or Business as soon as reasonably practicable; provided, however, that a
fairness opinion as to such transaction from a recognized investment banking
firm is delivered to the Management Board.
10.6. DEADLOCK.
(a) In the event of a Deadlock (as hereinafter defined), Thomas may
exercise its Put Right in accordance with Section 10.4 or Genlyte shall have the
right, in its sole discretion and without the need of approval of any other
Member or Representative or of any further action, to cause the entire Company
or Business to be sold; provided, however, that a fairness opinion as to such
transaction from a recognized investment banking firm is delivered to the
Management Board.
(b) A "DEADLOCK" shall be deemed to exist on or after the date
specified in Section 10.4(a) if: (i) the Management Board fails to agree in
accordance with Section 7.5 upon any action, or with respect to any matter, set
forth in Section 7.5; and (ii) such disagreement continues for 90 days (the
"DEADLOCK DATE"); provided, however, that during the 90-day period, negotiations
are conducted to resolve such disagreement pursuant to Section 15.14.
10.7. OFFER RIGHT. On or after the later to occur of (i) the final
settlement or disposition of the Litigation or (ii) January 31, 2002, either
Member shall have the right but not the obligation, to offer to buy the other
Member's interest (an "OFFER RIGHT"). A Member shall exercise its Offer Right,
if at all, by giving written notice of exercise (an "OFFER EXERCISE NOTICE") to
the Company and the other Members. The Members shall negotiate in good faith
the terms of the transaction for a period of 60 days following the date of the
Offer Exercise Notice. If the Members cannot agree on the terms within the 60
day period or on extending the 60 day period, then the Management Board shall
cause the entire Company or Business to be sold to the highest bidder; provided,
however, that a fairness opinion as to such transaction from a recognized
investment banking firm is delivered to the Management Board. Either Member may
participate in the bidding for the purchase of the entire Company or Business
pursuant to this Section 10.7.
10.8. CLOSING. The closing of any purchase of a Member's Interest or
the sale of the Company or the Business, as the case may be, pursuant to
Sections 10.4, 10.5, 10.6 and 10.7 shall take place on a date agreed upon by the
Company or the Non-Transferring Member, as the case may be, and the Transferring
Member, but in no event later than seven (7) months after the date of the Put
Exercise Notice, the Change of Control Date, the Deadlock Date or the Offer
Exercise Date (together with the 60 days plus any extension pursuant to Section
10.7), as the case may be (the "TRANSFER CLOSING DATE"); provided, however, that
Genlyte shall have the one-time right to delay the closing for up to six (6)
months from the anticipated Transfer Closing Date. In addition, Thomas shall
have the one-time right to delay the closing with respect to the exercise of an
Offer Right for up to six (6) months from the Transfer Closing Date. The time
and place of closing shall be agreed upon by the Company and the Transferring
Member. At the closing, the Company shall make payment of the Appraised Value
by wire transfer of immediately available funds to a bank account designated by
the Transferring Member. Such payment shall be in complete satisfaction of the
Transferring Member's Interest. Also, at the closing, the Transferring Member
shall deliver to the Company such documentation as the Company shall reasonably
request evidencing the Transfer to the Company of the Interest so Transferred,
free of any lien, claim or encumbrance.
10.9. APPRAISED VALUE.
(a) As used herein, "APPRAISED VALUE" means an amount equal to the
Fair Market Value of the Company (determined as set forth below) multiplied by
the Percentage Interest, or portion thereof, that is being put or Transferred,
as the case may be. For purposes of determining Appraised Value, "FAIR MARKET
VALUE" of the Company means the value of the total Interests in the Company
computed as a going concern, including the control premium. The amount of the
Fair Market Value of the Company finally determined in the manner described
below shall be binding and conclusive on all Members and the Company.
(b) The Member Transferring its Interest (the "TRANSFERRING MEMBER")
and the Member(s) not Transferring its Interest (collectively, the "NON-
<PAGE>
TRANSFERRING MEMBER ") shall each designate an appraiser (which shall be a
recognized investment banking firm) for the purpose of determining the Fair
Market Value of the Company in accordance with the methodology set forth herein
within ten (10) Business Days of the date of the Put Exercise Notice, the Change
of Control Date or the Deadlock Date, as the case may be. Each such appraiser
(an "INITIAL APPRAISER") shall, as of the Valuation Date, set forth its
preliminary determination of the Fair Market Value of the Company (the
"PRELIMINARY FAIR MARKET VALUE") in writing (together with reasonable detail
showing the method of calculation thereof) and shall deliver a copy of such
written determination (an "APPRAISER'S REPORT") to each of the Company, the
Transferring Member and the Non-Transferring Member, not later than the 30th day
following its retention.
(c) The two Initial Appraisers, if they cannot agree on the Fair
Market Value, shall mutually designate a third appraiser (the "THIRD
APPRAISER"), which shall be a recognized independent investment banking firm, to
make its own independent determination of the Preliminary Fair Market Value in
accordance with the same methodology as set forth above.
(d) The Third Appraiser shall use its best efforts to complete its
determination as soon as practicable, and in any event within thirty (30) days
of its retention. The determination by the Third Appraiser of the Preliminary
Fair Market Value shall be set forth in an Appraiser's Report delivered to the
Company, the Transferring Member and the Non-Transferring Member promptly after
the preparation thereof.
(e) In the event that the determination by the Third Appraiser of the
Preliminary Fair Market Value falls between the determinations by the two
Initial Appraisers, then the determination of the Third Appraiser shall
constitute the Fair Market Value of the Company for purposes of this Section.
In the event, however, that the determination by the Third Appraiser is higher
than the highest determination of the two Initial Appraisers or is lower than
the lowest of such determinations, then the determination by the particular
Initial Appraiser that is closest in value to the determination by the Third
Appraiser shall be deemed to constitute the Fair Market Value of the Company for
purposes of this Section.
(f) Promptly upon final determination of the Fair Market Value of the
Company, the Company shall calculate the Appraised Value and give notice thereof
to the Transferring Member and the Non-Transferring Member. The Transferring
Member shall be responsible for the costs and expenses of the Initial Appraiser
selected by it, and the Non-Transferring Member shall be responsible for the
costs and expenses of the Initial Appraiser selected by the Non-Transferring
Member. The costs and expenses of the Third Appraiser, if any, shall be paid by
the Member whose Initial Appraiser's Appraised Value is farthest from the
Appraised Value determined by the Third Appraiser
10.10. ASSIGNABILITY AND FINANCING.
(a) Notwithstanding anything contained herein to the contrary, the
Company's obligations under Sections 10.4, 10.5 and 10.6 shall be nonrecourse to
the Members and may be assigned by the Company to any third Person approved by
the Representatives of the Non-Transferring Members, provided, that no such
assignment shall be deemed to release the Company from any liability or
obligation hereunder, and, provided, further, that the admission of such third
Person as a Member is subject to the unanimous approval of all Non-Transferring
Members pursuant to Section 10.2 unless otherwise provided in this Section
10.10.
(b) Genlyte shall have the right, in its sole discretion and without
the need of approval of any other Member, Representative or of any further
action, to cause the Company to assign the rights to purchase Thomas's Interest,
pursuant to Sections 10.4, 10.5 and 10.6 to Genlyte; provided, however, that no
such assignment shall be deemed to release the Company from any liability or
obligation hereunder.
(c) Notwithstanding Section 7.5 or Section 10.10(a), Genlyte shall
have the right, in its sole discretion and without the need of approval of any
other Member, Representative or of any further action, to cause the Company to
incur indebtedness, to admit a new Member(s) to merge or consolidate the
Company, or to undertake an initial public offering (including taking corporate
action for the purpose of converting the Company to a corporation), to finance
or effect financing of the payment of the Appraised Value and to satisfy any
obligation or the exercise of any right of the Company and/or Genlyte pursuant
to this Article X. The incurrence of indebtedness, the admission of a new
Member(s) and the completion of an initial public offering shall take place
simultaneously with the closing of any purchase of a Member's Interest or the
sale of the Company or the Business, as the case may be, pursuant to this
Article X to the extent practicable (without in any way limiting Thomas' rights
to be paid in accordance with Article X). In the event the Company is converted
to a corporation in contemplation of an initial public offering pursuant to
Section 10.10(c) and such initial public offering is not completed, Thomas will
still be entitled to be paid in accordance with the terms of this Article X.
<PAGE>
(d) Each of the Members agrees to take all reasonably required
actions and to cause the Company to take all actions reasonably necessary to
convert the form of the Company to a corporation upon or prior to the initial
public offering of equity interests of the Company, if any, pursuant hereto.
(e) Notwithstanding Section 7.5 hereof, actions to be taken by the
Company pursuant to Sections 10.4, 10.5, 10.6 or 10.10 shall be determined by
the Management Board in accordance with the requirements of Section 7.4.
10.11. LIMITED APPLICABILITY. Notwithstanding anything contained herein
to the contrary, the provisions contained in Sections 10.4, 10.5, 10.6 and 10.7,
inclusive, above are applicable only with respect to Thomas or Genlyte, and are
not exercisable by any subsequent Transferee who is not a wholly-owned
subsidiary of Thomas or Genlyte, as the case may be.
ARTICLE XI
DISSOLUTION AND TERMINATION
11.1. Term; Events Causing Dissolution. The Company shall continue in
existence until it is dissolved upon the occurrence of any of the following
events:
(a) the unanimous written consent of the Members;
(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company;
(c) the termination of the Master Transaction Agreement; or
(d) without limiting Thomas's rights to be paid under
Section 10.4, 10.5, 10.6, 10.7, and 10.10(c), a merger of the Company
in which the Company is not the surviving entity or for the purpose of
converting the Company to a corporation in connection with an initial
public offering pursuant to Section 10.10(c);
(e) the bankruptcy, assignment for the benefit of creditors
or the dissolution or liquidation of any Member.
11.2. DISTRIBUTIONS UPON DISSOLUTION.
(a) Upon the dissolution of the Company as a result of the occurrence
of any of the events set forth in Section 11.1 hereof, the Management Board in
accordance with Section 7.4, or if the Members so agree, a liquidating trustee,
shall wind up the affairs of the Company and discharge all of its debts as
follows:
(i) First, to the payment of debts and liabilities of the
Company in the order of priority as provided by law (including any
loans or advances that may have been made by any of the Members to the
Company and any unpaid fees for services) and the expenses of
liquidation.
(ii) Second, to the establishment of any reserve which the
Management Board may deem reasonably necessary for any contingent,
conditional or unasserted claims or obligations of the Company. Such
reserve may be paid over by the Company to an escrow agent selected by
the Company to be held for disbursement in payment of any of the
aforementioned liabilities and, at the expiration of such period as
shall be deemed advisable by the Management Board, for distribution of
the balance, in the manner provided in this Article XI; and
(iii) Finally, the remaining balance of the liquidation
proceeds, if any, to the Members, in accordance with their respective
positive Capital Account balances.
(b) A Member shall not have any obligation to contribute any amount
to the Company in the event of a negative balance in its Capital Account. Any
distribution to a Member under this Article XI shall be made by the end of the
taxable year of the "liquidation" of the Company or, if later, within 90 days of
such "liquidation," as such term is defined by Treasury Regulations
section1.704-1(b)(2)(ii)(g), except as otherwise permitted by Treasury
Regulations section1.704-1(b)(2)(ii)(b). The distribution of cash or property to
a Member in accordance with the provisions of this Section 11.2 shall constitute
a complete return to the Member of its Capital Contributions and a complete
distribution to the Member of its Interest and all the Company's property.
(c) To the extent the Company assets cannot be sold or in the event
the Members otherwise agree, such unsold assets shall be distributed in kind to
the Members, in accordance with Article VI, including any value attributed to
goodwill. In determining whether the Company assets should be sold or
<PAGE>
distributed in kind, the Members shall each act reasonably and in good faith
with respect to any proposal from the other Member and the approval requirements
of Section 7.4 shall govern.
(d) If any Company assets are to be distributed in kind to the
Members, the liquidator shall obtain an independent appraisal of the fair market
value of such assets, net of liabilities, at a date reasonably close to the date
of liquidation and shall adjust the Members' Capital Accounts for any unrealized
gain or loss in the same manner as such Capital Accounts would be adjusted under
Article V upon an actual sale of such assets at such appraised value. The
assets shall be distributed in kind to the Members in accordance with Section
11.2. The Capital Account of each Member shall be debited by the appraised
value of the net assets distributed to it. All distributions in kind to the
Members shall be made subject to the liability of each distributee for costs,
expenses, and liabilities theretofore incurred or for which the Company shall
have committed to pay prior to the date of termination.
11.3. CERTIFICATE OF CANCELLATION. When all of the remaining property
and assets of the Company have been distributed, the Certificate shall be
cancelled by filing a certificate of cancellation with the Secretary of State of
Delaware.
ARTICLE XII
ACCOUNTING AND BANK ACCOUNTS
12.1. Books and Records.
(a) The books and records of the Company shall be maintained at its
principal place of business.
(b) The Company shall keep the following books and records:
(i) a current list of Members setting forth the full name
and last known mailing address of each Member;
(ii) a copy of the Certificate and all amendments thereto
together with executed copies of any powers of attorney pursuant to
which any of the foregoing were executed;
(iii) copies of the Company's federal, state, local and
foreign income tax returns and reports, if any, for the six (6) most
recent years or, if such returns and reports were not prepared for any
reason, copies of the information and records provided to, or which
should have been provided to, the Members to enable them to prepare
their federal, state, local and foreign tax returns for such period;
(iv) copies of this Agreement and all amendments thereto,
and copies of any other written agreements among the Members or
between any Member and the Company;
(v) copies of any financial statements of the Company for
the five (5) most recent years;
(vi) copies of any written promise by a Member to make a
contribution to the Company; and
(vii) copies of any other instruments or documents reflecting
matters required to be in writing pursuant to this Agreement, the Act
or at the direction of the Management Board.
12.2. FINANCIAL REPORTS. No later than sixty (60) days after the end
of each Fiscal Year of the Company, the Company shall prepare and deliver to
each Member audited financial statements of the Company audited by the Company's
independent auditors. No later than twenty (20) days after the end of each
fiscal quarter of the Company, the Company shall prepare and deliver to each
Member unaudited financial statements of the Company for such fiscal quarter.
In addition, Genlyte shall deliver to Thomas and Thomas shall deliver to Genlyte
copies of all filings made by each of them with the SEC.
12.3. TAX RETURNS AND ELECTIONS. The Company shall prepare and timely
file all federal, state, local and foreign income tax returns or other returns
or statements required by applicable law and shall timely provide the Members
with all information related to the Company needed by the Members to timely
prepare and file all federal, state, local and foreign income tax returns or
other returns or statements required by applicable law. All costs associated
with the preparation and filing of the Company's returns and statements and the
provision of such information shall be borne by the Company. The Company shall
claim all deductions and make such elections for federal or state income tax
purposes which the Management Board reasonably believes will produce the most
favorable tax results for the Members. The Company shall consult with the
Members with respect to deductions and tax elections which may have a material
impact on a Member's tax position before taking such deductions or making such
<PAGE>
elections. Genlyte shall act as the "TAX MATTERS PARTNER" of the Company
pursuant to Section 6231(a)(7) of the Code; provided, that its actions as the
tax matters partner shall be subject to review and approval of the Management
Board. The Company shall indemnify Genlyte and its appointed Representatives
against all liabilities and expenses in its capacity as "tax matters partner" to
the fullest extent, but subject to the terms and conditions set forth in Article
IX, as though Genlyte and such Representatives were entitled to indemnification
thereunder.
12.4. BANK ACCOUNTS. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Management
Board and in the Company's name. Withdrawals therefrom shall be made only by
persons authorized to do so by the Management Board.
12.5. RIGHT OF INSPECTION. On written request stating the purpose,
but in no event more than two times per year, a Member may audit, examine and
copy in person, at any reasonable time, for any proper purpose reasonably
related to such Member's Interest, and at the Member's expense, records required
to be maintained under the Act and such other information regarding the
business, affairs and financial condition of the Company as is just and
reasonable for the Member to audit, examine and copy. The right set forth in
this Section 12.5 may be exercised through any agent or employee of such Member
designated by it.
12.6. FINANCIAL ACCOUNTING. The provisions of this Agreement are not
intended to affect financial accounting for the Company. The Company shall
prepare its financial statements in accordance with United States generally
accepted accounting principles consistently applied.
12.7. LIFO. The Company shall adopt the federal income tax accounting
methodology directed by Thomas for the inventories received by the Company from
Thomas and its wholly-owned subsidiaries. In the case of inventories to be
accounted for on the last-in-first-out ("LIFO") method, the Company shall take
all reasonable measures to ensure the continued use of the LIFO method and avoid
the liquidation of LIFO reserves. Thomas shall (i), at its cost, be responsible
for the conduct of any income tax or financial reporting examination of such
LIFO methodology and any related issues and (ii) control any settlement or
litigation and bear any and all costs and expenses of such litigation or
settlement and of any proposed adjustments to the taxable income of the Company
with respect to such LIFO inventory, including adjustments which are the result
of settlement or litigation.
ARTICLE XIII
COVENANTS NOT TO COMPETE
Thomas and Genlyte each agree that during the Noncompete Period (as
hereinafter defined), they shall not, directly or indirectly, by or for
themselves or as the agent of another, or through others as their agent:
(a) manufacture, promote, sell or distribute anywhere in
the world (the "TERRITORY"), products or processes, which are similar
to or in competition with those of the Business;
(b) own, manage, operate, be compensated by, participate
in, have any right to or interest in any other business directly or
indirectly engaged in the production, sale or distribution of products
competitive with those of the Business anywhere in the Territory; or
(c) except as may be required by law, divulge, communicate,
use or disclose any confidential proprietary information concerning
the Company or the Business.
"NONCOMPETE PERIOD" means the period from the Effective Date until the
earlier to occur of the following: (i) the dissolution of the Company pursuant
to Article XI or (ii) the date a Member ceases to be a Member.
If, in any judicial proceeding, the duration or scope of the covenants and
agreements contained in this Article XIII shall be adjudicated to be invalid or
unenforceable, the parties agree that those covenants and agreements shall be
deemed amended to reduce such duration or scope to the extent necessary to
permit enforcement of such covenants or agreements, such amendment to apply only
with respect to the operation of such covenants and agreements in the particular
jurisdiction(s) in which such adjudication is made. Genlyte and Thomas each
further acknowledge and agree that money damages would constitute an inadequate
remedy in the event of a breach of this Article XIII and that in addition to any
other remedies which may be available, the obligations of Genlyte and Thomas
under this Article XIII shall be specifically enforceable.
<PAGE>
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
Each of the parties, severally and not jointly, represents, warrants and
covenants to the other parties to this Agreement (for purposes of this Article,
the "UNDERSIGNED") as of the date hereof and as of the Effective Date. The
representations and warranties set forth below shall survive the Effective Date.
14.1. AUTHORITY. The Undersigned has full capacity right, corporate
power and authority, without the consent of any other Person, to execute and
deliver this Agreement and any other agreement to which it is a party, and to
carry out the transactions contemplated hereby and thereby. Except with respect
to the approval of the stockholders of the Undersigned, all corporate
proceedings required to be taken by such to party to authorize the execution,
delivery and performance of this Agreement and such other agreements and all of
the transactions contemplated hereby and thereby have been duly and properly
taken.
14.2. VALIDITY. This Agreement and any agreement executed in
connection herewith to which the Undersigned is a party have been duly executed
and delivered and constitute lawful, valid and legally binding obligations of
such party, enforceable in accordance with their respective terms. The
execution and delivery of this Agreement and such other agreements and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation of any lien, charge or encumbrance of any kind or the
termination or acceleration of any indebtedness or other obligation of such
party and are not prohibited by, do not violate or conflict with any provision
of, and do not constitute a default under or a breach of (a) the Certificate of
Incorporation or By-laws of such party, (b) any Contract (as defined in the
Capitalization Agreements), (c) any order, writ, injunction, decree or judgment
of any court or governmental agency, or (d) any law, rule or regulation
applicable to the Undersigned.
14.3. DUE ORGANIZATION. The Undersigned is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has full power and authority and all requisite rights, permits and
franchises to own, lease and operate its assets and to carry on the business in
which it is engaged.
14.4. SECURITIES LAW MATTERS. With respect to the Interests acquired
by the Undersigned:
(a) The Undersigned has had access to such information
concerning the Contributed Assets and the liabilities to be assumed by
the Company pursuant to the Capitalization Agreements and such
information has been sufficient to enable the Undersigned to make an
informed investment judgment with respect to the Undersigned's
purchase of the Interests;
(b) The Undersigned understands (i) that the Interests
evidenced by this Agreement have not been registered under the
Securities Act of 1933, the Delaware Securities Act or any other state
securities laws (collectively, the "SECURITIES LAWS") because the
Company is issuing these Interests in reliance upon the exemptions
from the registration requirements of the Securities Laws providing
for issuance of securities not involving a public offering, (ii) that
the Company has relied upon the fact that the Interests are not to be
held by either Member with a view to the resale or distribution
thereof, and (iii) that exemption from registration under the
Securities Laws would not be available if the Interests were acquired
by a Member with a view to distribution;
(c) The Undersigned is acquiring its Interest solely for
its own account and not with a view to, or for resale in connection
with, the distribution or other disposition thereof, except for such
distributions and dispositions, which are (i) explicitly permitted or
contemplated under the terms of this Agreement, as well as (ii)
effected in compliance with the Securities Laws or unless the holder
of Interests delivers to the Company an opinion of counsel,
satisfactory to the Company, that such registration or other
qualification under the Securities Laws is not required in connection
with such transfer, offer or sale; and
(d) The Undersigned understands that the Company is under
no obligation to register the Interests or to assist the Undersigned
in complying with any exemption from registration under the Securities
Laws if the Undersigned should at a later date, wish to dispose of the
Interest. Furthermore, the Undersigned realizes that the Interests
are unlikely to qualify for disposition under Rule 144 promulgated
under the Securities Act of 1933, as amended, unless the Undersigned
is not an "affiliate" of the Company and the Interest has been
beneficially owned and fully paid for by the Undersigned for at least
two years.
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.1. TITLE TO ASSETS. Title to the Contributed Assets and all other
assets acquired by the Company shall be held in the name of the Company or its
subsidiaries. No Member shall individually have any ownership interest or
rights in the assets of the Company, except indirectly by virtue of such
Member's ownership of an Interest. No Member shall have any right to seek or
obtain a partition of any of the assets of the Company. No Member shall have
the right to any specific assets of the Company upon the liquidation of, or any
distribution from, the Company.
15.2. AMENDMENTS AND WAIVER.
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
15.3. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
(a) If to Genlyte:
The Genlyte Group Incorporated
2345 Vauxhall Road
P.O. Box 3148
Union, NJ 07083-1948
Attention: Larry K. Powers
Telecopy No.: (908) 810-4535
With a copy to:
McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey
Attention: Bart J. Colli, Esq.
Telecopy No.: (973) 624-7070
(b) If to the Thomas:
Thomas Industries Inc.
4360 Brownsboro Road
Louisville, Kentucky 40232
Attention: Timothy C. Brown
Telecopy No.: (502) 895-6618
With a copy to:
McDermott, Will & Emery
227 West Monroe Street
Suite 4400
Chicago, Illinois 60606-5096
Attention: Michael R. Fayhee, P.C.
Telecopy No.: (312) 984-7700
(c) If to the Company:
GT Lighting LLC
4360 Brownsboro Road
Louisville, Kentucky 40232
Attention: Larry K. Powers and Timothy C. Brown
Telecopy No.: (502) 895-6618
<PAGE>
With copies to:
McDermott, Will & Emery
227 West Monroe Street
Suite 4400
Chicago, Illinois 60606-5096
Attention: Michael R. Fayhee, P.C.
Telecopy No.: (312) 984-7700
and
McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey
Attention: Bart J. Colli, Esq.
Telecopy No.: (973) 624-7070
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of
receipt.
15.4. EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby. Except as otherwise expressly provided
herein, the Company shall not bear any of such expense. The provisions of this
Section 15.4 shall survive any termination of this Agreement.
15.5. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.6. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be given meaning and do not form a part
of this Agreement.
15.7. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties named herein and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, including
Section 10.10 hereof, this Agreement shall not be assigned by either party
hereto without the express prior written consent of the other party and
any attempted assignment, without such consents, shall be null and void. This
Agreement does not create any rights, claims or benefits inuring to any person
that is not a party hereto nor create or establish any third-party beneficiary
hereto.
15.8. ENTIRE TRANSACTION. This Agreement and the documents referred to
herein contain the entire agreement and understanding among the parties with
respect to the transactions contemplated hereby and supersede all other
agreements, understandings and undertakings among the parties on the subject
matter hereof. All schedules and exhibits hereto are hereby incorporated by
reference and made a part of this Agreement.
15.9. OTHER RULES OF CONSTRUCTION. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "OR" is not
exclusive. The word "INCLUDING" shall mean including, without limitation. The
term "ORDINARY COURSE" means the ordinary course of the Business consistent with
the past practice of the Business. References to the terms "CONTRACTS" or
"AGREEMENTS" shall each be deemed to include the other and shall include
understandings and arrangements of all types, whether written or oral, and all
amendments thereto. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.10. PARTIAL INVALIDITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
15.11. NATURE OF INTEREST IN THE COMPANY. A Member's Interest shall be
personal property for all purposes.
15.12. GOVERNING LAW. This Agreement shall be construed according to
and governed by the laws of the state of Delaware, without giving effect to the
conflict of laws principles thereof.
15.13. POWER OF ATTORNEY. The Members, by their execution hereof,
hereby make, constitute and appoint the President of the Company or his designee
as their true and lawful agent and attorney-in-fact, with full power of
substitution and full power and authority in his name, place and stead to make,
execute, sign, acknowledge, swear to, record and file: (a) the Certificate of
Formation of the Company and all further amendments thereto required by law or
<PAGE>
the provisions of this Agreement; (b) all certificates and other instruments
deemed advisable by the Management Board and required to carry out the
provisions of this Agreement and applicable law or to permit the Company to
become, qualify, be authorized or licensed or to continue as a limited liability
company in any jurisdiction where the Company may be or expects to be doing
business; (c) all conveyances and other instruments or papers deemed advisable
by the Management Board to effect the dissolution and termination of the
Company; (d) all fictitious or assumed name certificates required or permitted
to be filed on behalf of the Company; and (e) all other instruments or papers
deemed advisable by the Management Board which may be required by law to be
filed on behalf of the Company. The Members hereby ratify and approve all such
actions that may have been taken prior to the date hereof by such persons
pursuant to this Section 15.13.
15.14. NEGOTIATION BETWEEN SENIOR EXECUTIVES. (a) If any dispute,
controversy or claim arises out of or is related to this Agreement (except for
determinations of the Appraised Value by appraisers under Section 10.9) or any
other agreements executed in connection herewith (a "DISPUTE"), the parties
shall attempt to resolve the Dispute promptly by negotiations between senior
executives who have authority to settle the controversy. Either Member may give
the other Member written notice of any Dispute not resolved in the normal course
of business. Within thirty (30) days after delivery of said notice, senior
executives of both Members shall meet at a mutually acceptable time and place,
to exchange relevant information and to attempt to resolve the Dispute. The
senior executives shall continue to meet either until agreement is reached or
until an impasse is declared by either party.
(b) If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator shall be given at least three (3) Business Days' notice of
such intention and may also be accompanied by an attorney. All negotiations
pursuant to this Section 15.14 are confidential and shall be treated as
compromise and settlement negotiations for purposes of all rules of evidence.
15.15. STOCK OPTIONS . The Management Board, on an annual basis, shall
recommend to Thomas and Genlyte the aggregate amount of non-qualified stock
options that the Management Board would like Thomas and Genlyte to issue to
Company employees based on the value of the non-qualified stock options of each
of Thomas and Genlyte, the intention being that Thomas and Genlyte will issue
non-qualified stock options to Company employees based on their Percentage
Interests or such other arrangements as the parties may agree. In no event,
however, shall Thomas or Genlyte be obligated to grant the amount of non-
qualified stock options recommended by the Management Board.
15.16. EFFECT OF INCONSISTENCIES WITH THE ACT. Without limitation of
any of the parties' rights under the Capitalization Agreements and the
Collateral Agreements (as defined therein), it is the express intention of the
Members and the Company that this Agreement shall be the sole source of
agreement among them as to the matters covered hereby, and, except to the extent
a provision of this Agreement expressly incorporates federal income tax rules by
reference to sections of the Code or Regulations or is expressly prohibited or
ineffective under the Act, this Agreement shall govern, even when inconsistent
with, or different than, the provisions of the Act or any other law or rule. In
the event the Act is subsequently amended or interpreted in such a way to make
any provision of this Agreement that was formerly invalid valid, such provision
shall be considered to be valid from the effective date of such interpretation
or amendment. The Members and the Company hereby agree that the duties and
obligations imposed on the Members of the Company as such shall be those set
forth in this Agreement and the Capitalization Agreements and the Collateral
Agreements (as defined therein), which are intended to govern the relationship
among the Company and the Members notwithstanding any provision of the Act or
common law to the contrary.
15.17. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
15.18. AUTHORSHIP. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over construction of
this Agreement shall be decided without regard to events of authorship or
negotiation.
15.19. THOMAS AND AFFILIATES. For purposes of this Agreement, the term
"Thomas" shall refer to Thomas together with its wholly-owned subsidiaries, if
any, that own Interests in the Company and the terms and conditions of this
Agreement shall be binding on Thomas and its wholly-owned subsidiaries and
Thomas shall cause such wholly-owned subsidiaries to comply with the terms and
conditions of this Agreement to the same extent as they apply to Thomas.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
THOMAS INDUSTRIES INC.
By:
Its:
THE GENLYTE GROUP INCORPORATED
By:
Its:
GT LIGHTING, LLC
By:
Its:
<PAGE>
SCHEDULE 4.1
MEMBER PERCENTAGE INTEREST
Thomas Industries Inc. and its wholly-owned subsidiaries 32%
The Genlyte Group Incorporated 68
100%
<PAGE>
EXHIBIT 2.3
EXECUTION
CAPITALIZATION AGREEMENT
Among
GT LIGHTING, LLC
and
THOMAS INDUSTRIES INC.
TUPELO HOLDINGS INC.
THOMAS INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
THOMAS IMPORTS, INC.
TI INDUSTRIES CORPORATION
Dated April 28, 1998
<PAGE>
CAPITALIZATION AGREEMENT
CAPITALIZATION AGREEMENT, dated April 28, 1998, by and among GT Lighting,
LLC, a Delaware limited liability company (the "Company"), Thomas Industries
Inc., a Delaware corporation ("Thomas") and the Transferring Affiliates (Thomas
and the Transferring Affiliates, collectively, "Transferor").
W I T N E S S E T H:
WHEREAS, Transferor is in the business of manufacturing, selling, marketing
and distributing consumer, commercial, industrial and outdoor lighting products
through an unincorporated division (collectively the "Division") of Transferor;
WHEREAS, the Transferring Affiliates are wholly owned, either directly or
indirectly, by Thomas;
WHEREAS, Transferor and The Genlyte Group Incorporated ("Genlyte") have
caused the Company to be formed under the laws of the State of Delaware;
WHEREAS, Transferor desires to capitalize the Company with substantially
all of the assets, properties and capital stock comprising, held or used in
connection with the Business in a transaction qualifying under Section 721(a) of
the Code, in exchange for an ownership interest in the Company and the direct or
indirect assumption by the Company of the Assumed Liabilities and upon the terms
and subject to the conditions hereinafter set forth;
WHEREAS, Thomas's rights and duties as a member of the Company shall be as
set forth in that certain Limited Liability Company Agreement dated April 28,
1998 by and between Thomas and Genlyte (the "LLC Agreement");
WHEREAS, the Company will consummate certain transactions and enter into
certain agreements as set forth in the Master Transaction Agreement dated April
28, 1998 by and between Thomas and Genlyte (the "Master Transaction Agreement")
and the parties' obligations hereunder will be subject to satisfaction or waiver
of the conditions in the Master Transaction Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
ARTICLE I
CAPITALIZATION
1.1 Assets. Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, Transferor will contribute, transfer, convey, assign
and deliver to the Company, and the Company will acquire from Transferor, all
right, title and interest of Transferor in and to the properties, assets and
rights of every nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued, contingent or
otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) primarily relating to or used or held for use in connection
with the Business as the same may exist on the Closing Date (collectively, the
"Assets"), including all those items in the following categories that conform to
the definition of the term "Assets":
(a) all machinery, equipment, telephone systems and equipment,
furniture, furnishings, automobiles, trucks, vehicles, tools, dies, molds and
parts and similar property (including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other Person)
together with all Systems and all Components;
(b) all inventories of raw materials, work in process, finished
products, goods, spare parts, replacement and component parts, and office and
other supplies (collectively, the "Inventories") held at any Facility and
Inventories previously purchased and in transit to any Transferor at the
Facilities;
(c) all rights in and to products sold or leased (including products
hereafter returned or repossessed and Transferor's unpaid rights of rescission,
replevin, reclamation and rights to stoppage in transit);
(d) all rights (including any and all Intellectual Property rights)
in and to the products sold or leased and in and to any products or other
Intellectual Property rights under research or development prior to or on the
Closing Date;
(e) all of the rights of Transferor under all contracts,
arrangements, licenses, leases and other agreements, including any right to
receive payment for products sold or services rendered, and to receive goods and
services, pursuant to such agreements and to assert claims and take other
<PAGE>
rightful actions in respect of breaches, defaults and other violations of such
contracts, arrangements, licenses, leases and other agreements and otherwise;
(f) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by Transferor and all
notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person held by Transferor, except as set forth in Section 4.3;
(h) all Intellectual Property and all rights thereunder or in respect
thereof used or held for use in connection with the Business, including rights
to sue for and remedies against past, present and future infringements thereof,
and rights of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof (the "Intellectual
Property Assets");
(i) all books, records, manuals and other materials (in any form or
medium), including all records and materials maintained at the headquarters or
other offices of Transferor, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
records, data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and litigation
files, (collectively, the "Books and Records");
(j) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(k) all Real Property and all licenses, permits, approvals and
qualifications relating to any Real Property issued to Transferor by any
Governmental Authority;
(l) all rights to causes of action, lawsuits, judgments, claims and
demands of any nature available to or being pursued by Transferor with respect
to the Business or the ownership, use, function or value of any Asset, whether
arising by way of counterclaim or otherwise;
(m) all guarantees, warranties, indemnities and similar rights in
favor of Transferor with respect to any Asset;
(n) to the extent not described elsewhere in this Section 1.1, all
Net Working Capital;
(o) Thomas Lighting web site domain name together with related
rights; and
(p) all stock, partnership, membership or other interests in any
Person engaged in the Business listed on Schedule 1.1(p);
provided that, at Transferor's option, Transferor may convey Inventories to a
limited liability company that is a wholly-owned subsidiary of the Company.
At the Closing, the Assets shall be transferred to the Company free and
clear of all liabilities, obligations, liens and encumbrances excepting only
Assumed Liabilities, liens listed on Schedule 3.1.11 and Permitted Liens.
1.2. Excluded Assets. Transferor will retain and not transfer, and the
Company will not acquire any assets of Transferor other than the Assets,
including (i) the assets listed on Schedule 1.2, (ii) the Headquarters, (iii)
all Tax refunds, (iv) the names and marks "Thomas" and "Thomas Industries
Inc.", and (v) computers and software located at the Headquarters (collectively,
the "Excluded Assets").
1.3. Shared Assets. All of Transferor's properties, assets and rights of
every nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued, contingent or
otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) that do not primarily relate to or are not primarily used or
held for use in connection with the Business as the same may exist on the
Closing Date, but relate to or are used in or held for use in connection with
the Business to some lesser degree shall be retained by Transferor and provided
to the Company pursuant to the Services Agreement or a license agreement in a
form mutually acceptable to Transferor and the Company.
ARTICLE II
THE CLOSING
2.1. Place and Date. The consummation of the transactions contemplated
hereby shall take place on the "closing date" described in the Master
Transaction Agreement (the "Closing Date").
<PAGE>
2.2. Consideration. (a) Membership Interests. On the terms and subject
to the conditions set forth in this Agreement, the Master Transaction Agreement
and the LLC Agreement and, together with the Note or cash referenced in Section
2.2(b) below, as the sole consideration for Transferor's contribution of the
Assets to the Company pursuant hereto, on the Closing Date, the Company agrees
to issue to Thomas and/or wholly-owned subsidiaries of Thomas an aggregate
interest in the Company representing a 32% ownership interest (the "Membership
Interests") and to assume the Assumed Liabilities as provided in Section 2.3.
(b) Note. On the Closing Date, the Company agrees to pay Thomas
an amount equal to 32/68ths of Genlyte's total long-term indebtedness for
borrowed money on the Closing Date plus 100% of the cash consideration paid by
Thomas for the Horizon/Lite Acquisition, either in cash or pursuant to a
promissory note payable to Thomas, on payment terms corresponding to the terms
contained in the Company's primary credit facility referenced in Sections 6.8
and 7.8 of the Master Transaction Agreement (the "Note"), provided that the Note
shall be prepayable at any time without penalty or premium.
2.3. Assumption of Liabilities. (a) Subject to Sections 2.4 and 8.2 and
the other terms and conditions set forth herein, at the Closing, the Company
will assume and agree to pay, honor and discharge when due all of those
liabilities primarily relating to the Assets or arising out of the Business and
existing at or arising on or after the Closing Date (collectively, the "Assumed
Liabilities"), except for (i) long-term indebtedness of Thomas or the Business
for borrowed money, (ii) Taxes of Transferor for periods prior to the Closing
Date, whether or not relating to or arising out of the Business, (iii)
intercompany accounts payable that do not represent trade accounts payable, (iv)
liabilities in respect of Employees, employment agreements or Plans except to
the extent specifically assumed by the Company pursuant to Article VI, (v)
liabilities in respect to Transferred Employees except to the extent
specifically assumed by the Company pursuant to Article VI, and (vi) any
liability, obligation or commitment of Transferor set forth on Schedule 2.3.
(b) At the Closing, the Company shall assume the Assumed Liabilities
by executing and delivering to Transferor an assumption agreement in a form
reasonably satisfactory to Transferor (the "Assumption Agreement").
2.4 Excluded Liabilities. Notwithstanding the provisions of Section 2.3
or any other provision hereof or any schedule or exhibit hereto and regardless
of any disclosure to the Company, the Company shall not assume any liabilities,
obligations or commitments of Transferor, whether or not relating to or arising
out of the operation of the Business or the ownership of the Assets prior to the
Closing, other than the Assumed Liabilities (the "Excluded Liabilities").
2.5 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of the Company or
Transferor thereunder; and any transfer or assignment to the Company by
Transferor of any interest under any such instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third party shall
be made subject to such consent or approval being obtained. In the event any
such consent or approval is not obtained on or prior to the Closing Date,
Transferor shall continue to use its reasonable commercial efforts to obtain any
such approval or consent after the Closing Date until such time as such consent
or approval has been obtained, and Transferor will cooperate with the Company in
any lawful and economically feasible arrangement to provide that the Company
shall receive the interest of Transferor in the benefits under any such
instrument, contract, lease or permit or other agreement or arrangement,
including performance by Transferor as agent, if economically feasible, provided
that the Company shall be solely responsible for and undertake to pay or satisfy
the corresponding liabilities for the enjoyment of such benefit to the extent
the Company would have been responsible therefor hereunder if such consent or
approval had been obtained and shall be solely responsible for any breach of
warranty with respect to products of the Business manufactured after the Closing
Date. Transferor shall pay and discharge, and shall indemnify and hold the
Company harmless from and against, any and all out-of-pocket costs of seeking to
obtain or obtaining any such consent or approval whether before or after the
Closing Date. Nothing in this Section 2.5 shall be deemed a waiver by the
Company of its right to have received on or before the Closing an effective
assignment of all of the Assets nor shall this Section 2.5 be deemed to
constitute an agreement to exclude from the Assets any assets described under
Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Transferor. Transferor represents
and warrants to and agrees with the Company as follows:
<PAGE>
3.1.1. Authorization, etc. Transferor has the corporate power and
authority to execute and deliver this Agreement and each of the Collateral
Agreements to which it will be a party, to perform fully its obligations
thereunder, and to consummate the transactions contemplated hereby and thereby.
Subject to Section 4.1.10, the execution and delivery by Transferor of this
Agreement, and the consummation of the transactions contemplated hereby, have
been, and on the Closing Date the execution and delivery by Transferor of each
of the Collateral Agreements to which it will be a party and the consummation of
the transactions contemplated thereby will have been, duly authorized by all
requisite corporate action of Transferor (including the approval of Transferor's
shareholders to the extent required by law). Transferor has duly executed and
delivered this Agreement and on the Closing Date will have duly executed and
delivered each of the Collateral Agreements to which it is a party. This
Agreement is, and on the Closing Date each of the Collateral Agreements to which
Transferor is a party will be, legal, valid and binding obligations of
Transferor, enforceable against it in accordance with their respective terms.
3.1.2. Corporate Status. (a) Transferor is a corporation duly organized,
validly existing and in good standing under the respective laws of the
jurisdiction of its incorporation, as set forth in Schedule 3.1.2(a), with full
corporate power and authority to carry on its business (including the Business)
and to own or lease and to operate its properties as and in the places where
such business is conducted and such properties are owned, leased or operated.
(b) Transferor is duly qualified or licensed to do business and is in
good standing in each of the respective jurisdictions specified in Schedule
3.1.2(b), which are the only jurisdictions in which the operation of the
Business or the character of the properties owned, leased or operated by it in
connection with the Business makes such qualification or licensing necessary.
(c) Transferor has delivered to the Company complete and correct
copies of its certificate of incorporation and by-laws or other organizational
documents, as amended and in effect on the date hereof. Transferor is not in
violation of any of the provisions of its certificate of incorporation or by-
laws or other organizational documents.
(d) Thomas has no Subsidiaries engaged in the Business except as set
forth on Schedule 3.1.2(d). Except as set forth on Schedule 3.1.2(d), Thomas
has no interest, direct or indirect, and has no commitment to purchase any
interest, direct or indirect, in any other corporation or in any partnership,
joint venture or other business enterprise or entity. Except as set forth on
Schedule 3.1.2(d), the Business has not been conducted through any other direct
or indirect Subsidiary or affiliate of Thomas.
3.1.3. No Conflicts, etc. The execution, delivery and performance by
Transferor of this Agreement and each of the Collateral Agreements to which it
is a party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the lapse of time or
both) (i) any Applicable Law applicable to Transferor or any Affiliate thereof
or any of the properties or assets of Transferor (including the Assets), (ii)
the certificate of incorporation or by-laws or other organizational documents of
Transferor or (iii) except as set forth in Schedule 3.1.3, any Contract to
which Transferor or any Affiliate thereof is a party or by which Transferor or
any of its properties or assets, including the Assets, may be bound or
affected. Except as specified in Schedule 3.1.3, no Governmental Approval or
other Consent is required to be obtained or made by Transferor in connection
with the execution and delivery of this Agreement and the Collateral
Agreements or the consummation of the transactions contemplated thereby. The
consummation of the transaction that is the subject of this Agreement and the
Collateral Agreements and the issuance of the Membership Interests to all
members will not trigger any rights under the Thomas Industries Inc. and The
Fifth Third Bank Rights Agreement dated as of January 5, 1998 between Thomas
and The Fifth Third Bank or any applicable shareholder protection or state
takeover statute.
3.1.4. Financial Statements. Transferor has delivered to the Company (a)
unaudited consolidated financial statements of the Business as at and for the
year ended December 31, 1997 (the "Balance Sheet Date"), (b) unaudited
consolidated financial statements of the Business as at and for the period ended
March 31, 1998, and (c) unaudited consolidated financial statements of the
Business as at and for the monthly periods ended March 31, 1998 , including in
each of clauses (a), (b) and (c) a balance sheet, a statement of income and a
statement of cash flows (collectively, the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with GAAP applied throughout the periods indicated
and consistently applied with those portions of Transferor's financial
statements regarding the Business, except that the Financial Statements do not
contain notes and may be subject to normal audit adjustments. The balance
sheets included in the Financial Statements do not include any material assets
(other than Excluded Assets) or liabilities (other than Excluded Liabilities)
not intended to constitute a part of the Business or the Assets or omit any
material assets or liabilities of the Business, and present fairly the financial
condition of the Business as at their respective dates. The statements of
<PAGE>
income and retained earnings and statements of cash flows included in the
Financial Statements do not reflect the operations of any entity or business not
intended to constitute a part of the transactions, reflect all costs that
historically have been incurred by the Business (other than the Excluded
Liabilities) and present fairly the results of operations and cash flows of the
Business for the periods indicated.
3.1.5. Absence of Undisclosed Liabilities. Transferor has no liabilities
or obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, arising out of or
relating to the Business, except (a) as set forth in Schedule 3.1.5, (b) as and
to the extent disclosed or reserved against in the Balance Sheet (excluding the
notes thereto) and (c) for liabilities and obligations that (i) were incurred
after the date of the Balance Sheet in the ordinary course of business
consistent with prior practice and (ii) have not had or resulted in, and will
not have or result in, a Material Adverse Effect. None of the Division's
employees is, or will by the passage of time hereinafter become, entitled to
receive any material vacation time, vacation pay or severance pay attributable
to services rendered prior to such date except as disclosed on the Balance Sheet
(excluding the notes thereto) or as set forth on Schedule 3.1.5.
3.1.6. Taxes. (a) Transferor has (or by the Closing will have) duly and
timely filed all Tax Returns with respect to Taxes required to be filed on or
before the Closing Date ("Returns"). Except for Taxes set forth on Schedule
3.1.6(a), which are being contested in good faith and by appropriate
proceedings, and with respect to which Transferor has Adequate Reserves, the
following Taxes have (or by the Closing Date will have) been duly and timely
paid: (i) all Taxes shown to be due on the Returns, (ii) all deficiencies and
assessments of Taxes of which notice has (or by the Closing Date will have) been
received by Transferor that are or may become payable by the Company or
chargeable as a lien upon the Business or the Assets, and (iii) all other Taxes
due and payable on or before the Closing Date for which neither filing of
Returns nor notice of deficiency or assessment is required, if Transferor is or
reasonably should be (or by the Closing Date will be or reasonably should be)
aware that such Taxes are or may become payable by the Company or chargeable as
a lien upon the Business or the Assets. All Taxes required to be withheld by or
on behalf of Transferor in connection with amounts paid or owing to any
employee, independent contractor, or creditor ("Withholding Taxes") have been
withheld, and such withheld taxes have either been duly and timely paid to the
proper Governmental Authorities or set aside in accounts for such purposes.
(b) Except as set forth on Schedule 3.1.6(b), no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any Taxes or Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been filed with the IRS or any other Governmental
Authority.
(c) Except for items set forth on Schedule 3.1.6(c), with respect to
which Transferor has Adequate Reserves, (i) there are no Taxes or Withholding
Taxes asserted in writing by any Governmental Authority to be due from
Transferor and (ii) no issue has been raised in writing by any Governmental
Authority in the course of any audit with respect to Taxes or Withholding
Taxes. Except as set forth on Schedule 3.1.6(c), no Taxes and no Withholding
Taxes are currently under audit by any Governmental Authority. Except for
items set forth on Schedule 3.1.6(c), with respect to which Transferor has
Adequate Reserves, neither the IRS nor any other Governmental Authority is
now asserting or, to the Knowledge of Transferor, threatening to assert
against Transferor any deficiency or claim for additional Taxes or any
adjustment or Taxes that would, if paid by the Company, have a Material
Adverse Effect, and there is no reasonable basis for any such assertion of
which Transferor is or reasonably should be aware.
(d) Except as set forth on Schedule 3.1.6(d), there is no litigation
or administrative appeal pending or, to the Knowledge of Transferor, threatened
against or relating to Transferor in connection with Taxes.
3.1.7. Absence of Changes. Except for items set forth in Schedule 3.1.7,
with respect to which Transferor has Adequate Reserves, since the Balance Sheet
Date, Transferor has conducted the Business only in the ordinary course
consistent with prior practice and has not, on behalf of, in connection with or
relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a Material Adverse Effect;
(c) discharged or satisfied any Lien other than those then required
to be discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than
<PAGE>
current liabilities shown on the Balance Sheet and current liabilities incurred
since the date thereof in the ordinary course of business consistent with prior
practice;
(d) mortgaged, pledged or subjected to Lien, any property, business
or assets, tangible or intangible, held in connection with the Business other
than purchase money security interests incurred in the ordinary course of
business;
(e) sold, transferred, leased to others or otherwise disposed of any
of the Assets, except in the ordinary course of business, or canceled or
compromised any debt or claim, or waived or released any right of substantial
value;
(f) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had a Material
Adverse Effect;
(g) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any Intellectual Property,
or modified any existing rights with respect thereto;
(h) other than in the ordinary course of business, made any change in
the rate of compensation, commission, bonus or other direct or indirect
remuneration payable, or paid or agreed or orally promised to pay, conditionally
or otherwise, any bonus, dividend, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or vacation pay, to or in
respect of any shareholder, director, officer, employee, salesman, distributor
or agent of Transferor relating to the Business;
(i) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material change in its relations with its employees, agents, customers or
suppliers;
(j) failed to replenish the Division's inventories and supplies in a
normal and customary manner consistent with its prior practice and prudent
business practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of the Business or at
any price in excess of the then current market price or upon terms and
conditions more onerous than those usual and customary in the industry, or made
any change in its selling, pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(k) made any capital expenditures or capital additions or
improvements in excess of $250,000;
(l) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the Business or the
Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $250,000;
(m) entered into any transaction, contract or commitment other than
in the ordinary course of business or paid or agreed to pay any legal,
accounting, brokerage, finder's fee, Taxes or other expenses in connection with,
or incurred any severance pay obligations by reason of, this Agreement or the
transactions contemplated hereby; or
(n) except with respect to performing its obligations under this
Agreement, taken any action or omitted to take any action that would result in
the occurrence of any of the foregoing.
3.1.8. Litigation. Except for items set forth on Schedule 3.1.8, with
respect to which Transferor has Adequate Reserves, there is no action, claim,
demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, pending or threatened against or relating to
Transferor in connection with the Assets or the Business or against or relating
to the transactions contemplated by this Agreement, and Transferor knows of no
basis for any of the foregoing. Except for items set forth in such Schedule
3.1.8, with respect to which Transferor has Adequate Reserves, since December
31, 1997, no material citations, fines or penalties have been asserted against
Transferor with respect to the Division under any Environmental Law or any
foreign, federal, state or local law relating to occupational health or safety.
3.1.9. Compliance with Laws; Governmental Approvals and Consents;
Governmental Contracts. (a) Except for items disclosed in Schedule 3.1.9(a),
with respect to which Transferor has Adequate Reserves, since the Balance Sheet
Date, Transferor has complied in all material respects with all Applicable Laws
applicable to the Business or the Assets, and Transferor has not received any
notice alleging any such conflict, violation, breach or default.
<PAGE>
(b) Except for items set forth in Schedule 3.1.9(b), with respect to
which Transferor has Adequate Reserves, all Governmental Approvals and Consents
necessary for or otherwise material to the conduct of the Business have been
duly obtained and are in full force and effect, and Transferor is in material
compliance with each of such Governmental Approvals and Consents held by it with
respect to the Assets and the Business.
(c) To the Knowledge of Transferor, there are no proposed laws,
rules, regulations, ordinances, orders, judgments, decrees, governmental
takings, condemnations or other proceedings which would be applicable to the
business, operations or properties of the Division and which might adversely
affect the properties, assets, liabilities, operations or prospects of the
Division, either before or after the Closing Date.
3.1.10. Operation of the Business. Except as set forth in Schedule
3.1.10, (a) Transferor has conducted the Business only through the Division and
not through any other divisions or any direct or indirect Subsidiary or
Affiliate of Transferor and (b) no part of the Business is operated by
Transferor through any entity other than Transferor.
3.1.11. Assets. Except for items disclosed in Schedule 3.1.11, with
respect to which Transferor has Adequate Reserves, Transferor has good title to
all the Assets free and clear of any and all Liens other than Permitted Liens.
The Assets, together with the services and arrangements described in Section
5.2.2, comprise all assets and services required for the continued conduct of
the Business by the Company as now being conducted. The Assets, taken as a
whole, constitute all the properties and assets primarily relating to or used or
held for use in connection with the Business during the past twelve months
(except Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, Contracts fully performed, properties or assets sold in the
ordinary course of business, employees not hired by the Company, and the
Excluded Assets). Except for Excluded Assets and subject to Section 2.5, there
are no assets or properties used in the operation of the Business and owned by
any Person other than Transferor that will not be leased or licensed to the
Company under valid, current leases or license arrangements. Except as
disclosed on Schedule 3.1.11, the Assets are in all material respects adequate
for the purposes for which such Assets are currently used or are held for use,
and are in reasonably good repair and operating condition (subject to normal
wear and tear) and, to the Knowledge of Transferor, there are no facts or
conditions affecting the Assets which could interfere in any material respect
with the use, occupancy or operation thereof as currently used, occupied or
operated, or their adequacy for such use.
3.1.12. Contracts. (a) Schedule 3.1.12(a) contains a complete and
correct list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (x) by which
any of the Assets are bound or affected or (y) to which Transferor is a party or
by which it is bound in connection with the Business or the Assets (the
"Contracts"):
(i) other than the Leases and Other Leases, each lease and other
contract concerning or relating to the Real Property with respect to which
the amount that could reasonably be expected to be paid or received
thereunder exceeds $100,000 per year;
(ii) employment, consulting, agency, collective bargaining or
other similar contracts, agreements, and other instruments and arrangements
that cannot be terminated in accordance with their terms within six months
of the date hereof relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust, bonds,
notes, guarantees, and other agreements and instruments relating to the
borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of, any
Intellectual Property;
(v) brokerage or finders' agreements;
(vi) joint venture, partnership and similar contracts involving a
sharing of profits or expenses (including joint research and development
and joint marketing contracts);
(vii) asset purchase agreements and other acquisition or
divestiture agreements, including any agreements relating to the sale,
lease or disposal of any Assets (other than sales of inventory or other
properties or assets in the ordinary course of business) or involving
continuing indemnity or other obligations, entered into since January 1,
1992;
<PAGE>
(viii) other than purchase orders or contracts for capital
projects already approved by Transferor's Board of Directors, contracts
with respect to which the aggregate amount that could reasonably be
expected to be paid or received thereunder in the future exceeds $250,000
per annum;
(ix) contracts, agreements or arrangements with respect to the
representation of the Business in foreign countries, other than Canada and
Mexico;
(x) master lease agreements providing for the leasing of both
(A) personal property primarily used in, or held for use primarily in
connection with, the Business and (B) other personal property, pursuant to
which, in either case, the amount that could reasonably be expected to be
paid or received thereunder exceeds $100,000 per year or $1,500,000 in the
aggregate;
(xi) contracts, agreements or commitments with any employee,
director, officer, stockholder or Affiliate of Transferor; and
(xii) any other contracts, agreements or commitments that are
material to the Business pursuant to which the amount that could reasonably
be expected to be paid or received thereunder exceeds $100,000 per year or
$1,500,000 in the aggregate.
(b) Transferor has delivered to the Company complete and correct
copies of all written Contracts, together with all amendments thereto, and
accurate descriptions of all material terms of all oral Contracts, set forth or
required to be set forth in Schedule 3.1.12(a).
(c) All Contracts are in full force and effect and enforceable
against each party thereto. There does not exist under any Contract any event
of default or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default thereunder on the part
of Transferor or, to the Knowledge of Transferor, any other party thereto except
for items set forth in Schedule 3.1.12(c), with respect to which Transferor has
Adequate Reserves, and except for such events or conditions that, individually
and in the aggregate, (i) has not had or resulted in, and will not have or
result in, a Material Adverse Effect and (ii) has not and will not materially
impair the ability of Transferor to perform its obligations under this Agreement
and under the Collateral Agreements. Except as set forth in Schedule 3.1.12(c),
no consent of any third party is required under any Contract as a result of or
in connection with, and the enforceability of any Contract will not be affected
in any manner by, the execution, delivery and performance of this Agreement or
any of the Collateral Agreements or the consummation of the transactions
contemplated hereby or thereby.
(d) Transferor has outstanding no power of attorney relating to the
Business.
3.1.13. Territorial Restrictions. Except as set forth on Schedule 3.1.13,
Transferor is not restricted by any written agreement or understanding with any
other Person from carrying on the Business anywhere in the world. Except as set
forth on Schedule 3.1.13, the Company, solely as a result of its purchase of the
Business from Transferor pursuant hereto and the assumption of the Assumed
Liabilities, will not thereby become restricted in carrying on any business
anywhere in the world.
3.1.14. Product Warranties. Except for items set forth in Schedule
3.1.14, with respect to which Transferor has Adequate Reserves, and for
warranties under Applicable Law, there are no pending or threatened claims with
respect to any warranty, express or implied, written or oral, with respect to
the products or services of the Business in excess of $100,000 per claim, and
Transferor has no liability with respect to any such warranty, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
3.1.15. Absence of Certain Business Practices. To the Knowledge of
Transferor, none of Transferor, any officer, employee or agent of Transferor, or
any other Person acting on their behalf, has, directly or indirectly, within the
past five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who was or may be in a
position to help or hinder the Business (or assist Transferor in connection with
any actual or proposed transaction relating to the Business) (i) which subjected
or might have subjected Transferor to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject Transferor to
suit or penalty in any private or governmental litigation or proceeding, (iv)
for any of the purposes described in Section 162(c) of the Code or (v) for the
purpose of establishing or maintaining any concealed fund or concealed bank
account.
<PAGE>
3.1.16. Intellectual Property. (a) Title. Schedule 3.1.16(a) contains a
complete and correct list of all Intellectual Property that is owned by
Transferor and primarily related to, used in, held for use in connection with,
or necessary for the conduct of, or otherwise material to the Business (the
"Owned Intellectual Property"). Except as set forth on Schedule 3.1.16(a),
Transferor owns or has the right to use pursuant to license, sublicense,
agreement or permission all Intellectual Property Assets, free from any Liens
(other than Permitted Liens) and free from any requirement of any past, present
or future royalty payments, license fees, charges or other payments, in any case
in excess of $100,000, or conditions or restrictions whatsoever. The
Intellectual Property Assets comprise all of the Intellectual Property necessary
for the Company to conduct and operate the Business as now being conducted by
Transferor.
(b) Transfer. Immediately after the Closing, the Company will own
all of the Owned Intellectual Property and will have a right to use all other
Intellectual Property Assets, free from any Liens (other than Permitted Liens)
and on the same terms and conditions as in effect prior to the Closing.
(c) No Infringement. The conduct of the Business does not infringe
or otherwise conflict with any rights of any Person in respect of any
Intellectual Property. To the Knowledge of Transferor, none of the Intellectual
Property Assets is being infringed or otherwise used or available for use, by
any other Person.
(d) No Intellectual Property Litigation. Except for items set forth
on Schedule 3.1.16(d), with respect to which Transferor has Adequate Reserves,
no claim or demand of any Person has been made nor is there any proceeding that
is pending, or to the Knowledge of Transferor, threatened, nor is there a
reasonable basis therefor, that (i) challenges the rights of Transferor in
respect of any Intellectual Property Assets, (ii) asserts that Transferor is
infringing or otherwise in conflict with, or is, except for items set forth in
Schedule 3.1.16(d), with respect to which Transferor has Adequate Reserves,
required to pay any royalty, license fee, charge or other amount, in any case in
excess of $100,000, with regard to, any Intellectual Property, or (iii) claims
that any default exists under any agreement or arrangement concerning any
Intellectual Property Assets. None of the Intellectual Property Assets is
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency, or has been the subject of
any litigation within the last five years, whether or not resolved in favor of
Transferor.
(e) Use of Name and Mark. Except as set forth in Schedule 3.1.16(e),
there are, and immediately after the Closing will be, no contractual restriction
or limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any Governmental Authority on the Company's right to use the name
and marks set forth on Schedule 3.1.16(e) in the conduct of the Business as
presently carried on by Transferor.
3.1.17. Insurance. Schedule 3.1.17 contains a complete description of all
insurance policies maintained by Transferor for the benefit of or in connection
with the Assets or the Business. Transferor has made available to the Company
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and effect, and all
premiums due thereon have been paid. Transferor has complied in all material
respects with the terms and provisions of such policies. The insurance coverage
provided by such policies is adequate and customary for the Business. Schedule
3.1.17 sets out all claims, other than worker's compensation claims, made by
Transferor under any policy of insurance during the past two years with respect
to the Business.
3.1.18. Real Property. (a) Owned Real Property. Schedule 3.1.18(a)
contains a complete and correct list of all Owned Real Property setting forth
the address and owner of each parcel of Owned Real Property and describing all
improvements thereon including the properties reflected as being so owned on the
Financial Statements. Transferor has, or on the Closing Date will have, good,
valid and marketable fee simple title to the Owned Real Property indicated on
Schedule 3.1.18(a) as being owned by it, free and clear of all Liens other than
Permitted Liens. There are no outstanding options or rights of first refusal to
purchase the Owned Real Property, or any portion thereof or interest therein.
(b) Leases. Schedule 3.1.18(b) contains a complete and correct list
of (i) all Leases setting forth the address, landlord and tenant for each Lease
and (ii) all Other Leases, setting forth the address, landlord and tenant for
each Other Lease, in either case, with respect to which the amount that could
reasonably be expected to be paid or received thereunder exceeds $100,000 per
year. Transferor has made available to the Company correct and complete copies
of the Leases and the Other Leases. Each Lease and Other Lease is legal, valid,
binding, enforceable, and in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization and similar Applicable Laws affecting
creditors generally and by the availability of equitable remedies. Neither
Transferor nor any other party is in default, violation or breach in any respect
under any Lease or Other Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
<PAGE>
default, violation or breach in any respect under any Lease or Other Lease,
which default, violation or breach has had or could reasonably be expected to
have a Material Adverse Effect on the Business or the Company or cause any Lease
or Other Lease to be terminated. Each Lease grants the tenant under the Lease
the exclusive right to use and occupy the demised premises thereunder.
Transferor has good and valid title to the leasehold estate under each Lease
free and clear of all Liens other than Permitted Liens. Transferor enjoys
peaceful and undisturbed possession under its respective Leases for the Leased
Real Property.
(c) Fee and Leasehold Interests, etc. The Real Property constitutes
all the fee and leasehold interests in real property held for use in connection
with, necessary for the conduct of, or otherwise material to, the Business.
(d) No Proceedings. There are no eminent domain or other similar
proceedings pending or, to the Knowledge of Transferor, threatened affecting
any portion of the Real Property. There is no writ, injunction, decree, order
or judgment outstanding, nor any action, claim, suit or proceeding, pending or,
to the Knowledge of Transferor, threatened, relating to the ownership, lease,
use, occupancy or operation by any Person of any Real Property.
(e) Current Use. Transferor has received no written notice that the
use and operation of the Real Property in the conduct of the Business violates
in any material respect any instrument of record or agreement affecting the Real
Property. Transferor has received no written notice that there is any violation
of any covenant, condition, restriction, easement or order of any Governmental
Authority having jurisdiction over such property or of any other Person entitled
to enforce the same affecting the Real Property or the use or occupancy
thereof. No damage or destruction has occurred with respect to any of the
Real Property since December 31, 1997 that would, individually or in the
aggregate, have a Material Adverse Effect.
(f) Compliance with Real Property Laws. Transferor has received no
written notice that the Real Property is not in full compliance with all
applicable building, zoning, subdivision and other land use and similar
Applicable Laws affecting the Real Property (collectively, the "Real Property
Laws"). To the Knowledge of Transferor, there is no pending or anticipated
change in any Real Property Law that will have or result in a Material Adverse
Effect upon the ownership, alteration, use, occupancy or operation of the Real
Property or any portion thereof. No current use by Transferor of the Real
Property is dependent on a nonconforming use or other Governmental Approval the
absence of which would materially limit the use of such properties or Assets
held for use in connection with, necessary for the conduct of, or otherwise
material to, the Business.
(g) Subdivision. To Transferor's Knowledge, no approvals are
necessary to subdivide the Owned Real Property from any Real Property included
in the Excluded Assets.
3.1.19. Environmental Matters. (a) Permits. Except for items set forth
on Schedule 3.1.19(b), with respect to which Transferor has Adequate Reserves,
Transferor currently holds, and at all times has held, all such Environmental
Permits necessary to the operation of the Business or the ownership, occupancy
or use of the Real Property or the Assets, and all such Environmental Permits
shall be validly transferred to the Company on the Closing Date. All such
Environmental Permits are in full force and effect. To Transferor's Knowledge,
Transferor has not been notified by any relevant Governmental Authority that any
Environmental Permit will be modified, suspended, canceled or revoked, or cannot
be renewed in the ordinary course of business.
(b) No Violations. Except for items set forth on Schedule 3.1.19(b),
with respect to which Transferor has Adequate Reserves, each of Transferor and
its Affiliates have complied and is in compliance in all material respects with
all Environmental Permits and all applicable Environmental Laws pertaining to
the Real Property (and the ownership, occupancy, use or transferability
thereof), the Business or the Assets. Except for items set forth on Schedule
3.1.19(b), with respect to which Transferor has Adequate Reserves, no Person has
alleged any violation by Transferor and its Affiliates of any Environmental
Permits or any applicable Environmental Law relating to the conduct of the
Business or the use, ownership or transferability of the Real Property or the
Assets.
(c) No Actions. Except for items set forth in Schedule 3.1.19(c),
with respect to which Transferor has Adequate Reserves, none of Transferor or
any of its Affiliates has caused or taken any action that has resulted or may
result in, or has been or is subject to, any liability or obligation relating to
(i) the environmental conditions on, under, about or emanating from any Real
Property, the Assets or other properties or assets owned, operated, leased or
used by Transferor held for use in connection with, necessary for the conduct
of, or otherwise material to, the Business, or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Substances, except for any such liabilities and
<PAGE>
obligations that, individually and in the aggregate, are not material to the
Business and have not had or resulted in, and will not have or result in, a
Material Adverse Effect.
(d) Other. Except for items set forth in Schedule 3.1.19(d), with
respect to which Transferor has Adequate Reserves:
(i) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned property or assets of
Transferor used in the Business, including the Assets and the Real
Property, is related to or subject to any investigation or evaluation by
any Governmental Authority, as to whether any Remedial Action is needed to
respond to a Release or threatened Release of any Hazardous Substances.
(ii) Transferor is not subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual or other
obligation to or with, any Governmental Authority or other Person in
respect of which the Company may be required to incur any Environmental
Liabilities and Costs arising from the Release or threatened Release of a
Hazardous Substances.
(iii) None of the Real Property is, and none of Transferor or
any of its Affiliates has transported or arranged for transportation
(directly or indirectly) of any Hazardous Substances relating to the Assets
or the Real Property to any location that is, listed or proposed for
listing under CERCLA, or on any similar state list, or the subject of
federal, state or local enforcement actions or investigations or Remedial
Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Assets pursuant to or to comply with
any Environmental Law, nor has Transferor or any of its Affiliates received
any notice of any such requirement, except for such work, repair,
construction or capital expenditure as is not material to the Business and
is in the ordinary course of business.
(e) Full Disclosure. Transferor has disclosed and made available to
the Company all information, including all studies, analyses and test results,
in the possession, custody or control of Transferor and its Affiliates relating
to (i) the environmental conditions on, under, about or emanating from the Real
Property, and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored, disposed of or Released by Transferor or any other
Person at any time on any Real Property, or otherwise in connection with the
operation of the Business or the ownership, operation, occupancy or use of the
Real Property, the Assets or other assets, equipment or facilities used in or
held for use in connection with the Business.
3.1.20. Employees, Labor Matters, etc. Except as set forth in Schedule
3.1.20, Transferor is not a party to or bound by any collective bargaining
agreement and there are no labor unions or other organizations representing,
purporting to represent or, to Transferor's Knowledge, attempting to represent
any employees employed in the operation of the Business. Since December 31,
1997, there has not occurred or, to Transferor's Knowledge, been threatened any
material strike, slowdown, picketing, work stoppage, concerted refusal to work
overtime or other similar labor activity with respect to any employees employed
in the operation of the Business. Except for items set forth on Schedule
3.1.20, with respect to which Transferor has Adequate Reserves, there are no
labor disputes currently subject to any grievance procedure, arbitration or
litigation and there is no representation petition pending or, to the Knowledge
of Transferor, threatened with respect to any employees employed in the
operation of the Business. Transferor has complied with all provisions of
Applicable Law pertaining to the employment of employees, including all such
Laws relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination or other similar employment practices or
acts, except for any failure so to comply that, individually or together with
all such other failures has not had or resulted in, and will not have or result
in, a Material Adverse Effect. Except for items set forth on Schedule 3.1.20,
with respect to which Transferor has Adequate Reserves, Transferor is not party
to any agreement with any employee employed in the Business that contains change
of control and/or severance provisions that would become operative by virtue of
the consummation of the transaction that is the subject of this Agreement.
3.1.21. Employee Benefit Plans and Related Matters. (a) Employee Benefit
Plans. Schedule 3.1.21(a) sets forth a true and complete list of each "employee
benefit plan," as such term is defined in section 3(3) of the ERISA, whether or
not subject to ERISA, and each bonus, incentive or deferred compensation,
severance, termination or other separation benefits, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, fringe benefits or payroll practices, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed in the operation of the Business or the
beneficiaries or dependents of any such employee or former employee (such
<PAGE>
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained, contributed
to, or required to contribute to, or established, by Transferor or any of its
Affiliates or any other trade or business, whether or not incorporated, which,
together with Transferor is or would have been at any date of determination
occurring within the preceding six years treated as a single employer under
Section 414 of the Code or within the meaning of section 4001 of ERISA (such
other trades and business collectively, the "Related Persons"), or to which
Transferor or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which Transferor or the Business may
have any liability or obligation (collectively, the "Plans"). With respect to
each such Plan (other than a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan")), Transferor has provided the
Company and Genlyte complete and correct copies, if applicable, of: the document
embodying or establishing each written Plan (including all amendments thereto);
a description of each unwritten Plan; all trust agreements, insurance contracts
or other funding arrangements; the two most recent actuarial and trust reports;
the two most recent Forms 5500 and all schedules thereto; the most recent IRS
determination letter; the current summary plan description; the two most recent
summary annual reports, all summaries of material modifications; all material
communications received from or sent to the IRS, including a request for a
compliance certificate under the IRS Voluntary Compliance Program (or similar
program), or an application under the IRS Closing Agreement Programs with
respect to any of the Plans, the Pension Benefit Guaranty Corporation or the
Department of Labor (including a written description of any oral communication);
an actuarial study of any post-employment life or medical benefits provided
under any such Plan; and all amendments and modifications to any such document.
With respect to each Multiemployer Plan, Transferor has provided the Company and
Genlyte a complete and correct copy of statements or other communications
regarding withdrawal or other multiemployer plan liabilities, and the most
recent available estimate from the Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal. Except as specifically set forth in
Schedule 3.1.21(a), Transferor has not communicated to any Employee any
intention or commitment to modify any Plan or to establish or implement any
other employee or retiree benefit or compensation arrangement.
(b) Qualification. Each of the Plans (other than a Multiemployer
Plan) that is intended to meet the requirements of Section 401(a) and, where
applicable, Section 401(k) of the Code, now meets, and since its inception has
met, the requirements for qualification under Section 401(a), and, where
applicable, Section 401(k) of the Code and its related trust is now, and since
its inception has been, exempt from taxation under Section 501(a) of the Code
and nothing has occurred that would adversely affect the qualified status of any
such Plan. Each such Plan and the trust forming a part thereof, has received a
favorable determination letter from the IRS pursuant to Revenue Procedure 93-39
and its progeny as to its qualification under the Code, and to the effect that
each such trust is exempt from taxation under section 501(a) of the Code, and,
to the Knowledge of the Transferor, nothing has occurred since the date of such
determination letter that could adversely affect such qualification or tax-
exempt status.
(c) Compliance; Liability.
(i) With respect to each Plan (other than a Multiemployer Plan)
that is subject to section 412 of the Code or section 302 or Title IV of
ERISA, (A) no "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code) has been or could be
expected to be incurred, whether or not waived, and no excise or other
taxes have been or could be expected to be incurred or are due and owing
with respect to the Plan because of any failure to comply with the minimum
funding standards of ERISA and the Code, (B) no proceeding has been or is
expected to be initiated to terminate such Plan, and (C) no security under
Section 401(a)(29) of the Code has been or could be expected to be
required.
(ii) No liability has been or is expected to be incurred by
Transferor, any Related Person or the Business (either directly or
indirectly, including as a result of an indemnification obligation) under
or pursuant to ERISA or otherwise or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans
that could, following the Closing, become or remain a liability of the
Business or become a liability of the Company or of any employee benefit
plan established or contributed to by the Company and, to the Knowledge of
each of Transferor, no event, transaction or condition has occurred or
exists that could result in any such liability to the Business or,
following the Closing, the Company.
(iii) Each of the Plans has been operated and administered in
all respects in compliance with all Applicable Laws and the provisions of
each Plan, except for any failure so to comply that, individually or
together with all other such failures, has not and will not result in a
material liability or obligation on the part of the Business, or, following
<PAGE>
the Closing, the Company, and has not had or resulted in, and will not have
or result in, a Material Adverse Effect. There are no material pending or,
to the Knowledge of Transferor, threatened claims, lawsuits, arbitrations
or other action by or on behalf of any of the Plans, by any Employee or
otherwise involving any such Plan or the assets of any Plan (other than
routine claims for benefits).
No Plan is or is expected to be under audit or investigation by the IRS, DOL, or
any other Governmental Authority and no such completed audit, if any, has
resulted in the imposition of any tax or penalty. No "reportable event" within
the meaning of Section 4043(b) of ERISA has occurred with respect to any Plan.
Notwithstanding the foregoing, the representations set forth in this subsection
(c) with respect to any Multiemployer Plan shall be made to Transferor's
Knowledge.
(iv) No Plan is a "multiple employer plan" within the meaning of
section 4063 or 4064 of ERISA, and there has never been any "multiple
employer plan" covering any Employees. With respect to each Plan which is
a Multiemployer Plan:
(a) with respect to events prior to the Closing, none of the
Transferor, any Related Person, or their predecessors has incurred or
has any reason to believe it has incurred or will incur any withdrawal
liability; no event has occurred which with the giving of notice would
result in any liability under Section 4201 of ERISA as a result of a
complete withdrawal (within the meaning of Section 4203 of ERISA) or a
partial withdrawal (within the meaning of Section 4205 of ERISA); none
of the Transferor, any Related Person, or their predecessors has
received any notice of any claim or demand for complete or partial
withdrawal liability;
(b) none of the Transferor, any Related Person, or their
predecessors has received any notice or has any reason to believe that
such Multiemployer Plan is in "reorganization" (within the meaning of
Section 4241 of ERISA), that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of an excise
tax, or that the Multiemployer Plan is or may become "insolvent"
(within the meaning of Section 4241 of ERISA);
(c) no Multiemployer Plan is a party to any pending merger or
asset or liability transfer under Part 2 of Subtitle E of Title IV of
ERISA; and
(d) the PBGC has not instituted proceedings against the
Multiemployer Plan.
(v) All contributions required to have been made by Transferor
and each Related Person to any Plan under the terms of any such Plan or
pursuant to any applicable collective bargaining agreement or Applicable
Law have been made within the time period prescribed by any such Plan,
agreement or Applicable Law.
(vi) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment in the Business, including
death or survivor benefits, medical or health benefits (whether or not
insured), other than (a) coverage provided pursuant to the terms of any
Plan specifically identified as providing such coverage in Schedule
3.1.21(c)(vi) or mandated by section 4980B of the Code, (b) retirement
benefits payable under any Plan qualified under section 401(a) of the Code
or (c) deferred compensation accrued as a liability on the Balance Sheet or
incurred after December 31, 1997 in the ordinary course of business
consistent with the prior practice of Transferor, pursuant to the terms of
a Plan. The consummation of the transactions contemplated by this
Agreement or the Collateral Agreements will not (either alone or upon the
occurrence of any additional subsequent events) result in an increase in
the amount of compensation or benefits (whether of severance pay or
otherwise) or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee. No
amounts payable under any Plan will fail to be deductible for federal
income tax purposes by virtue of Sections 280G or 162(m) of the Code.
(vii) No Employee has accrued any additional benefits under
the Floor Plan since July 1, 1995 (including earning any additional service
towards a subsidized "early" retirement benefit).
(viii) Transferor does not maintain any Plan that is funded by
a trust described in Section 501(c)(9) of the Code or subject to the
provisions of Section 505 of the Code. Transferor has complied with the
requirements of Section 4980B of the Code regarding the continuation of
health care coverage under any Plan and the provisions of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA").
(ix) No event, condition, or circumstance exists that could
result in a material increase of the benefits provided under any Plan or
<PAGE>
the expense of maintaining any Plan from the level of benefits or expense
incurred for the most recent fiscal year ended before the Closing. Except
as set forth on Schedule 3.1.21(c)(ix), no event, condition, or
circumstance exists that would prevent the amendment or termination of any
Plan.
3.1.22. Confidentiality. Except as set forth on Schedule 3.1.22,
Transferor has taken all steps reasonably necessary to preserve the confidential
nature of all material confidential information (including any proprietary
information) with respect to the Business, including the manufacturing or
marketing of any of the Division products or services.
3.1.23. No Guarantees. None of the obligations or liabilities of the
Business or of Transferor incurred in connection with the operation of the
Business is guaranteed by or subject to a similar contingent obligation of any
other Person other than Transferor. Other than guarantees by Thomas of the
obligations of its Affiliates, Transferor has not guaranteed or become subject
to a similar contingent obligation in respect of the obligations or liabilities
of any other Person related to the Business. There are no outstanding letters
of credit, surety bonds or similar instruments of Transferor or any of its
Affiliates in connection with the Business or the Assets.
3.1.24. Records. The minute books of Transferor insofar as they relate to
or affect the Business and the Assets are substantially complete and correct in
all material respects. The books of account of Transferor, insofar as they
relate to or affect the Business and the Assets, are sufficient to prepare the
Financial Statements in accordance with GAAP.
3.1.25. Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Agreements, and the transactions contemplated thereby,
have been carried on without the participation of any Person acting on behalf of
Transferor or its Affiliates in such manner as to give rise to any valid claim
against the Company or any of its subsidiaries for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to any
officer, director, employee, agent or sales representative of or consultant to
Transferor or its Affiliates upon consummation of the transactions contemplated
hereby or thereby.
3.1.26. Disclosure. No representation or warranty by Transferor contained
in this Agreement nor any statement or certificate furnished or to be furnished
by or on behalf of Transferor to the Company or its representatives in
connection herewith or pursuant hereto or set forth in any reports filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934 contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
contained herein or therein not misleading. There is no fact (other than
matters of a general economic or political nature which do not affect the
Business uniquely) known to Transferor that has not been disclosed by Transferor
to the Company that might reasonably be expected to have or result in a Material
Adverse Effect.
3.1.27. Receivables. All of Transferor's receivables (including accounts
receivable, loans receivable and advances) which have arisen in connection with
the Business and which are reflected in the Financial Statements, and all such
receivables which will have arisen since the Balance Sheet Date, shall have
arisen only from bona fide transactions in the ordinary course of business.
Unless paid prior to the Closing Date, such receivables are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Balance Sheet or on the accounting records of Transferor as of the Closing Date
(which reserves are adequate and calculated consistent with past practices and,
in the case of the reserve as of the Closing Date, will not represent a greater
percentage of such receivables as of the Closing Date than the reserve reflected
in the Balance Sheet represented of such receivables reflected therein and will
not represent a material adverse change in the composition of such receivables
in terms of aging).
3.1.28. Relationships With Related Entities. No Related Entity of
Transferor has, or since December 31, 1997 has had, any interest in property
(whether real, personal or mixed and whether tangible or intangible), used in or
pertaining to the Business. Neither Transferor nor any Related Entity of
Transferor is or since December 31, 1997 has owned (of record or as a beneficial
owner) an equity interest in or in any of the financial or profit interest in, a
Person that has (i) had business dealings or a material financial interest in
any transaction with Transferor relating to the Business, or (ii) engaged in
competition with Transferor with respect to any line of products or services of
Transferor relating to the Business in any market presently served by
Transferor. Neither Transferor nor any Related Entity of Transferor is a party
to any Contract with, or has any claim or right against, Transferor.
3.1.29. Year 2000 Compliance. (a) Transferor represents and warrants
that, (i) it is in the process of conducting a comprehensive review of its
Systems to identify those Systems that may be unable to process data accurately
beyond the year 1999; and (ii) a plan has been implemented whereby identified
Systems will either be replaced or modified over the next eighteen months and
<PAGE>
that the execution of this plan will not cause significant disruptions in the
Business's operations or have a Material Adverse Effect.
3.1.30. Information Supplied for Joint Proxy Statement. None of the
information supplied or to be supplied by Transferor for inclusion or
incorporation by reference in the Joint Proxy Statement to be filed with the
Securities and Exchange Commission by Transferor and Genlyte in connection with
the stockholder meetings of Transferor and Genlyte to be held in connection with
the Master Transaction Agreement and the transactions contemplated hereby will,
at the date mailed to stockholders, or at the time of such meetings, 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
the light of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will, as of its mailing date, comply as to form in all
material respects with Applicable Law, including the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder, except
that no representation is made by Transferor with respect to information
supplied by Genlyte or the stockholders of Genlyte for inclusion therein.
3.1.31 Opinion of Financial Advisor. The financial advisor of
Transferor, Salomon Smith Barney, has rendered an opinion to the Board of
Directors of Transferor to the effect that, as of the date thereof, the
Membership Interest to be received by Transferor pursuant to this Agreement is
fair from a financial point of view to Transferor; it being understood and
acknowledged by the Company that such opinion has been rendered for the benefit
of the Board of Directors of Transferor and is not intended to, and may not, be
relied upon by the Company or its Affiliates.
ARTICLE IV
COVENANTS
4.1. Covenants of Transferor.
4.1.1. Further Actions. (a) Subject to the terms and conditions of the
Master Transaction Agreement, Transferor agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated hereby by the Closing Date,
including obtaining the approval of Transferor's stockholders.
(b) Transferor will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to Applicable Law in connection
with this Agreement, the Collateral Agreements, the sale and transfer of the
Assets pursuant to this Agreement and the consummation of the other transactions
contemplated thereby, including filings pursuant to the HSR Act and the WARN
Act, to the extent required by Applicable Law.
(c) Transferor, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including all
Governmental Approvals and any Consents required under any Contract) necessary
to be obtained by any of them in order to consummate the contribution and
transfer of the Assets to the Company pursuant to this Agreement and the
consummation of the other transactions contemplated thereby.
4.1.2. Further Assurances. Following the Closing, Transferor shall, and
shall cause each of their Affiliates to, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take such
other actions as shall be necessary, or otherwise reasonably requested by the
Company, to confirm and assure the rights and obligations provided for in this
Agreement, and in the Collateral Agreements and render effective the
consummation of the transactions contemplated hereby and thereby.
4.1.3. Certificates of Tax Authorities. On or before the Closing Date, to
the extent such taxing authorities grant certificates, Transferor shall provide
to the Company copies of certificates from all taxing authorities in which
Transferor files (or should file) Tax Returns stating that no Taxes are due to
any such state or other taxing authority for which the Company could have
liability to withhold or pay Taxes with respect to the transfer of the Assets or
the Business
4.1.4. Use of Business Name. After the Closing, Transferor will not,
directly or indirectly, use or do business, or allow any Affiliate to use or do
business, or assist any third party in using or doing business, under the names
and marks listed on Schedule 4.1.4.
4.1.5. Environmental Compliance. Transferor shall comply in all material
respects with the requirements of all applicable Environmental Laws necessary to
effect the lawful transfer of the Real Property or the Business prior to the
Closing Date.
4.1.6. Assumed Liabilities. Transferor agrees that the Company shall be
permitted to direct the defense and settlement of any litigation that is an
Assumed Liability and shall have sole discretion as to the manner of doing so,
<PAGE>
provided that the Company takes all steps reasonably necessary to conduct a
competent and diligent defense or settlement thereof, and provided further that
such litigation does not seek injunctive or other equitable relief involving
Transferor or an adverse result in connection therewith could not reasonably be
expected to have a Material Adverse Effect on Transferor other than with respect
to this Agreement. In addition, to the extent that any litigation is reasonably
expected to exceed the Reserve attributable thereto, the Company shall consult
with Transferor regarding the settlement, disposition and strategy with respect
to such litigation and the Company shall not settle or dispose of such
litigation without Transferor's consent, which consent shall not be unreasonably
withheld.
4.1.7. Audited Financial Statements. Transferor shall make all books and
records available, cooperate with the Company, and pay all of the expenses, and
Transferor shall and shall cause Transferor's Accountants to make available all
work papers, in connection with the preparation of audited financial statements
of the Business as at and for the year ended December 31, 1997, together with an
unqualified report thereon by Transferor's Accountants, including a balance
sheet, statements of income and retained earnings and a statement of cash flows
(the "Audited Financial Statement). At the time that the Audited Financial
Statements are delivered to the Company, Transferor shall by such delivery be
deemed to have made the same representations and warranties to the Company with
respect to such Audited Financial Statements as the representations and
warranties have been made to the Unaudited Financial Statements as set forth in
Section 3.1.4.
4.1.8. Insurance. Transferor agrees that the Company shall have the
right to make claims against any product liability insurance or other insurance
maintained prior to Closing by Transferor for the Business, provided that the
cost of adding the Company as an additional named insured as well as any
deductible or self-insured retentions related to any claim asserted under these
insurance policies with respect to the Business shall be borne by the Company.
4.1.9. Adjusted Tax Basis. On or before the Closing Date, Transferor
shall prepare and deliver to the Company a schedule that accurately and
completely sets forth Transferor's adjusted tax basis in each of the Assets
having a value in excess of $10,000, which shall become the Company's tax basis
in the Assets by operation of Code Section 723, subject to adjustment in
accordance with the provisions of Code Sections 734(b) and 754, as set forth in
the LLC Agreement.
4.1.10. Due Authorization. Within 15 days of the date hereof, Thomas
shall cause each Transferring Affiliate to have duly authorized the execution
and delivery of this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby and thereby by all
requisite corporate action, and shall deliver to the Company evidence of such
authorization satisfactory to the Company in all respects.
4.2. Covenants of the Company.
4.2.1. Further Assurances. Following the Closing, the Company shall, and
shall cause its members to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by Transferor,
to confirm and assure the rights and obligations provided for in this Agreement
and in the Collateral Agreements and render effective the consummation of the
transactions contemplated thereby.
4.2.2. Use of Business Names by the Company. To the extent the name
"Thomas Industries, Inc." is used by the Division or the Business on stationery,
signage, invoices, receipts, forms, packaging, advertising and promotional
materials, products, training and service literature and materials, computer
programs or like materials ("Marked Materials") or appear on Inventory at the
Closing, the Company may use such Marked Materials or sell such Inventory after
the Closing for a period of 12 months without altering or modifying such Marked
Materials or Inventory, or removing such trademarks, service marks, brand names,
or trade, corporate or business names, but the Company shall not thereafter use
such trademarks, service marks, brand names or trade, corporate or business
names in any other manner without the prior written consent of Transferor.
Within 13 months after the Closing Date, the Company shall provide evidence
reasonably satisfactory to Transferor that all Marked Materials have been used
or destroyed. The Company shall defend, indemnify and hold Transferor harmless
from any Loss from the use of the Marked Materials, including any product
liability or other claims arising from products manufactured or sold by the
Company using such Marked Materials unless due to the fault of Transferor.
4.2.3. Liability for Transfer Taxes. The Company shall be responsible for
the timely payment of, and shall indemnify and hold harmless Transferor against,
all sales (including bulk sales), use, value added, documentary, stamp, gross
receipts, registration, transfer, conveyance, excise, recording, license and
other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection
with or attributable to the transactions effected pursuant to this Agreement.
The Company shall prepare and timely file all Tax Returns required to filed in
respect of Transfer Taxes (including all notices required to be given with
<PAGE>
respect to bulk sales taxes), provided that Transferor shall be permitted to
prepare any such Tax Returns that are the primary responsibility of Transferor
under applicable law. Transferor's preparation of any such Tax Returns shall be
subject to the Company's approval, which approval shall not be withheld
unreasonably.
4.2.4. Records and Documents. For seven years following the Closing Date,
the Company shall grant Transferor and its representatives, at Transferor's
request, during normal business hours on two day's prior notice, access to and
the right to make copies of Books and Records, possession of which is held by
the Company, as may be necessary or useful in connection with Transferor's
preparation of its accounting records, tax returns, financial statements,
compliance with Applicable Laws related to Employee Benefits, filings with the
Securities and Exchange Commission or other related matters. If during such
period, the Company elects to dispose of such Books and Records, the Company
shall first give Transferor sixty (60) days' written notice during which period
Transferor shall have the right to take such Books and Records.
4.2.5. Removal of Transferor as Guarantor. The Company shall use its best
efforts to, within thirty days of the Closing Date, cause Transferor and its
Affiliates to be removed as guarantors with respect to any obligation or
liability related to the Business or any Asset. During the period prior to
removing Transferor and its Affiliates as guarantors, the Company shall
indemnify Transferor and its Affiliates from any and all Losses related to such
guaranties.
4.2.6. LIFO Method. The Company shall adopt the federal income tax
accounting methodology directed by Transferor for the inventories received by
the Company from Transferor. In the case of inventories to be accounted for on
the last-in-first-out ("LIFO") method, the Company shall take all reasonable
measures to ensure the continued use of the LIFO method and avoid the
liquidation of LIFO reserves. Transferor shall, (i) at its cost, be responsible
for the conduct of any income tax or financial reporting examination of such
LIFO methodology and any related issues and (ii) control the settlement or
litigation and bear any and all costs and expense of the litigation or
settlement of any proposed adjustments to the taxable income of the Company with
respect to such LIFO inventory, including adjustments which are the result of
settlement or litigation.
4.3. Adjustment. (a) Prior to the Closing, the Company will prepare and
deliver to Transferor a balance sheet and income statement of Genlyte and the
Business as of the last day of the most recent fiscal month for which month-end
statements are available (the "Determination Date"), all at the Company's
expense, (the "Determination Date Financial Statements"). The Company will also
prepare and deliver to Transferor a calculation setting forth the Target Net
Working Capital (as defined below) as of the Determination Date (the
"Determination Date Target Net Working Capital") and the Net Working Capital as
of the Determination Date (the "Determination Date Net Working Capital"). After
the Closing, the Company will prepare a balance sheet and income statement (the
"Closing Financial Statements") of Genlyte and the Business as of the Closing
Date, all at the Company's expense. The Company shall deliver the Closing
Financial Statements to Transferor within 60 days after the Closing Date,
together with a statement (the "Adjustment Statement") premised upon such
Closing Financial Statements setting forth the Target Net Working Capital (as
defined below) of the Business as of the Closing Date (the "Closing Date Target
Net Working Capital") and the Net Working Capital as of the Closing Date (the
"Closing Date Net Working Capital").
(b) (i) On the Closing Date, Transferor shall pay to the Company, in
cash, the amount, if any, by which Net Working Capital of the Business is less
than the Determination Date Target Net Working Capital (a "Cash Payment"), and
the Company shall pay to Transferor, at Transferor's option, either (A) pursuant
to a promissory note, bearing interest at a rate equal to the rate paid by the
Company on its short term borrowings, which note may be repaid by the Company at
any time, but shall in any event be paid in full within one year from the date
of issuance (the "NWC Note"), or (B) Transferor shall retain an undivided
percentage interest in the accounts receivable of the Business, equal to, in the
case of either clause (A) or (B), the amount, if any, by which Net Working
Capital of the Business exceeds the Determination Date Target Net Working
Capital (a "Note/Receivable Payment"). In the event Transferor retains such
accounts receivable, the Company shall have the exclusive right to collect such
accounts receivable and the Company shall remit the proceeds thereof to
Transferor within five days after the last day of the month within which such
receivables are collected until such time as the proceeds received by Transferor
equals the amount owed to Transferor under this Section 4.3(b)(i).
(ii) Following the delivery of the Adjustment Statement, the
Company shall pay to Transferor, or Transferor shall pay to the Company, as the
case may be, the amount necessary so that the Closing Date Net Working Capital
of the Business equals the Closing Date Target Net Working Capital, taking into
account any Cash Payment or Note/Receivable Payment made pursuant to Section
4.3(b)(i). Any payments made pursuant to this Section 4.3(b)(ii) required by
Transferor shall be made in cash, within ten Business Days after the delivery of
the Adjustment Statement. Any payments required to be made by the Company
<PAGE>
pursuant to this Section 4.3(b)(ii) shall be made, at Transferor's option (x)
pursuant to the terms of a promissory note on the same terms as the NWC Note, or
(y) the Company shall transfer to Transferor that undivided percentage interest
in receivables of the Business equal to the amount owed pursuant to this Section
4.3(b)(ii).
(c) For purposes of this Section 4.3, the term "Target Net Working
Capital" shall mean:
A+B
2
where "A" is equal to the Genlyte Adjusted Net Working Capital multiplied by
32/68. "Genlyte Adjusted Net Working Capital" is equal to the sum of (i)
Genlyte's Net Working Capital, plus (ii) excess reserves classified by Genlyte
as current liabilities; and
"B" is the product of (i) Thomas's Business reported year-to-date net sales, and
(ii) Genlyte's Net Working Capital divided by Genlyte's reported year-to-date
net sales.
(d) For purposes of this Section 4.3, the term "Net Working Capital" shall
mean current assets less current liabilities (in each case excluding Excluded
Assets and Excluded Liabilities), all as determined in accordance with GAAP,
consistently applied.
(e) Transferor's and the Company's rights to indemnification hereunder
(and any limitations on such rights) shall not be deemed to limit, supercede or
otherwise affect the Company's or Transferor's rights to a full adjustment
pursuant to this Section 4.3.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. Master Transaction Agreement. All of the conditions of Thomas and
Genlyte set forth in the Master Transaction Agreement shall have been satisfied,
the LLC Agreement shall be effective and the Genlyte Capitalization Agreement
shall close simultaneously herewith.
5.2. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by the Company) on or prior to the Closing Date of
the following additional conditions, which Transferor agrees to use reasonable
good faith efforts to cause to be fulfilled:
5.2.1. Representations, Performance. The representations and warranties
of Transferor contained in this Agreements and in the Collateral Agreements
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
on and as of the Closing Date. Transferor shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement and each of the Collateral Agreements to be performed or complied
with by it prior to or on the Closing Date. Transferor shall have delivered to
the Company a certificate, dated the Closing Date and signed by its duly
authorized officers, to the foregoing effect.
5.2.2. Collateral Agreements. Transferor or one of its Affiliates, as the
case may be, shall have entered into each of the following agreements with the
Company:
(a) a transitional services agreement, in form and substance mutually
agreed upon by the parties (the "Services Agreement");
(b) a license agreement, in form and substance mutually agreed upon
by the parties, pursuant to which Transferor shall provide to the Company a
royalty-free, fully paid-up, perpetual license of the names and marks "Thomas"
and "Thomas Lighting";
(c) the LLC Agreement; and
(d) the Master Transaction Agreement.
<PAGE>
5.2.3. Opinion of Counsel. The Company shall have received an opinion,
addressed to it and dated the Closing Date, from McDermott, Will & Emery,
counsel to Transferor, in substance and form reasonably satisfactory to the
Company.
5.2.4. Transfer Documents. Transferor shall have delivered to the Company
at the Closing all documents, certificates and agreements necessary to transfer
to the Company good and marketable title to the Assets, free and clear of any
and all Liens thereon, other than Permitted Liens, including:
(a) a bill of sale, assignment and general conveyance, in form and
substance reasonably satisfactory to the Company, dated the Closing Date, with
respect to the Assets, (other than any Asset to be transferred pursuant to any
of the instruments referred to in any other clause of this Section 5.2.4);
(b) assignments of all Contracts, Intellectual Property and any other
agreements and instruments constituting Assets, dated the Closing Date,
assigning to the Company all of Transferor's right, title and interest therein
and thereto, with any required Consent endorsed thereon;
(c) a general warranty deed, dated as of the Closing Date, with
respect to each parcel of Owned Real Property in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations,
or other filings;
(d) an assignment of lease, dated as of the Closing Date, with
respect to each Lease and each Other Lease, in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations or
other filings;
(e) certificates of title to all motor vehicles included in the
Assets to be transferred to the Company hereunder, duly endorsed for transfer to
the Company as of the Closing Date; and
(f) stock certificates representing the Assets described in Section
1.1(p) together with stock powers executed by Transferor in blank.
5.2.5. Consents and Estoppels. The Company shall have received consents
from the lessor of each Lease listed on Schedule 3.1.18(b) to the assignment of
such Lease to the Company. The Company shall also have received estoppel
certificates addressed to the Company from the lessor of each Lease, dated
within 30 days of the Closing Date, identifying the Lease documents and any
amendments thereto, stating that the Lease is in full force and effect and, to
the best knowledge of the lessor, that the tenant is not in default under the
Lease and no event has occurred that, with notice or lapse of time or both,
would constitute a default by the tenant under the Lease and containing any
other information reasonably requested by the Company.
5.2.6. FIRPTA Certificate. The Company shall have received a certificate
of Transferor, dated the Closing Date and sworn to under penalty of perjury,
setting forth the name, address and federal tax identification number of
Transferor and stating that Transferor is not a "foreign person" within the
meaning of Section 1445 of the Code, such certificate to be in the form set
forth in the Treasury Regulations thereunder.
5.2.7. Environmental Compliance. Transferor shall have complied in all
material respects with the requirements of all applicable Environmental Laws
necessary to effect the lawful transfer of the Real Property or the Business.
5.2.8. Financial Statements. The Company shall have received the Audited
Financial Statements and they shall not be materially different from the
Financial Statements or reflect a Material Adverse Effect as compared to the
Financial Statements.
5.2.9. Adjusted Tax Basis. Transferor shall have delivered to the Company
the schedule referred to in Section 4.1.9 in form and substance reasonably
satisfactory to the Company.
5.3. Conditions to Obligations of Transferor. The obligation of
Transferor to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by Transferor), on or prior to the Closing Date,
of the following additional conditions, which the Company agrees to use
reasonable good faith efforts to cause to be fulfilled.
5.3.1. Representations, Performance, etc. The Company shall have duly
performed and complied in all material respects with all agreements and
conditions required by this Agreement and the Collateral Agreements to be
performed or complied with by it prior to or on the Closing Date. The Company
shall have delivered to Transferor a certificate, dated the Closing Date and
signed by its duly authorized officer, to the foregoing effect.
5.3.2. Assumption Agreement. Transferor shall have received from the
Company the Assumption Agreement.
<PAGE>
5.3.3. Collateral Agreements. The Company shall have entered into each of
the Collateral Agreements to which it is a party.
5.3.4. Environmental Compliance. Transferor shall have complied in all
material respects with the requirements of all applicable Environmental Laws
necessary to effect the lawful transfer of the Real Property or the Business.
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1 Employment of Transferor's Employees.
(a) Transferor will, and will cause each of its Affiliates to, use
all commercial efforts to cause the employees employed by Transferor in the
Business to make available their employment services to the Company. For a
period of two years from the Closing Date, Transferor will not, and will not
permit any of its Affiliates to, solicit, offer to employ, hire or retain the
services of or otherwise interfere with the relationship of the Company with any
person employed by or otherwise engaged to perform services for the Company in
connection with the operation of the Business.
(b) Effective as of the Closing Date, the Company shall offer
employment to all employees who are actively employed by Transferor principally
in the operation of the Business ("Business Employees"). Those Business
Employees who accept such offers of employment effective as of the Closing Date
shall be referred to herein as the "Transferred Employees". The Company shall
provide any Transferred Employee who is terminated by the Company within 180
days after the Closing Date with severance pay equal to the severance pay that
such Transferred Employee would have received under the severance plans of
Transferor listed on Schedule 3.1.21(a) if such person's employment with
Transferor were terminated as of the Closing Date. Except as provided under the
immediately preceding sentence, Transferor shall remain responsible, and the
Company shall not assume any liability, for payment of any and all severance,
termination pay, retention, change in control or other similar compensation or
benefits which are or may become payable in connection with the consummation of
the transactions contemplated by this Agreement or the Collateral Agreements.
(c) As of, and subject to, the Closing, the Company shall assume all
Benefit Liabilities of Transferor to the extent such Benefit Liabilities relate
to a Plan (as defined in Section 3.1.21) and any other non-material Benefit
Liability with respect to the Transferred Employees, except to the extent
expressly provided in this Article VI . From and after the Closing Date,
Transferor shall remain solely responsible for any and all Benefit Liabilities
which are not assumed by the Company pursuant to this Article VI.
6.2. Salaried Pension Plan.
As of the date hereof, Transferor maintains the Thomas Industries Pension
Floor Plan (the "Floor Plan") under which eligible Business Employees have
frozen accrued benefits. Notwithstanding anything herein to the contrary, the
Company will not assume the Floor Plan, or any rights, duties, obligations or
liabilities thereunder, nor shall it become a successor employer or be
responsible in any way for Transferor's participation in or obligations or
responsibilities with respect to the Floor Plan. Transferor shall take such
actions as are necessary to fully vest as of the Closing Date the accrued
benefits of each Business Employee under the Floor Plan.
6.3. Salaried Profit Sharing Plan.
(a) As of the date hereof, Transferor maintains the Thomas Industries
Profit Sharing Plan (the "Transferor Profit Sharing Plan") in which eligible
Business Employees participate. Effective as of the Closing Date, Transferor
and the Company shall take all action necessary for the Company to adopt the
Transferor Profit Sharing Plan as a contributing employer for those Transferred
Employees who, immediately prior to the Closing Date, participated (or were
eligible to participate) in the Transferor Profit Sharing Plan (the "Covered
Profit Sharing Participants"). Such actions shall include Transferor's
amendment of the Transferor Profit Sharing Plan and related documents to the
extent necessary to effectuate the intent of this Section, including any changes
necessary so that Transferred Employees will not be entitled to a distribution
under the Transferor Profit Sharing Plan as the result of the transactions
contemplated by this Agreement and the Collateral Agreements. Unless the
Company unilaterally terminates its participation in the Transferor Profit
Sharing Plan at an earlier date, as provided under Section 6.3(c) below, the
Company shall remain a participating employer in the Transferor Profit Sharing
Plan until December 31, 1999.
(b) During the period that the Company is a contributing employer
under the Transferor Profit Sharing Plan, the Company consents to all of the
provisions of the Transferor Profit Sharing Plan, as the same shall be amended
from time to time, and agrees to be bound thereby; provided, however, that the
Company shall have discretion to set the contribution levels applicable to
Covered Profit Sharing Participants for periods on and after January 1, 1999.
<PAGE>
During the period it is a contributing employer under the Transferor Profit
Sharing Plan, the Company shall pay (i) to the Transferor Profit Sharing Plan
its contributions at such times required of other contributing employers, and
(ii) to Transferor an administrative fee as set forth in the Services Agreement
(as defined in Section 5.2.2(a)). The contribution to the Transferor Profit
Sharing Plan for each Covered Profit Sharing Participant for the plan year in
which the Closing Date occurs shall be made by Transferor and the Company on a
proportionate basis based on the number of days in such plan year that the
Covered Profit Sharing Participant were employed by each such company.
(c) The Company, upon at least 30 days advance written notice to
Transferor, may unilaterally terminate its participation in the Transferor
Profit Sharing Plan on a prospective basis; provided that the Company shall
remain obligated to pay to the Transferor Profit Sharing Plan all contribution
amounts owed to such Plan with respect to the period prior to the effective date
of such termination.
(d) (i) As soon as practicable after December 31, 1999, or such
earlier date after the Company's participation in the Transferor Profit Sharing
Plan terminates, that is mutually agreed to by Transferor and the Company,
Transferor shall cause the trustee of the Transferor Profit Sharing Plan to
transfer to the funding agent of a defined contribution plan maintained or
established by the Company (the "Company Profit Sharing Plan ) and containing
provisions necessary to satisfy section 411(d)(6) of the Code by a transferee
plan, for the benefit of Covered Profit Sharing Participants, an amount, in cash
or securities traded on a nationally recognized securities exchange (other than
securities of Transferor or any of its Affiliates), bonds of companies traded on
a nationally recognized securities exchange or such other assets mutually agreed
to by Transferor and the Company, equal to the total account balances (whether
or not vested) held under the Transferor Profit Sharing Plan for the Covered
Profit Sharing Participants (the "Transferred Profit Sharing Plan Assets").
Transferor also shall include in the Transferred Profit Sharing Plan Assets (i)
actual investment earnings or losses through the date of transfer, and (ii)
amounts required under the Transferor Profit Sharing Plan or applicable law to
be contributed to such plan by Transferor with respect to such Covered Profit
Sharing Participants on account of any period prior to the Closing Date (whether
or not currently due). The Company hereby represents and warrants that nothing
shall occur prior to, and on, the actual date of transfer of the Transferred
Profit Sharing Plan Assets which would adversely affect the qualified status of
the Company Profit Sharing Plan and Transferor hereby represents and warrants
that nothing shall occur prior to, and on, the actual date of transfer of the
Transferred Profit Sharing Plan Assets which would adversely affect the
qualified status of the Transferor Profit Sharing Plan. Transferor and the
Company agree that the Transferred Profit Sharing Plan Assets shall not in any
event be less than the amount required under Section 414(1) of the Code and the
regulations thereunder.
(ii) Pending the transfer of the Transferred Profit Sharing Plan
Assets, the accounts of the Covered Profit Sharing Participants shall remain in
the trust fund for the Transferor Profit Sharing Plan and Transferor shall cause
the trustee of the Transferor Profit Sharing Plan to pay any current benefits or
make any distributions to Covered Profit Sharing Participants as they become
due.
(iii) Transferor and the Company agree to provide each other
with such records and information as they may reasonably request relating to
their respective obligations under this section or the administration of the
Transferor Profit Sharing Plan or the Company Profit Sharing Plan, and agree, if
required by law, and in accordance with any time periods required by applicable
law, to notify the Internal Revenue Service of the contemplated transfer.
(e) Except as specifically provided in this Section 6.3, the Company
will not assume the Transferor Profit Sharing Plan, or any rights, duties,
obligations or liabilities thereunder (other than to provide benefits under the
Company Profit Sharing Plan relating to Transferred Profit Sharing Plan Assets),
nor shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
the Transferor Profit Sharing Plan.
6.4. Salaried Savings Plan.
(a) As of the date hereof, Transferor maintains the Thomas Industries
Inc. Retirement Savings and Investment Plan (the "Transferor Savings Plan") in
which eligible Business Employees participate. Effective as of the Closing
Date, Transferor and the Company shall take all action necessary for the Company
to adopt the Transferor Savings plan as a contributing employer for those
Transferred Employees who, immediately prior to the Closing Date, participated
(or were eligible to participate) in the Transferor Savings Plan (the "Covered
Savings Participants"). Such actions shall include Transferor's amendment of the
Transferor Savings Plan and related documents to the extent necessary to
effectuate the intent of this Section, including any changes necessary so that
Transferred Employees will not be entitled to a distribution under the
Transferor Savings Plan as the result of the transactions contemplated by this
Agreement and the Collateral Agreements. Unless the Company unilaterally
<PAGE>
terminates its participation in the Transferor Savings Plan at an earlier date,
as provided under Section 6.4(c) below, the Company shall remain a participating
employer in the Transferor Savings Plan until December 31,1999.
(b) During the period that the Company is a contributing employer
under the Transferor Savings Plan, the Company consents to all of the provisions
of the Transferor Savings Plan, as the same shall be amended from time to time,
and agrees to be bound thereby; provided, however, that the Company shall have
discretion to set the matching contribution levels applicable to Covered Savings
Participants for periods on and after January 1, 1999. During the period it is
a contributing employer under the Transferor Savings Plan, the Company shall pay
(i) to the Transferor Savings Plan its contributions at such times required of
other contributing employers, and (ii) to the Transferor an administrative fee
as set forth in the Services Agreement (as defined in Section 5.2.2(a)). The
employer matching contributions to the Transferor Savings Plan for each Covered
Savings Participant for the plan year in which the Closing Date occurs shall be
made by Transferor and the Company based on the salary deferral contributions
made by the Covered Savings Participant during the period they were employed by
each such company.
(c) The Company, upon at least 30 days advance written notice to
Transferor, may unilaterally terminate its participation in the Transferor
Savings Plan on a prospective basis; provided that the Company shall remain
obligated to pay to the Transferor Savings Plan all contribution amounts owned
to such Plan with respect to the period prior to the effective date of such
termination.
(d) (i) Unless otherwise agreed to by the Company, as soon as
practicable after the Company's participation in the Transferor Savings Plan
terminates, Transferor shall cause the trustee of the Transferor Savings Plan to
transfer to the funding agent of a defined contribution plan maintained or
established by the Company (the "Company Savings Plan") and containing
provisions necessary to satisfy sections 401(k) and 411(d)(6) of the Code by a
transferee plan, for the benefit of Covered Savings Participants, an amount , in
cash or common stock of Transferor, or such other assets mutually agreed to by
Transferor and the Company, in kind, equal to the total account balances
(whether or not vested) held under the Transferor Savings Plan for the Covered
Savings Participants (the "Transferred Savings Plan Assets"). Transferor also
shall include in the Transferred Savings Plan assets (i) actual investment
earnings or losses through the date of transfer and (ii) amounts required under
respect to such Covered Savings Participants on account of any period prior to
the Closing Date (whether or not currently due). In addition, Transferor shall
take all action necessary prior to the date assets are transferred to the
Company Savings Plan so that all accounts of Covered Savings Participants under
the Transferor Savings Plan are participant directed under ERISA Section
404(c). The Company hereby represents and warrants that nothing shall occur
prior to, and on, the actual date of transfer of the Transferred Savings Plan
Assets which would adversely affect the qualified status of the Company
Savings Plan and Transferor hereby represents and warrants that nothing shall
occur prior to, and on, the actual date of transfer of the Transferred
Savings Plan Assets which would adversely affect the qualified status of the
Transferor Savings Plan. Transferor and the Company agree that the
Transferred Savings Plan Assets shall not in any event be less than the
amount required under Section 414(1) of the Code and the regulations thereunder.
(ii) Pending the transfer of the Transferred Savings Plan Assets,
the accounts of the Covered Participants shall remain in the trust fund for the
Transferor Savings Plan and Transferor shall cause the trustee of the Transferor
Savings Plan to pay any current benefits or make any distributions to Covered
Participants as they become due.
(iii) Transferor and the Company agree to provide each other
with such records and information as they may reasonably request relating to
their respective obligations under this section or the administration of the
Transferor Savings Plan or the Company Savings Plan, and agree, if required by
law, and in accordance with any time periods required by applicable law, to
notify the Internal Revenue Service of the contemplated transfer.
(e) Except as specifically provided in this Section 6.4, the Company
will not assume the Transferor Savings Plan, or any rights, duties, obligations
or liabilities thereunder (other than to provide benefits under the Company
Savings Plan relating to Transferred Savings Plan Assets), nor shall it become a
successor employer or be responsible in any way for Transferor's participation
in or obligations or responsibilities with respect to the Transferor Savings
Plan.
6.5. Consolidated Thrift Savings Plan for Hourly Employees.
(a) As of the date hereof, Transferor maintains the Thomas
Industries, Inc. Consolidated Thrift Savings Plan for Hourly Employees (the
"Transferor Consolidated Savings Plan") in which eligible Business Employees
participate. Immediately prior to the Closing, Transferor shall establish a
separate, substantially identical plan and trust to the Transferor Consolidated
Savings Plan and related trust (the "New Consolidated Savings Plan") and "spin
<PAGE>
off" to the New Consolidated Savings Plan the assets and liabilities of the
Transferor Consolidated Savings Plan representing the account balances of
Business Employees. As of, and subject to, the Closing, the Company shall adopt
and assume the New Consolidated Savings Plan with respect to all persons
entitled to benefits under the provisions of the New Consolidated Savings Plan.
Transferor shall contribute to the Transferor Consolidated Savings Plan all
amounts required under the Transferor Consolidated Savings Plan or applicable
law to be contributed to such plan with respect to such Business Employees on
account of periods prior to the Closing Date (whether or not currently due).
Prior to and after the Closing, Transferor and the Company shall cooperate in
preparing any appropriate documents and use their reasonable best efforts to
take all other actions necessary to effectuate the intent of this Section.
(b) As soon as administratively practicable after the Closing
Date, Transferor will supply the Company with (i) all records concerning
participation, vesting, accrual of benefits, payment of benefits, and election
forms of benefits under the New Consolidated Savings Plan, and (ii) any other
information reasonably requested by the Company as necessary or appropriate for
the administration of the New Consolidated Savings Plan. Transferor will make
all required filings or reports with or to the IRS, or any other governmental
agency, and the participants and their beneficiaries with respect to the New
Consolidated Savings Plan (the "Required Filings") on a timely basis for all
plan years ending before or on the Closing Date or as may be required in
connection with the transfer of the New Consolidated Savings Plan. The Company
will make all Required Filings on a timely basis for the plan years ending after
the Closing Date, and Transferor will supply the Company with all information
and data in Transferor's control reasonably requested by the Company as
necessary or appropriate for the completion of the Required Filings or for
seeking any determination from the IRS with respect to New Consolidated Savings
Plan.
(c) The Company will not assume the Transferor Consolidated Savings
Plan, or any rights, duties, obligations or liabilities thereunder (other than
to provide benefits under the New Consolidated Savings Plan), nor shall it
become a successor employer or be responsible in any way for Transferor's
participation in or obligations or responsibilities with respect to the
Transferor Consolidated Savings Plan.
6.6. Assumed Hourly Plans.
(a) As of the date hereof, Transferor maintains the Thomas
Industries Inc. Thrift Savings Plan for Hourly Employees at Emco Lighting,
Milan, Illinois, the Thomas Industries Inc., at Hopkinsville, Kentucky, and the
I.B.E.W. Local Union No. 1090, AFL-CIO, Pension Plan, the Thomas Industries
Holdings Inc. at Sparta, Tennessee and the I.B.E.W. Local Union No. 2143, AFL-
CIO, Pension Plan, and the Thomas Industries Holdings Inc. Retirement Plan for
Employees Represented by Local 1028 and Local 1969, I.B.E.W., AFL-CIO
(collectively, the "Hourly Plans"), and (ii) Transferor is the contributing
employer under the Gardco-I.B.E.W. Retirement Plan and the Gardco-I.B.E.W.
401(k) Plan (collectively, the "Gardco Hourly Plans", and, together with the
Hourly Plans, the "Assumed Hourly Plans"), in which eligible Business Employees
participate. As of, and subject to, the Closing, the Company shall adopt and
assume the Assumed Hourly Plans, with respect to all persons entitled to
benefits under the provisions of such Assumed Hourly Plans. Prior to and after
the Closing, Transferor and the Company shall cooperate in preparing any
appropriate documents and use their reasonable best efforts to take all other
actions necessary to effectuate the intent of this Section.
(b) As soon as administratively practicable after the Closing Date,
Transferor will supply the Company with (i) all records concerning
participation, vesting, accrual of benefits, payment of benefits, and election
forms of benefits under each Assumed Hourly Plan, and (ii) any other information
reasonably requested by the Company as necessary or appropriate for the
administration of each Assumed Hourly Plan. Transferor will make all required
filings or reports with or to the IRS, or any other governmental agency, and the
participants and their beneficiaries with respect to each Assumed Hourly Plan
(the "Required Filings") on a timely basis for all plan years ending before the
Closing Date or as may be required in connection with the transfer of the
Assumed Hourly Plans. The Company will make all Required Filings on a timely
basis for all plan years ending after the Closing Date, and Transferor will
supply the Company with all information and data in Transferor's control
reasonably requested by the Company as necessary or appropriate for the
completion of the Required Filings or for seeking any determination from the IRS
with respect to the Assumed Hourly Plans.
6.7. Continuation of Welfare Benefits.
(a) Transferor agrees to continue to provide, for the one hundred and
eighty (180) day period beginning on the Closing Date, any Transferred Employees
or, at the Company's option, any other persons hired by the Company or
transferred to one of the facilities contributed by Transferor pursuant hereto
within the one hundred and eighty (180) day period beginning on the Closing Date
(collectively referred to as "Post Closing Employees") with such benefits under
"welfare plans" (as defined in Section 3(1) of ERISA) other than severance
<PAGE>
plans, as are, immediately prior to the Closing Date, being provided to such
Transferred Employees, whether provided through insurance programs or on a self-
funded basis, (collectively, the "Welfare Benefits"). Transferor agrees to take
all steps necessary (including amending the applicable plans and related
documents) to allow Transferred Employees to continue to participate in such
plans for said one hundred and eighty (180) day period and the Company agrees to
reimburse Transferor for the actual cost of providing such Welfare Benefits
within thirty (30) days after presentation of written monthly statements thereof
to the Company to the extent not disputed. With respect to Welfare Benefits
provided through insurance programs, for purposes of the preceding sentence,
Transferor's actual cost for providing such Welfare Benefits shall mean the sum
of employer and employee premium contributions which are made on behalf of Post-
Closing Employees to the plans providing such Welfare Benefits, which shall not
exceed the rate of such contributions made on behalf of comparable employees of
Transferor. Transferor shall furnish the Company with such reasonable
information as the Company shall request in order for the Company to verify
Transferor's cost thereof. If the Company so requests, Transferor agrees to use
its best efforts to procure the consent of any insurance carrier or other
Person, and to take such other actions as may be necessary, in order to
effectuate the assignment to the Company of any insurance policies or other
contracts issued to Transferor exclusively in connection with the Welfare
Benefits or the Transferred Employees under other Plans. If any "qualifying
event," as defined in Section 603 of ERISA, occurs during the period in which
health coverage is provided pursuant to the provisions hereof, Transferor agrees
to offer the affected Post Closing Employees and their dependents the
opportunity to continue health coverage with the full cost thereof to be paid by
the persons continuing such coverage, to the extent and for the time required by
ERISA or the Code and any applicable state laws (on the same basis, to the same
extent and for payment of the same amounts as employees and dependents of
Transferor are provided the opportunity to continue such coverage), and to
provide the Post-Closing Employees and their dependents with any notifications
required thereunder. Transferor shall continue to process and pay, or cause to
be processed and paid, in accordance with the terms of its plans providing
Welfare Benefits, all claims submitted by the Post-Closing Employees under such
benefit plans for expenses and claims incurred prior to the date to which such
Welfare Benefits coverage is extended pursuant to the provisions hereof.
(b) From and after the Closing Date, Transferor shall remain solely
responsible for any and all Benefit Liabilities relating to or arising in
connection with the requirements of Section 4980B of the Code (including the
obligation to provide "COBRA" continuation coverage under 4980(B) of the Code)
to provide continuation of health care coverage and the requirements of HIPAA
and under any Benefit Plan in respect of (A) Business Employees, other than the
Transferred Employees and their covered dependents, and (B) to the extent
related to a qualifying event occurring on or before the Closing Date,
Transferred Employees and their covered dependents. Transferor agrees, and
agrees to cause its Affiliates to, issue or cause to be issued all certificates,
notices and such other documents required by HIPAA to each Transferred Employee
and their covered dependents.
(c) Except as specifically provided in this Section 6.7 and in
Sections 6.1(b) and 6.8, the Company will not assume any Plan providing Welfare
Benefits, or any rights, duties, obligations or liabilities thereunder, nor
shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
any such Plan.
6.8. Post-Retirement Health Benefits.
As of the date hereof, Transferor maintains one or more Plans that are
"employee welfare benefit plan" (within the meaning of section 3(1) of ERISA)
and that provide post-retirement health benefits to Business Employees and
former employees of the Business ("Transferor Retiree Welfare Benefits").
Effective as of, and subject to the Closing, the Company shall assume the
obligation to provide such Transferor Retiree Welfare Benefits, provided that
Transferor agrees to reimburse the Company after the Closing Date for the actual
cost incurred by the Company to provide the Transferor Retiree Welfare Benefits
under the terms of the applicable Plan in effect as of the date hereof, to the
extent such cost incurred by the Company exceeds (i) $500,000 with respect to
any full calendar year beginning after the Closing Date, or (ii) with respect to
the calendar year in which the Closing Date occurs, an amount equal to $500,000,
multiplied by a fraction, the numerator of which is the number of days in such
calendar year after the Closing Date and the denominator of which is 365. Such
reimbursement shall be made within 30 days after presentation of written monthly
statements thereof to Transferor to the extent not disputed.
6.9. Multiemployer Plans.
With respect to each Multiemployer Plan set forth on Schedule 3.1.21(a),
the Company shall reimburse Transferor for any withdrawal liability incurred by
Transferor under such Multiemployer Plan as the result of the transactions
contemplated under this Agreement and the Collateral Agreements.
Notwithstanding the foregoing, the Company may elect prior to the Closing Date
that Section 4204 of ERISA shall apply to the transactions contemplated under
<PAGE>
this Agreement and the Collateral Agreements with respect to any such
Multiemployer Plan, in which case Transferor and the Company shall take all
actions necessary to comply with Section 4204 of ERISA with respect to each such
Multiemployer Plan. Such compliance shall include the execution of any
necessary documentation and the posting of a bond or escrow (or letter of credit
if acceptable to the Multiemployer Plan) within the time required by Section
4204(a)(1)(B) of ERISA for each of the Multiemployer Plans for which a bond or
escrow (or letter of credit) is required, in an amount, for the period of time,
and in a form that complies with Section 4204(a)(1)(B) of ERISA - or, within
such time period obtaining a variance from such bonding or escrow requirement
from each of the applicable Multiemployer Plan or Multiemployer Plans or from
the Pension Benefit Guaranty Corporation (the "PBGC") - so that a transfer of
contribution obligations to the Company under the Multiemployer Plans with
respect to Business Employees does not result in a complete or partial
withdrawal of Transferor from the applicable Multiemployer Plans under Sections
4203 or 4205 of ERISA, respectively. In order to assist the Company in making
any election contemplated by this Section 6.9, Transferor shall use its
reasonable best efforts to provide to the Company as soon as possible after the
date hereof a written estimate from each Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal as of the Closing.
6.10. Supplemental Profit Sharing Plan.
(a) As of the date hereof, Transferor maintains the Thomas Industries
Supplemental Profit Sharing Plan (the "Supplemental Plan") in which eligible
Business Employees participate, and with respect to which Transferor has
established and maintained a grantor trust (the "Rabbi Trust") to fund benefits
to be provided under the Supplemental Plan. Effective as of, and subject to,
the Closing Date, Transferor and the Company shall take all action necessary for
the Company to adopt the Supplemental Plan as a contributing employer for those
Transferred Employees who, immediately prior to the Closing Date, participated
(or were eligible to participate) in the Supplemental Plan (the "Supplemental
PSP Participants"). The Company shall remain a contributing employer under the
Supplemental Plan until December 31, 1998 or such longer period agreed to by the
parties. During the period it is a contributing employer under the Supplemental
Plan, the Company shall pay to the Rabbi Trust its contributions at such times
required of other contributing employers, and (ii) to Transferor an
administrative fee as set forth in the Services Agreement (as defined in Section
5.2.2(a)).
(b) At approximately the same time as Transferred Profit Sharing Plan
Assets are transferred to the Company Profit Sharing Plan under Section 6.3(d),
Transferor shall use its commercially reasonable efforts to transfer assets of
the Rabbi Trust to a successor trust to be established by the Company which
represents the entire benefit accrued by Supplemental PSP Participants as of
such date under the Supplemental Plan. To the extent that Transferor is able to
transfer such amounts to the successor trust to be established by the Company,
the Company shall assume the obligation of Transferor to provide the benefits
accrued by Supplemental PSP Participants under the Supplemental Plan.
Transferor agrees to provide Company with such records and information as it may
reasonably request relating to its obligations to provide the benefits
contemplated under this Section.
(c) Except for the Company's assumption of Transferor's obligation to
provide benefits accrued by Supplemental PSP Participants under the Supplemental
Plan to the extent that assets are transferred to a successor trust to be
established by the Company, as described above, the Company will not assume the
Supplemental Plan, or any rights, duties, obligations or liabilities thereunder,
nor shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
the Supplemental Plan.
6.11. Employment Taxes.
(a) Transferor and the Company will, to the extent permitted by
Applicable Law, (i) treat the Company as a "successor employer" and Transferor
as a "predecessor employer" within the meaning of sections 3121(a)(1) and
3306(b)(1) of the Code, with respect to Transferred Employees who are employed
by the Company for purposes of Taxes imposed under the United States Federal
Unemployment Tax Act ("FUTA") or the United States Federal Insurance
Contributions Act ("FICA") and (ii) and cooperate with each other to avoid, to
the extent possible, the filing of more than one IRS Form W-2 with respect to
each such Transferred Employee for the calendar year within which the Closing
Date occurs.
(b) At the request of the Company with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers' compensation, payroll, healthcare or other
similar Tax other than taxes imposed under FICA and FUTA, Transferor and the
Company will, to the extent permitted by Applicable Law, (i) treat the Company
as a successor employer and Transferor as a predecessor employer, within the
meaning of the relevant provisions of such Tax law, with respect to Transferred
Employees who are employed by the Company and (ii) cooperate with each other to
<PAGE>
avoid, to the extent possible, the filing of more than one individual
information reporting form pursuant to each such Tax law with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
6.12. Other Plans. The Company shall not assume or have any Benefit
Liabilities with respect to the Thomas Industries Executive Retirement Plan, the
Thomas Industries Inc. 1995 Incentive Stock Plan and the Thomas Industries Stock
Award Program.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement shall be terminated at such time as the
Master Transaction Agreement is terminated. In the event of the termination of
this Agreement, this Agreement shall become void and have no effect, without any
liability to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors, members,
managers, officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except (i) as specified in Section 8.4, (ii) subject
to Article VIII of the Master Transaction Agreement, for any liability resulting
from such party's breach of this Agreement and (iii) for the payment of any fee
pursuant to Article VIII of the Master Transaction Agreement.
ARTICLE VIII
DEFINITIONS, MISCELLANEOUS
8.1 Definition of Certain Terms. The terms defined in this Section 8.1,
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement. All
references herein to a Section, Article or Schedule are to a Section, Article or
Schedule of or to this Agreement, unless otherwise indicated.
Adequate Reserves: with respect to any asset or liability, an amount
of specific or general Reserves that equals or exceeds the amount of any
Loss associated with such asset or liability now or hereafter recognized.
Adjustment Statement: as defined in Section 4.3(a).
Affiliate: when used with reference to a specified Person, any Person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with the specified Person.
Agreement: this Capitalization Agreement, including the Schedules
hereto.
Applicable Law: all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
Assets: as defined in Section 1.1.
Assumed Liabilities: as defined in Section 2.3.
Assumed Hourly Plans: as defined in Section 6.6(a).
Assumption Agreement: as defined in Section 2.3(b).
Audited Financial Statements: as defined in Section 4.1.7.
Balance Sheet: the balance sheet contained in the Financial
Statements referenced in clause (a) of Section 3.1.4.
Balance Sheet Date: as defined in Section 3.1.4.
Benefit Liabilities: liabilities, obligations, commitments, damages,
costs, taxes and expenses, including reasonable fees and disbursements of
attorneys and other advisors, including any such expenses incurred in
connection with the enforcement of any applicable provision of this
Agreement payable to any Employee or other Person as a result of, with
respect to or under any Plan or similar employee benefit plan, agreement,
policy or practice.
Books and Records: as defined in Section 1.1(i).
Business: the business of Transferor relating to the manufacture,
sale, marketing and distribution of consumer, commercial, industrial and
outdoor lighting.
<PAGE>
Business Day: shall mean any day on which commercial banks in the
City of New York, New York are open for business.
Business Employees: as defined in Section 6.1(b).
Cash Payment: as defined in Section 4.3(b)(i).
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. section9601 et seq.
Closing Date: as defined in Section 2.1.
Closing Date Net Working Capital: as defined in Section 4.3(a).
Closing Date Target Net Working Capital: as defined in Section
4.3(a).
Closing Financial Statement: as defined in Section 4.3(a).
Code: the Internal Revenue Code of 1986, as amended, or any successor
statute to such Code.
Collateral Agreements: the agreements and other documents and
instruments described in Section 5.2.2 and 5.2.4.
Company: as defined in the first paragraph of this Agreement.
Company Indemnitees: as defined in Section 8.2(a).
Company's Accountants: the accountants of the Company as determined
by the Company's management board.
Company Profit Sharing Plan: as defined in Section 6.3(d)(i).
Company Savings Plan: as defined in Section 6.4(d)(i).
Component: means any Hardware, Software, Databases and/or Embedded
Control of any System used in the Business.
Consent: any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of
registration, certificate, declaration or filing with, or report or notice
to, any Person, including but not limited to any Governmental Authority.
Contract: as defined in Section 3.1.12(a).
Covered Profit Sharing Participants: as defined in Section 6.3(a).
Covered Savings Participants: as defined in Section 6.4(a).
Database: shall mean all data and other information recorded, stored,
transmitted and retrieved in electronic form by a System or any Component,
whether located on any Component(s) of a System or archived in storage
media of a type employed or used in conjunction with any Component or
System used in the Business.
Determination Date: as defined in Section 4.3(a).
Determination Date Financial Statements: as defined in Section
4.3(a).
Determination Date Net Working Capital: as defined in Section 4.3(a).
Determination Date Target Net Working Capital: as defined in Section
4.3(a).
Division: as defined in the first WHEREAS clause of this Agreement.
$ or dollars: lawful money of the United States.
Embedded Control: shall mean any microprocessor, microcontroller, PLC,
smart instrumentation or other sensor, driver, monitor, robotic or other
device containing a semiconductor, memory circuit, BIOS, PROM or other
microchip used in the Business.
Employees: as defined in Section 3.1.21(a).
Environmental Laws: all Applicable Laws relating to the protection of
the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, handling, holding, abatement, existence,
Release, threatened Release or transportation or disposal of any Hazardous
Substances, including (i) CERCLA, the Resource Conservation and Recovery
Act, and the Occupational Safety and Health Act, (ii) all other
requirements pertaining to reporting, licensing, permitting, investigation
<PAGE>
or remediation of emissions, discharges, releases or threatened releases of
Hazardous Substances into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of Hazardous
Substances, and (iii) all other requirements pertaining to the protection
of the health and safety of employees or the public.
Environmental Liabilities and Costs: all Losses, whether direct or
indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including all Losses
related to Remedial Actions, and all fees disbursements and expenses of
counsel, experts, personnel and consultants based on, arising out of or
otherwise in respect of: (i) the ownership, operation, use or occupancy of
the Business, the Assets, the Real Property or Other Leases or any other
real properties, assets, equipment or facilities, by any Transferor, or any
of their predecessors or Affiliates; (ii) the environmental conditions
existing on the Closing Date on, under, above, about or emanating from any
Real Property, the Assets or property subject to Other Leases or any other
real properties, assets, equipment or facilities currently or previously
owned, leased, operated, occupied or used by the any Transferor, or any of
their predecessors or Affiliates; and (iii) expenditures necessary to cause
any Real Property or any aspect of the Business or the Assets to be in
compliance with any and all requirements of Environmental Laws as of the
Closing Date, including all Environmental Permits issued or required under
or pursuant to such Environmental Laws, and reasonably necessary to make
full economic use of any Real Property or the Assets.
Environmental Permits: any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization with respect to the any Transferor
necessary for the conduct of the Business as currently conducted or
previously conducted under any Environmental Law.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Excluded Assets: as defined in Section 1.2.
Excluded Liabilities: as defined in Section 2.4.
Financial Statements: each of the financial statements required to be
provided by Section 3.1.4.
Floor Plan: as defined in Section 6.2.
GAAP: generally accepted accounting principles as in effect in the
United States.
Gardco Hourly Plans: as defined in Section 6.6(a).
Genlyte: as defined in the WHEREAS clauses of this Agreement.
Genlyte Adjusted Net Working Capital: as defined in Section 4.3(c).
Governmental Approval: any Consent of, with or to any Governmental
Authority.
Governmental Authority: any nation of government, any state or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision, thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-
regulatory organization.
Hardware: shall mean all mainframes, midrange computers, personal
computers, notebooks, servers, switches, printers, modems, drives,
peripherals and any component of any of the foregoing used by the Business.
Hazardous Substances: any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" thereunder, or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental Authority or
Environmental Law.
Headquarters: the building located at 4360 Brownsboro Road,
Louisville, Kentucky 40232.
HIPAA: as defined in Section 3.1.21(c)(viii).
<PAGE>
Horizon/Lite Acquisition: the contemplated acquisition by one of
Transferor's subsidiaries of certain assets of Horizon/Lite.
Hourly Plans: as defined in Section 6.6(a).
HSR Act: the Hart-Scott-Rodino Anti-trust Improvements Act of 1976,
as amended.
Indemnified Party: as defined in Section 8.2(d).
Indemnifying Party: as defined in Section 8.2(d).
Intellectual Property: any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and
extensions), patent disclosures awaiting filing determination, inventions
and improvements thereto; (b) trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, and registrations and
applications for registration thereof but excluding the names "Thomas" and
"Thomas Industries Inc."; (c) copyrights (including software) and
registrations thereof; (d) inventions, processes, designs, formulae, trade
secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f) Software;
(g) intellectual property rights similar to any of the foregoing; (h)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media) used in the Business.
Intellectual Property Assets: as defined in Section 1.1(h).
Inventories: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
Joint Proxy Statement: the Joint Proxy Statement of Thomas and
Genlyte to be filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, pursuant to which each of
Thomas and Genlyte will seek stockholder approval of the transactions
contemplated by the Master Transaction Agreement.
Knowledge: the actual knowledge after due inquiry of (i) any
"officer" of the Transferor, as such term is defined in Rule 16a-1(f) of
the General Rules and Regulations under the Securities Exchange Act of
1934, or (ii) any individual employed by Transferor as a manager of any
portion of the Business.
LLC Agreement: as defined in the WHEREAS clauses of this Agreement.
Leased Real Property: means all interests leased pursuant to the
Leases.
Leases: means the real property leases, subleases, licenses and
occupancy agreements relating the Business pursuant to which Transferor is
the lessee, sublessee, licensee or occupant.
Lien: any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment,
burden, title defect, title retention agreement, voting, trust agreement,
interest, equity, option, lien, right of first refusal, charge or other
restrictions or limitations of any nature whatsoever, including such as may
arise under any Contracts.
Losses: as defined in Section 8.2(a).
Marked Materials: as defined in Section 4.2.2.
Master Transaction Agreement: as defined in the WHEREAS clauses of
this Agreement.
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is adverse to the business, operations, prospects,
results of operations, condition (financial or otherwise), properties
(including intangible properties), assets (including intangible assets) or
liabilities of the Business in an amount equal to $5,000,000 or greater.
Membership Interests: as defined in Section 2.2.
Multiemployer Plan: as defined in Section 3.1.21(a).
Net Working Capital: as defined in Section 4.3(d).
<PAGE>
New Consolidated Savings Plan: as defined in Section 6.5.
Note: as defined in Section 2.2(b).
Note/Receivable Payment: as defined in Section 4.3(b)(i).
NWC Note: as defined in Section 4.3(b).
Other Leases: the leases, subleases, licenses and occupancy
agreements pursuant to which Transferor is a lessor sublessor or licensor
of any part of the Real Property.
Owned Intellectual Property: as defined in Section 3.1.16(a).
Owned Real Property: the real property owned by the Transferor or any
Affiliate utilized by the Business, together with all other structures,
facilities, improvements, fixtures, systems, equipment and items of
property presently or hereafter located thereon attached or appurtenant
thereto or owned by Transferor or any Affiliate and utilized by the
Business and located on Leased Real Property and all easements, licenses,
rights and appurtenances relating to the foregoing other than owned real
property included in Excluded Assets.
Permitted Liens: (i) Liens reserved against in the Balance Sheet to
the extent so reserved, (ii) Liens for Taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on Transferor's books
in accordance with GAAP, (iii) liens arising in the ordinary course of
business from a purchase money security interest or related to indebtedness
for borrowed money under Transferor's credit facilities, or (iv) Liens
that, individually and in the aggregate, do not and would not materially
detract from the value of any of the property or assets of the Business or
materially interfere with the use thereof as currently used.
Person: any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
Plan: as defined in Section 3.1.21(a).
Rabbi Trust: as defined in Section 6.10.
Real Property: all of the real property, together with all buildings,
structures, fixtures and improvements, listed on Schedules 3.1.18(a) and
3.1.18(b).
Real Property Laws: as defined in Section 3.1.18(f).
Related Entity: with respect to any Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a material interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a material
interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee(or in a similar capacity); and
(f) any Related Entity of any individual described in clause (b)
or (c).
Related Persons: as defined in Section 3.1.21(a).
Release: any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including, the
moving of any materials through, into or upon, any land, soil, surface
water, ground water or air, or otherwise entering into the environment.
Remedial Action: all actions required to (i) clean up, remove, treat
or in any other way remediate any Hazardous Substances; (ii) prevent the
release of Hazardous Substances so that they do not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform studies, investigations and care related to any such Hazardous
Substances.
<PAGE>
Reserves: the reserves shown on the Balance Sheet or in the
accounting records of Transferor for the Business as of the Closing Date.
Software: shall mean all software owned, developed, licensed or used
by Transferor or any of its Affiliates in the Business, including (i) all
modifications, enhancements, fixes, updates, upgrades, bypasses and work-
arounds, (ii) the source code and object code for any of the foregoing and
(iii) all operating systems, bridgeware, firmware, middleware or utilities
used by the Business.
Subsidiaries: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or
other equity interests.
Supplemental Plan: as defined in Section 6.10.
Supplemental PSP Participants: as defined in Section 6.10.
System: shall mean any combination of any Software, Hardware, Database
or Embedded Control used by the Business.
Target Net Working Capital: as defined in Section 4.3(c).
Tax: any federal, state, provincial, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, goods and services, excise,
customs duties, transfer, conveyance, mortgage registration, stamp,
documentary, recording, premium, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or other similar tax, duty or
other governmental charge or assessment or deficiencies thereof (including
all interest and penalties thereon and additions thereto whether disputed
or not).
Tax Return: any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Thomas: as defined in the first paragraph of this Agreement.
Transaction Expenses: as defined in Section 8.4.
Transferred Employees: as defined in Section 6.1(b).
Transferred Profit Sharing Plan Assets: as defined in Section
6.3(d)(i).
Transferred Savings Plan Assets: as defined in Section 6.4(d)(i).
Transferring Affiliates: Tupelo Holdings Inc., Thomas Industries
Holdings Inc., Gardco Mfg, Inc., Capri Lighting, Inc., Thomas Imports, Inc.
and TI Industries Corporation.
Transfer Taxes: as defined in Section 4.2.3.
Transferor: as defined in the first paragraph of this Agreement.
Transferor Consolidated Savings Plan: as defined in Section 6.5.
Transferor Profit Sharing Plan: as defined in Section 6.3(a).
Transferor Retiree Welfare Benefits: as defined in Section 6.8.
Transferor Savings Plan: as defined in Section 6.4(a).
Transferor's Accountants: Ernst & Young LLP.
Treasury Regulations: the regulations prescribed pursuant to the
Code.
Welfare Benefits: as defined in Section 6.7(a).
Withholding Taxes: as defined in Section 3.1.6(a)
8.2 Indemnification. (a) By Transferor. Transferor covenants and agrees
to defend, indemnify and hold harmless the Company, its officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively, the
"Company Indemnitees") from and against, and pay or reimburse the Company
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
<PAGE>
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Transferor herein or under any Collateral Agreement or in connection
herewith or therewith;
(ii) any failure of Transferor to perform any covenant or
agreement hereunder or under any Collateral Agreement or fulfill any
other obligation in respect hereof or of any Collateral Agreement;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any and all Taxes of Transferor and all Affiliates thereof,
whether or not relating to or arising out of the Business; and
(v) any and all Benefit Liabilities not assumed by the Company.
Except for inaccuracies in the representations and warranties
contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.6 and 3.1.11 and breaches of
covenants contained herein or in any Collateral Agreement, Transferor shall not
be required to indemnify the Company Indemnitees with respect to any claim for
indemnification pursuant to this Section 8.2(a) unless and until the aggregate
amount of all Losses arising under this Section 8.2(a) exceeds $1,000,000 and
then only for the amount of such excess. Notwithstanding the immediately
preceding sentence, Transferor shall not be required to indemnify the Company
Indemnitees with respect to any claim for indemnification arising from
inaccuracies in the representations and warranties contained in Section 3.1.19
unless and until the aggregate amount of all such Losses exceeds $500,000 and
then only for the amount of such excess.
(b) By the Company. The Company covenants and agrees to defend,
indemnify and hold harmless Transferor and its officers, directors, employees,
agents, advisers, representatives and Affiliates (collectively, the "Transferor
Indemnitees") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty by the
Company made or contained in any Collateral Agreement or in connection
therewith; or
(ii) any failure of the Company to perform any covenant or
agreement made or contained in this Agreement or any Collateral
Agreement or fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities except to the extent that they
constitute Losses for which Transferor is required to indemnify the
Company Indemnitees under Section 8.2(a);
(iv) the use by the Company of any Transferor tradenames or
trademarks after the Closing Date as contemplated by Section 4.2.2;
and
(v) the operation of the Business by the Company or the
Company's ownership, operation or use of the Assets following the
Closing Date, except to the extent such Losses result from or arise
out of the Excluded Liabilities, Excluded Assets or constitute Losses
for which Transferor is required to indemnify the Company Indemnitees
under Section 8.2(a).
(c) Adjustment to Indemnification Payments. Any payment made by
Transferor pursuant to Section 8.2(a) in respect of any Losses shall be net of
any Reserve maintained by Transferor for such Loss or category of Losses. Any
payment made by Transferor to the Company Indemnitees, on the one hand, or by
the Company to the Transferor Indemnitees, on the other hand, pursuant to this
Section 8.2 in respect of any Losses (i) shall be net of any insurance proceeds
realized by and paid to the Indemnified Party in respect of such Losses and (ii)
shall be (A) reduced by an amount equal to any Tax benefits attributable to such
Losses and (B) increased by an amount equal to any Taxes attributable to the
receipt of such payment, but only to the extent that such Tax benefits are
actually realized, or such Taxes are actually paid, as the case may be, by the
Indemnified Party or by a consolidated, combined or unitary group of which the
Indemnified Party is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any Losses for which it is seeking
indemnification pursuant to this Section 8.2; provided that the Indemnified
Party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes (based on written advice from
insurance brokers or providers) the cost of pursuing such an insurance claim
together with any corresponding increase in insurance premiums or other
chargebacks to the Indemnified Party, as the case may be, would exceed the value
of the claim for which the Indemnified Party is seeking indemnification. Any
<PAGE>
amount paid by Transferor pursuant to Section 8.2(a) shall be characterized, for
tax purposes, as a contribution to the Company's capital and amounts paid by the
Company pursuant to Section 8.2(b) shall be characterized as a return of
capital. "Indemnified Party" means a party entitled to indemnification pursuant
to this Agreement.
(d) Indemnification Procedures. In the case of any claim asserted by
a third party against an Indemnified Party, notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate in such defense at
such Indemnified Party's expenses, and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of the Company to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.2 and the records of each shall be available to the other with respect
to such defense.
(e) Time Limitation. All claims for indemnification under clause (i)
of the first sentence of Section 8.2(a) or clause (i) of the first sentence of
Section 8.2(b) must be asserted prior to the termination of the respective
survival periods set forth in Section 8.3. Notwithstanding the foregoing, any
claim for indemnification that is asserted by written notice within the
applicable survival period shall survive until resolved and discharged by the
parties or pursuant to a final non-appealable judicial determination.
(f) Payment by Transferor. Notwithstanding any provision of this
Section 8.2 to the contrary, any payment required to be made by Transferor to
the Company pursuant to this Section 8.2 shall be deemed a liability of Thomas
owing to the Company and shall be deducted from the next distribution made to
Thomas pursuant to Section 6.2(b) of the LLC Agreement (other than Tax
Distributions, as such term is defined in the LLC Agreement), provided that in
the event that the Loss payable by Transferor exceeds the amount of such
distribution, Transferor shall deliver to the Company a note in the amount of
such excess, which shall bear interest at the rate of the Company's primary
credit facility referenced in Sections 6.8 and 7.8 of the Master Transaction
Agreement, and shall be payable out of future distributions (other than Tax
Distributions) pursuant to the LLC Agreement. The mechanism provided in this
Section 8.2(f) shall be the sole and exclusive source of payment for any
obligation of Transferor pursuant to this Section 8.2.
(g) Application of Reserve. With respect to indemnification claims
for breach of representations or warranties to which a Reserve is applicable,
Transferor shall bear the burden of proving the amount of the Reserve.
(h) Exclusive Remedy. Except for the provisions of Section 7.1 and
subject to Article VIII of the Master Transaction Agreement, the
indemnifications contained in Section 8.2 shall be Transferor's and the
Company's sole and exclusive remedies with respect to money damages, against
each other, with respect to matters arising under this Agreement, of any kind or
nature, or relating to the Division, the Business, the Assets, the Assumed
Liabilities, the Excluded Assets or the Excluded Liabilities. Transferor and
the Company hereby waive and release any other rights, remedies, causes of
<PAGE>
action or claims that they have or that may arise against the other with respect
to matters arising under this Agreement, of any kind or nature, or relating to
the Division, the Business, the Assets, the Assumed Liabilities, the Excluded
Assets or the Excluded Liabilities. The foregoing restrictions of this Section
8.2(h) shall not apply to any matter involving actual fraud or criminal
misconduct.
8.3. Survival of Representations and Warranties, etc. The representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Section 3.1 shall survive
to the date that is 60 days after the delivery of the audited
financial statements of the Company for the fiscal year 1999;
(b) the representations and warranties contained in Section 3.1.19
shall survive for a period of three years following the Closing Date;
(c) the representations and warranties contained in Sections 3.1.1,
3.1.2, 3.1.3 and 3.1.11 shall survive without limitation; and
(d) the representations and warranties of Transferor contained in
Section 3.1.6 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
by reason of waiver of such statute of limitations.
8.4. Expenses. Except as provided in Section 4.2.3 and in Section 8.2 of
the Master Transaction Agreement, Transferor, on the one hand, and the Company,
on the other hand, shall bear their respective expenses, costs and fees
(including attorneys', auditors' and financing commitment fees) in connection
with the transactions contemplated hereby, including the preparation, execution
and delivery of this Agreement and compliance herewith (the "Transaction
Expenses"), whether or not the transactions contemplated hereby shall be
consummated.
8.5. Partial Invalidity. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
8.6 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
(a) If to Thomas:
Thomas Industries Inc.
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, Kentucky 40232
Attention: Timothy C. Brown, President and CEO
Telecopy No.: 502-893-4685
With a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Attention: Michael R. Fayhee, Esq.
Telecopy No.: 312-372-2000
(b) If to the Company:
GT Lighting, LLC
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, Kentucky 40232
Attention: Larry Powers, President & CEO
Telecopy No. 502-893-4685
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of
receipt.
8.7. Miscellaneous.
8.7.1. Other Rules of Construction. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
<PAGE>
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "or" is not
exclusive. The word "including" shall mean including, without limitation. The
section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement
8.7.2. Entire Transaction. This agreement and the agreements and documents
referred to herein contain the entire agreement and understanding among the
parties with respect to the transactions contemplated hereby and supersede all
other agreements, understandings and undertakings among the parties on the
subject matter hereof. All exhibits and schedules hereto are hereby
incorporated by reference and made a part of this Agreement
8.7.3. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.7.4. Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Delaware without giving effect to the conflict of laws
rules thereof. The Company and Transferor hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware solely in respect
of the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that such party is not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any of such document may not be enforced in or by said
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The Company and Transferor hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8.6, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
8.7.5. Successors and Assigns This Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. This Agreement shall not be assigned by either party hereto
without the express prior written consent of the other party and any attempted
assignment, without such consents, shall be null and void, provided that the
Company may assign this Agreement to any Subsidiary of the Company, provided
further that the Company shall in all events remain liable hereunder. Except as
otherwise provided in the Master Transaction Agreement, this Agreement does not
create any rights, claims or benefits inuring to any person that is not a party
hereto nor create or establish any third-party beneficiary hereto.
8.7.6. Amendment; Waivers.
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
8.7.7. Remedies. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of Transferor shall not be affected or deemed
waived by reason of any investigation made by or on behalf of the Company
(including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Company or any of such
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
8.7.8. Authorship. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
<PAGE>
shall be resolved against either party. Any controversy over the construction
of this Agreement shall be decided without regard to events of authorship or
negotiation.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
GT LIGHTING, LLC
By: ______________________________
Larry K. Powers
President
THOMAS INDUSTRIES INC.
TUPELO HOLDINGS INC.
THOMAS INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
THOMAS IMPORTS, INC.
TI INDUSTRIES CORPORATION
By: ______________________________
Timothy C. Brown
President
<PAGE>
LIST OF SCHEDULES
TO THE
CAPITALIZATION AGREEMENT
BETWEEN
GT LIGHTING, LLC
AND
THOMAS INDUSTRIES INC.
TUPELO HOLDINGS INC.
THOMAS INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
THOMAS IMPORTS, INC.
TI INDUSTRIES CORPORATION
DATED APRIL 28, 1998
Schedule 1.1(p): Stock, Partnership, Membership or Other Interests in
any Person Engaged in the Business
Schedule 1.2: Excluded Assets
Schedule 2.3: Excluded Liabilities
Schedule 3.1.2(a): State of Incorporation
Schedule 3.1.2(b): States in Which Qualified to do Business
Schedule 3.1.2(d): Subsidiaries
Schedule 3.1.3: Required Consents
Schedule 3.1.5: Undisclosed Liabilities
Schedule 3.1.6(a): Contested Taxes
Schedule 3.1.6(b): Agreements or Powers of Attorney Extending Period of
Assessment or Collection of Taxes
Schedule 3.1.6(c): Taxes Due or Audit Issues
Schedule 3.1.6(d): Tax-Related Litigation or Administrative Appeal
Schedule 3.1.7: Changes in Conduct of Business out of the Ordinary
Course Since the Audited Balance Sheet Date
Schedule 3.1.8: Litigation Pending or Threatened
Schedule 3.1.9(a): Noncompliance with Applicable Law
Schedule 3.1.9(b): Governmental Approvals and Consents Required
Schedule 3.1.10: Conduct of the Business Outside of the Division
Schedule 3.1.11: Assets to Which Thomas Industries Inc. Does Not Have
Good Title; Assets Not in Reasonably Good Repair and
Operating Condition
Schedule 3.1.12(a): List of Contracts
Schedule 3.1.12(c): Defaults under Contracts; Consents Required
Schedule 3.1.12(d): Power of Attorney Relating to the Business
Schedule 3.1.13: Territorial Restrictions: Non-Competition Agreements
Schedule 3.1.14: Pending or Threatened Claims Regarding Warranties in
Excess of $100,000
Schedule 3.1.16(a): Owned Intellectual Property
Schedule 3.1.16(d): Intellectual Property Litigation
Schedule 3.1.16(e): List of Names and Marks; Contractual Restrictions
Schedule 3.1.17: Insurance Policies; Claims Made within Last Two Years
Schedule 3.1.18(a): Owned Real Property
Schedule 3.1.18(b): Leases in amount in excess of $100,000
Schedule 3.1.19(b): Noncompliance with Environmental Permits and Laws
Schedule 3.1.19(c): Actions Resulting in Liability or Obligation
<PAGE>
Schedule 3.1.19(d): Other Environmental Concerns
Schedule 3.1.20: Employees, Labor Matters, etc.
Schedule 3.1.21(a): Employee Benefit Plans, etc.
Schedule 3.1.21(c)(vi): Post-Employment Benefits
Schedule 3.1.21(c)(ix): Severance Pay Policies
Schedule 3.1.22: Breaches of Confidentiality
Schedule 4.1.4: Names and Marks Under which Business Will be Conducted
After Closing
Schedule 8.1(b): Transferring Affiliates
<PAGE>
EXHIBIT 2.4
EXECUTION
CAPITALIZATION AGREEMENT
Between
GT LIGHTING, LLC
and
THE GENLYTE GROUP INCORPORATED
Dated April 28, 1998
<PAGE>
CAPITALIZATION AGREEMENT
CAPITALIZATION AGREEMENT, dated April 28, 1998, by and between GT Lighting,
LLC, a Delaware limited liability company (the "Company"), and The Genlyte Group
Incorporated, a Delaware corporation ("Transferor").
W I T N E S S E T H:
WHEREAS, Transferor is in the business of manufacturing, selling, marketing
and distributing consumer, commercial, industrial and outdoor lighting products;
WHEREAS, Transferor and Thomas Industries Inc. ("Thomas") have caused the
Company to be formed under the laws of the State of Delaware;
WHEREAS, Transferor desires to capitalize the Company with substantially
all of its assets, properties and capital stock in a transaction qualifying
under Section 721(a) of the Code, in exchange for an ownership interest in the
Company and the direct or indirect assumption by the Company of the Assumed
Liabilities and upon the terms and subject to the conditions hereinafter set
forth;
WHEREAS, Transferor's rights and duties as a member of the Company shall be
as set forth in that certain Limited Liability Company Agreement dated April 28,
1998 by and between Transferor and Thomas (the "LLC Agreement");
WHEREAS, the Company will consummate certain transactions and enter into
certain agreements as set forth in the Master Transaction Agreement dated April
28, 1998 by and between Thomas and Transferor (the "Master Transaction
Agreement") and the parties' obligations hereunder will be subject to
satisfaction or waiver of the conditions in the Master Transaction Agreement;
and
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
ARTICLE I
CAPITALIZATION
1.1 Assets. Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, Transferor will contribute, transfer, convey, assign
and deliver to the Company, and the Company will acquire from Transferor, all
right, title and interest of Transferor in and to Transferor's properties,
assets and rights of every nature, kind and description, tangible and intangible
(including goodwill), whether real, personal or mixed, whether accrued,
contingent or otherwise and whether now existing or hereinafter acquired (other
than the Excluded Assets) as the same may exist on the Closing Date
(collectively, the "Assets"), including all those items in the following
categories that conform to the definition of the term "Assets":
(a) all machinery, equipment, telephone systems and equipment,
furniture, furnishings, automobiles, trucks, vehicles, tools, dies, molds and
parts and similar property (including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other Person)
together with all Systems and all Components;
(b) all inventories of raw materials, work in process, finished
products, goods, spare parts, replacement and component parts, and office and
other supplies (collectively, the "Inventories") held at any Facility and
Inventories previously purchased and in transit to any Transferor at the
Facilities;
(c) all rights in and to products sold or leased (including products
hereafter returned or repossessed and Transferor's unpaid rights of rescission,
replevin, reclamation and rights to stoppage in transit);
(d) all rights (including any and all Intellectual Property rights)
in and to the products sold or leased and in and to any products or other
Intellectual Property rights under research or development prior to or on the
Closing Date;
(e) all of the rights of Transferor under all contracts,
arrangements, licenses, leases and other agreements, including any right to
receive payment for products sold or services rendered, and to receive goods and
services, pursuant to such agreements and to assert claims and take other
rightful actions in respect of breaches, defaults and other violations of such
contracts, arrangements, licenses, leases and other agreements and otherwise;
(f) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by Transferor and all
<PAGE>
notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person held by Transferor;
(h) all Intellectual Property and all rights thereunder or in respect
thereof, including rights to sue for and remedies against past, present and
future infringements thereof, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all tangible
embodiments thereof (the "Intellectual Property Assets");
(i) all books, records, manuals and other materials (in any form or
medium), including all records and materials maintained at the headquarters or
other offices of Transferor, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
records, data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and litigation files
(collectively, the "Books and Records");
(j) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(k) all Real Property and all licenses, permits, approvals and
qualifications relating to any Real Property issued to Transferor by any
Governmental Authority;
(l) all rights to causes of action, lawsuits, judgments, claims and
demands of any nature available to or being pursued by Transferor with respect
to the Business or the ownership, use, function or value of any Asset, whether
arising by way of counterclaim or otherwise;
(m) all guarantees, warranties, indemnities and similar rights in
favor of Transferor with respect to any Asset;
(n) to the extent not described elsewhere in this Section 1.1, all
Net Working Capital;
(o) any web site domain name together with related rights; and
(p) all stock, partnership, membership or other interests in any
Person engaged in the Business listed on Schedule 1.1(p).
At the Closing, the Assets shall be transferred to the Company free and
clear of all liabilities, obligations, liens and encumbrances excepting only
Assumed Liabilities, liens listed on Schedule 3.1.11 and Permitted Liens.
1.2. Excluded Assets. Transferor will retain and not transfer, and the
Company will not acquire any assets of Transferor other than the Assets,
including (i) the assets listed on Schedule 1.2, and (ii) all Tax refunds
(collectively, the "Excluded Assets").
ARTICLE II
THE CLOSING
2.1. Place and Date. The consummation of the transactions contemplated
hereby shall take place on the "closing date" described in the Master
Transaction Agreement (the "Closing Date").
2.2. Consideration. On the terms and subject to the conditions set forth
in this Agreement, the Master Transaction Agreement and the LLC Agreement and as
the sole consideration for Transferor's contribution of the Assets to the
Company pursuant hereto, on the Closing Date, the Company agrees to issue to
Transferor an interest in the Company representing a 68% ownership interest (the
"Membership Interests") and to assume the Assumed Liabilities as provided in
Section 2.3.
2.3. Assumption of Liabilities. (a) Subject to Sections 2.4 and 8.2 and
the other terms and conditions set forth herein, at the Closing, the Company
will assume and agree to pay, honor and discharge when due all of those
liabilities relating to the Assets or arising out of the Business and existing
at or arising on or after the Closing Date (collectively, the "Assumed
Liabilities"), except for (i) Taxes of Transferor for periods prior to the
Closing Date, whether or not relating to or arising out of the Business, (ii)
intercompany accounts payable that do not represent trade accounts payable,
(iii) liabilities in respect of Employees, employment agreements or Plans
except to the extent specifically assumed by the Company pursuant to Article VI,
(iv) liabilities in respect to Transferred Employees except to the extent
specifically assumed by the Company pursuant to Article VI, and (v) any
liability, obligation or commitment of Transferor set forth on Schedule 2.3.
<PAGE>
(b) At the Closing, the Company shall assume the Assumed Liabilities
by executing and delivering to Transferor an assumption agreement in a form
reasonably satisfactory to Transferor (the "Assumption Agreement").
2.4 Excluded Liabilities. Notwithstanding the provisions of Section 2.3
or any other provision hereof or any schedule or exhibit hereto and regardless
of any disclosure to the Company, the Company shall not assume any liabilities,
obligations or commitments of Transferor, whether or not relating to or arising
out of the operation of the Business or the ownership of the Assets prior to the
Closing, other than the Assumed Liabilities (the "Excluded Liabilities").
2.5 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of the Company or
Transferor thereunder; and any transfer or assignment to the Company by
Transferor of any interest under any such instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third party shall
be made subject to such consent or approval being obtained. In the event any
such consent or approval is not obtained on or prior to the Closing Date,
Transferor shall continue to use its reasonable commercial efforts to obtain any
such approval or consent after the Closing Date until such time as such consent
or approval has been obtained, and Transferor will cooperate with the Company in
any lawful and economically feasible arrangement to provide that the Company
shall receive the interest of Transferor in the benefits under any such
instrument, contract, lease or permit or other agreement or arrangement,
including performance by Transferor as agent, if economically feasible, provided
that the Company shall be solely responsible for and undertake to pay or satisfy
the corresponding liabilities for the enjoyment of such benefit to the extent
the Company would have been responsible therefor hereunder if such consent or
approval had been obtained and shall be solely responsible for any breach of
warranty with respect to products of the Business manufactured after the Closing
Date. Transferor shall pay and discharge, and shall indemnify and hold the
Company harmless from and against, any and all out-of-pocket costs of seeking to
obtain or obtaining any such consent or approval whether before or after the
Closing Date. Nothing in this Section 2.5 shall be deemed a waiver by the
Company of its right to have received on or before the Closing an effective
assignment of all of the Assets nor shall this Section 2.5 be deemed to
constitute an agreement to exclude from the Assets any assets described under
Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Transferor. Transferor represents
and warrants to and agrees with the Company as follows:
3.1.1. Authorization, etc. Transferor has the corporate power and
authority to execute and deliver this Agreement and each of the Collateral
Agreements to which it will be a party, to perform fully its obligations
thereunder, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Transferor of this Agreement, and the consummation
of the transactions contemplated hereby, have been, and on the Closing Date the
execution and delivery by Transferor of each of the Collateral Agreements to
which it will be a party and the consummation of the transactions contemplated
thereby will have been, duly authorized by all requisite corporate action of
Transferor (including the approval of Transferor's shareholders to the extent
required by law). Transferor has duly executed and delivered this Agreement and
on the Closing Date will have duly executed and delivered each of the Collateral
Agreements to which it is a party. This Agreement is, and on the Closing Date
each of the Collateral Agreements to which Transferor is a party will be, legal,
valid and binding obligations of Transferor, enforceable against it in
accordance with their respective terms.
3.1.2. Corporate Status. (a) Transferor is a corporation duly organized,
validly existing and in good standing under the respective laws of the
jurisdiction of its incorporation, as set forth in Schedule 3.1.2(a), with full
corporate power and authority to carry on its business (including the Business)
and to own or lease and to operate its properties as and in the places where
such business is conducted and such properties are owned, leased or operated.
(b) Transferor is duly qualified or licensed to do business and is in
good standing in each of the respective jurisdictions specified in Schedule
3.1.2(b), which are the only jurisdictions in which the operation of the
Business or the character of the properties owned, leased or operated by it in
connection with the Business makes such qualification or licensing necessary.
(c) Transferor has delivered to the Company complete and correct
copies of its certificate of incorporation and by-laws or other organizational
documents, as amended and in effect on the date hereof. Transferor is not in
<PAGE>
violation of any of the provisions of its certificate of incorporation or by-
laws or other organizational documents.
(d) Transferor has no Subsidiaries engaged in the Business except as
set forth on Schedule 3.1.2(d). Except as set forth on Schedule 3.1.2(d),
Transferor has no interest, direct or indirect, and has no commitment to
purchase any interest, direct or indirect, in any other corporation or in any
partnership, joint venture or other business enterprise or entity. Except as
set forth on Schedule 3.1.2(d), the Business has not been conducted through any
other direct or indirect Subsidiary or affiliate of Transferor.
3.1.3. No Conflicts, etc. The execution, delivery and performance by
Transferor of this Agreement and each of the Collateral Agreements to which it
is a party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the lapse of time or
both) (i) any Applicable Law applicable to Transferor or any Affiliate thereof
or any of the properties or assets of Transferor (including the Assets), (ii)
the certificate of incorporation or by-laws or other organizational documents of
Transferor or (iii) except as set forth in Schedule 3.1.3, any Contract to
which Transferor or any Affiliate thereof is a party or by which Transferor or
any of its properties or assets, including the Assets, may be bound or
affected. Except as specified in Schedule 3.1.3, no Governmental Approval or
other Consent is required to be obtained or made by Transferor in connection
with the execution and delivery of this Agreement and the Collateral
Agreements or the consummation of the transactions contemplated thereby. The
consummation of the transaction that is the subject of this Agreement and the
Collateral Agreements and the issuance of the Membership Interests to all
members will not trigger any rights under the Rights Agreement between
Transferor and Continental Bank National Association dated August 29, 1989 or
any applicable shareholder protection or state takeover statute.
3.1.4. Financial Statements. Transferor has delivered to the Company (a)
its audited consolidated financial statements as at and for the year ended
December 31, 1997 (the "Audited Balance Sheet Date"), together with a report
thereon by Transferor's Accountants (the "Audited Financial Statements"), (b)
unaudited consolidated financial statements as at and for the period ended March
31, 1998 (the "Unaudited Financial Statements"), and (c) unaudited consolidated
financial statements as at and for the monthly periods ended March 31, 1998 (the
"Monthly Unaudited Financial Statements"), including in each of clauses (a), (b)
and (c) a balance sheet, statements of income and retained earnings and a
statement of cash flows (the Audited Financial Statements and the Monthly
Unaudited Financial Statements, collectively the "Financial Statements"). The
Audited Financial Statements are complete and correct in all material respects
and have been prepared in accordance with GAAP applied throughout the periods
indicated. The Unaudited Financial Statements and the Monthly Unaudited
Financial Statements have been prepared in accordance with GAAP, except that the
Unaudited Financial Statements and the Monthly Unaudited Financial Statements do
not contain notes and may be subject to normal audit adjustments and, in the
case of the Monthly Unaudited Financial Statements, normal annual adjustments.
The balance sheets included in the Financial Statements do not include any
material assets (other than Excluded Assets) or liabilities (other than Excluded
Liabilities) not intended to constitute a part of the Business or the Assets or
omit any material assets or liabilities of Transferor, and present fairly the
financial condition of Transferor as at their respective dates. The statements
of income and retained earnings and statements of cash flows included in the
Financial Statements do not reflect the operations of any entity or business not
intended to constitute a part of the transactions, reflect all costs that
historically have been incurred by Transferor (other than the Excluded
Liabilities) and present fairly the results of operations and cash flows of
Transferor for the periods indicated.
3.1.5. Absence of Undisclosed Liabilities. Transferor has no liabilities
or obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, arising out of or
relating to the Business, except (a) as set forth in Schedule 3.1.5, (b) as and
to the extent disclosed or reserved against in the Audited Balance Sheet
(excluding the notes thereto) and (c) for liabilities and obligations that (i)
were incurred after the date of the Audited Balance Sheet in the ordinary course
of business consistent with prior practice and (ii) have not had or resulted in,
and will not have or result in, a Material Adverse Effect. None of Transferor's
employees is, or will by the passage of time hereinafter become, entitled to
receive any material vacation time, vacation pay or severance pay attributable
to services rendered prior to such date except as disclosed on the Audited
Balance Sheet (excluding the notes thereto) or as set forth on Schedule 3.1.5.
3.1.6. Taxes. (a) Transferor has (or by the Closing will have) duly and
timely filed all Tax Returns with respect to Taxes required to be filed on or
before the Closing Date ("Returns"). Except for Taxes set forth on Schedule
3.1.6(a), which are being contested in good faith and by appropriate
proceedings, and with respect to which Transferor has Adequate Reserves, the
following Taxes have (or by the Closing Date will have) been duly and timely
paid: (i) all Taxes shown to be due on the Returns, (ii) all deficiencies and
assessments of Taxes of which notice has (or by the Closing Date will have) been
<PAGE>
received by Transferor that are or may become payable by the Company or
chargeable as a lien upon the Business or the Assets, and (iii) all other Taxes
due and payable on or before the Closing Date for which neither filing of
Returns nor notice of deficiency or assessment is required, if Transferor is or
reasonably should be (or by the Closing Date will be or reasonably should be)
aware that such Taxes are or may become payable by the Company or chargeable as
a lien upon the Business or the Assets. All Taxes required to be withheld by or
on behalf of Transferor in connection with amounts paid or owing to any
employee, independent contractor, or creditor ("Withholding Taxes") have been
withheld, and such withheld taxes have either been duly and timely paid to the
proper Governmental Authorities or set aside in accounts for such purposes.
(b) Except as set forth on Schedule 3.1.6(b), no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any Taxes or Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been filed with the IRS or any other Governmental
Authority.
(c) Except for items set forth on Schedule 3.1.6(c) , with respect to
which Transferor has Adequate Reserves, (i) there are no Taxes or Withholding
Taxes asserted in writing by any Governmental Authority to be due from
Transferor and (ii) no issue has been raised in writing by any Governmental
Authority in the course of any audit with respect to Taxes or Withholding
Taxes. Except as set forth on Schedule 3.1.6(c), no Taxes and no Withholding
Taxes are currently under audit by any Governmental Authority. Except for
items set forth on Schedule 3.1.6(c), with respect to which Transferor has
Adequate Reserves, neither the IRS nor any other Governmental Authority is
now asserting or, to the Knowledge of Transferor, threatening to assert
against Transferor any deficiency or claim for additional Taxes or any
adjustment or Taxes that would, if paid by the Company, have a Material
Adverse Effect, and there is no reasonable basis for any such assertion of
which Transferor is or reasonably should be aware.
(d) Except as set forth on Schedule 3.1.6(d), there is no litigation
or administrative appeal pending or, to the Knowledge of Transferor, threatened
against or relating to Transferor in connection with Taxes.
3.1.7. Absence of Changes. Except for items set forth in Schedule 3.1.7,
with respect to which Transferor has Adequate Reserves, since the Audited
Balance Sheet Date, Transferor has conducted the Business only in the ordinary
course consistent with prior practice and has not, on behalf of, in connection
with or relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a Material Adverse Effect;
(c) discharged or satisfied any Lien other than those then required
to be discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than
current liabilities shown on the Audited Balance Sheet and current liabilities
incurred since the date thereof in the ordinary course of business consistent
with prior practice;
(d) mortgaged, pledged or subjected to Lien, any property, business
or assets, tangible or intangible, held in connection with the Business other
than purchase money security interests incurred in the ordinary course of
business;
(e) sold, transferred, leased to others or otherwise disposed of any
of the Assets, except in the ordinary course of business, or canceled or
compromised any debt or claim, or waived or released any right of substantial
value;
(f) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had a Material
Adverse Effect;
(g) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any Intellectual Property,
or modified any existing rights with respect thereto;
(h) other than in the ordinary course of business, made any change in
the rate of compensation, commission, bonus or other direct or indirect
remuneration payable, or paid or agreed or orally promised to pay, conditionally
or otherwise, any bonus, dividend, incentive, retention or other compensation,
<PAGE>
retirement, welfare, fringe or severance benefit or vacation pay, to or in
respect of any shareholder, director, officer, employee, salesman, distributor
or agent of Transferor relating to the Business;
(i) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material change in its relations with its employees, agents, customers or
suppliers;
(j) failed to replenish Transferor's inventories and supplies in a
normal and customary manner consistent with its prior practice and prudent
business practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of the Business or at
any price in excess of the then current market price or upon terms and
conditions more onerous than those usual and customary in the industry, or made
any change in its selling, pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(k) made any capital expenditures or capital additions or
improvements in excess of $250,000;
(l) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the Business or the
Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $250,000;
(m) entered into any transaction, contract or commitment other than
in the ordinary course of business or paid or agreed to pay any legal,
accounting, brokerage, finder's fee, Taxes or other expenses in connection with,
or incurred any severance pay obligations by reason of, this Agreement or the
transactions contemplated hereby; or
(n) except with respect to performing its obligations under this
Agreement, taken any action or omitted to take any action that would result in
the occurrence of any of the foregoing.
3.1.8. Litigation. Except for items set forth on Schedule 3.1.8, with
respect to which Transferor has Adequate Reserves, there is no action, claim,
demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, pending or threatened against or relating to
Transferor in connection with the Assets or the Business or against or relating
to the transactions contemplated by this Agreement, and Transferor knows of no
basis for any of the foregoing. Except for items set forth in such Schedule
3.1.8, with respect to which Transferor has Adequate Reserves, since December
31, 1997, no material citations, fines or penalties have been asserted against
Transferor under any Environmental Law or any foreign, federal, state or local
law relating to occupational health or safety.
3.1.9. Compliance with Laws; Governmental Approvals and Consents;
Governmental Contracts. (a) Except for items disclosed in Schedule 3.1.9(a),
with respect to which Transferor has Adequate Reserves, since the Audited
Balance Sheet Date, Transferor has complied in all material respects with all
Applicable Laws applicable to the Business or the Assets, and Transferor has not
received any notice alleging any such conflict, violation, breach or default.
(b) Except for items set forth in Schedule 3.1.9(b), with respect to
which Transferor has Adequate Reserves, all Governmental Approvals and Consents
necessary for or otherwise material to the conduct of the Business have been
duly obtained and are in full force and effect, and Transferor is in material
compliance with each of such Governmental Approvals and Consents held by it with
respect to the Assets and the Business.
(c) To the Knowledge of Transferor, there are no proposed laws,
rules, regulations, ordinances, orders, judgments, decrees, governmental
takings, condemnations or other proceedings which would be applicable to the
business, operations or properties of Transferor and which might adversely
affect the properties, assets, liabilities, operations or prospects of
Transferor, either before or after the Closing Date.
3.1.10. Operation of the Business. Except as set forth in Schedule
3.1.10, (a) Transferor has not conducted the Business through any divisions or
any direct or indirect Subsidiary or Affiliate of Transferor and (b) no part of
the Business is operated by Transferor through any entity other than Transferor.
3.1.11. Assets. Except for items disclosed in Schedule 3.1.11, with
respect to which Transferor has Adequate Reserves, Transferor has good title to
all the Assets free and clear of any and all Liens other than Permitted Liens.
The Assets, together with the services and arrangements described in Section
5.2.2, comprise all assets and services required for the continued conduct of
the Business by the Company as now being conducted. The Assets, taken as a
whole, constitute all the properties and assets relating to or used or held for
use in connection with the Business during the past twelve months (except
<PAGE>
Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, Contracts fully performed, properties or assets sold in the
ordinary course of business, employees not hired by the Company, and the
Excluded Assets). Except for Excluded Assets and subject to Section 2.5, there
are no assets or properties used in the operation of the Business and owned by
any Person other than Transferor that will not be leased or licensed to the
Company under valid, current leases or license arrangements. Except as
disclosed on Schedule 3.1.11, the Assets are in all material respects adequate
for the purposes for which such Assets are currently used or are held for use,
and are in reasonably good repair and operating condition (subject to normal
wear and tear) and, to the Knowledge of Transferor, there are no facts or
conditions affecting the Assets which could interfere in any material respect
with the use, occupancy or operation thereof as currently used, occupied or
operated, or their adequacy for such use.
3.1.12. Contracts. (a) Schedule 3.1.12(a) contains a complete and
correct list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (x) by which
any of the Assets are bound or affected or (y) to which Transferor is a party or
by which it is bound in connection with the Business or the Assets (the
"Contracts"):
(i) other than the Leases and Other Leases, each lease and other
contract concerning or relating to the Real Property with respect to which
the amount that could reasonably be expected to be paid or received
thereunder exceeds $100,000 per year;
(ii) employment, consulting, agency, collective bargaining or
other similar contracts, agreements, and other instruments and arrangements
that cannot be terminated in accordance with their terms within six months
of the date hereof relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust, bonds,
notes, guarantees, and other agreements and instruments relating to the
borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of, any
Intellectual Property;
(v) brokerage or finders' agreements;
(vi) joint venture, partnership and similar contracts involving a
sharing of profits or expenses (including joint research and development
and joint marketing contracts);
(vii) asset purchase agreements and other acquisition or
divestiture agreements, including any agreements relating to the sale,
lease or disposal of any Assets (other than sales of inventory or other
properties or assets in the ordinary course of business) or involving
continuing indemnity or other obligations, entered into since January 1,
1992;
(viii) other than purchase orders or contracts for capital
projects already approved by Transferor's Board of Directors, contracts
with respect to which the aggregate amount that could reasonably be
expected to be paid or received thereunder in the future exceeds $250,000
per annum;
(ix) contracts, agreements or arrangements with respect to the
representation of the Business in foreign countries, other than Canada and
Mexico;
(x) master lease agreements providing for the leasing of both
(A) personal property primarily used in, or held for use primarily in
connection with, the Business and (B) other personal property, pursuant to
which, in either case, the amount that could reasonably be expected to be
paid or received thereunder exceeds $100,000 per year or $1,500,000 in the
aggregate;
(xi) contracts, agreements or commitments with any employee,
director, officer, stockholder or Affiliate of Transferor; and
(xii) any other contracts, agreements or commitments that are
material to the Business pursuant to which the amount that could reasonably
be expected to be paid or received thereunder exceeds $100,000 per year or
$1,500,000 in the aggregate.
<PAGE>
(b) Transferor has delivered to the Company complete and correct
copies of all written Contracts, together with all amendments thereto, and
accurate descriptions of all material terms of all oral Contracts, set forth or
required to be set forth in Schedule 3.1.12(a).
(c) All Contracts are in full force and effect and enforceable
against each party thereto. There does not exist under any Contract any event
of default or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default thereunder on the part
of Transferor or, to the Knowledge of Transferor, any other party thereto except
for items set forth in Schedule 3.1.12(c), with respect to which Transferor has
Adequate Reserves, and except for such events or conditions that, individually
and in the aggregate, (i) has not had or resulted in, and will not have or
result in, a Material Adverse Effect and (ii) has not and will not materially
impair the ability of Transferor to perform its obligations under this Agreement
and under the Collateral Agreements. Except as set forth in Schedule 3.1.12(c),
no consent of any third party is required under any Contract as a result of or
in connection with, and the enforceability of any Contract will not be affected
in any manner by, the execution, delivery and performance of this Agreement or
any of the Collateral Agreements or the consummation of the transactions
contemplated hereby or thereby.
(d) Transferor has outstanding no power of attorney relating to the
Business.
3.1.13. Territorial Restrictions. Except as set forth on Schedule 3.1.13,
Transferor is not restricted by any written agreement or understanding with any
other Person from carrying on the Business anywhere in the world. Except as set
forth on Schedule 3.1.13, the Company, solely as a result of its purchase of the
Business from Transferor pursuant hereto and the assumption of the Assumed
Liabilities, will not thereby become restricted in carrying on any business
anywhere in the world.
3.1.14. Product Warranties. Except for items set forth in Schedule
3.1.14, with respect to which Transferor has Adequate Reserves, and for
warranties under Applicable Law, there are no pending or threatened claims with
respect to any warranty, express or implied, written or oral, with respect to
the products or services of the Business in excess of $100,000 per claim, and
Transferor has no liability with respect to any such warranty, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
3.1.15. Absence of Certain Business Practices. To the Knowledge of
Transferor, none of Transferor, any officer, employee or agent of Transferor, or
any other Person acting on their behalf, has, directly or indirectly, within the
past five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who was or may be
in a position to help or hinder the Business (or assist Transferor in
connection with any actual or proposed transaction relating to the Business)
(i) which subjected or might have subjected Transferor to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii)
which if not given in the past, might have had a Material Adverse Effect,
(iii) which if not continued in the future, might have a Material Adverse
Effect or subject Transferor to suit or penalty in any private or
governmental litigation or proceeding, (iv) for any of the purposes described
in Section 162(c) of the Code or (v) for the purpose of establishing or
maintaining any concealed fund or concealed bank account.
3.1.16. Intellectual Property. (a) Title. Schedule 3.1.16(a) contains a
complete and correct list of all Intellectual Property that is owned by
Transferor and primarily related to, used in, held for use in connection with,
or necessary for the conduct of, or otherwise material to the Business (the
"Owned Intellectual Property"). Except as set forth on Schedule 3.1.16(a),
Transferor owns or has the right to use pursuant to license, sublicense,
agreement or permission all Intellectual Property Assets, free from any Liens
(other than Permitted Liens) and free from any requirement of any past, present
or future royalty payments, license fees, charges or other payments, in any case
in excess of $100,000, or conditions or restrictions whatsoever. The
Intellectual Property Assets comprise all of the Intellectual Property necessary
for the Company to conduct and operate the Business as now being conducted by
Transferor.
(b) Transfer. Immediately after the Closing, the Company will own
all of the Owned Intellectual Property and will have a right to use all other
Intellectual Property Assets, free from any Liens (other than Permitted Liens)
and on the same terms and conditions as in effect prior to the Closing.
(c) No Infringement. The conduct of the Business does not infringe
or otherwise conflict with any rights of any Person in respect of any
Intellectual Property. To the Knowledge of Transferor, none of the Intellectual
Property Assets is being infringed or otherwise used or available for use, by
any other Person.
<PAGE>
(d) No Intellectual Property Litigation. Except for items set forth
on Schedule 3.1.16(d) , with respect to which Transferor has Adequate Reserves,
no claim or demand of any Person has been made nor is there any proceeding that
is pending, or to the Knowledge of Transferor, threatened, nor is there a
reasonable basis therefor, that (i) challenges the rights of Transferor in
respect of any Intellectual Property Assets, (ii) asserts that Transferor is
infringing or otherwise in conflict with, or is, except for items set forth in
Schedule 3.1.16(d) , with respect to which Transferor has Adequate Reserves,
required to pay any royalty, license fee, charge or other amount, in any case in
excess of $100,000, with regard to, any Intellectual Property, or (iii) claims
that any default exists under any agreement or arrangement concerning any
Intellectual Property Assets. None of the Intellectual Property Assets is
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency, or has been the subject of
any litigation within the last five years, whether or not resolved in favor of
Transferor.
(e) Use of Name and Mark. Except as set forth in Schedule 3.1.16(e),
there are, and immediately after the Closing will be, no contractual restriction
or limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any Governmental Authority on the Company's right to use the name
and marks set forth on Schedule 3.1.16(e) in the conduct of the Business as
presently carried on by Transferor.
3.1.17. Insurance. Schedule 3.1.17 contains a complete description of all
insurance policies maintained by Transferor for the benefit of or in connection
with the Assets or the Business. Transferor has made available to the Company
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and effect, and all
premiums due thereon have been paid. Transferor has complied in all material
respects with the terms and provisions of such policies. The insurance coverage
provided by such policies is adequate and customary for the Business. Schedule
3.1.17 sets out all claims, other than worker's compensation claims, made by
Transferor under any policy of insurance during the past two years with respect
to the Business.
3.1.18. Real Property. (a) Owned Real Property. Schedule 3.1.18(a)
contains a complete and correct list of all Owned Real Property setting forth
the address and owner of each parcel of Owned Real Property and describing all
improvements thereon including the properties reflected as being so owned on the
Audited Financial Statements. Except as set forth on Schedule 3.1.18(a),
Transferor has, or on the Closing Date will have, good, valid and marketable fee
simple title to the Owned Real Property indicated on Schedule 3.1.18(a) as being
owned by it, free and clear of all Liens other than Permitted Liens. Except as
set forth on Schedule 3.1.18(a), there are no outstanding options or rights of
first refusal to purchase the Owned Real Property, or any portion thereof or
interest therein.
(b) Leases. Schedule 3.1.18(b) contains a complete and correct list
of (i) all Leases setting forth the address, landlord and tenant for each Lease
and (ii) all Other Leases, setting forth the address, landlord and tenant for
each Other Lease, in either case, with respect to which the amount that could
reasonably be expected to be paid or received thereunder exceeds $100,000 per
year. Transferor has made available to the Company correct and complete copies
of the Leases and the Other Leases. Each Lease and Other Lease is legal, valid,
binding, enforceable, and in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization and similar Applicable Laws affecting
creditors generally and by the availability of equitable remedies. Neither
Transferor nor any other party is in default, violation or breach in any respect
under any Lease or Other Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach in any respect under any Lease or Other Lease,
which default, violation or breach has had or could reasonably be expected to
have a Material Adverse Effect on the Business or the Company or cause any Lease
or Other Lease to be terminated. Each Lease grants the tenant under the Lease
the exclusive right to use and occupy the demised premises thereunder.
Transferor has good and valid title to the leasehold estate under each Lease
free and clear of all Liens other than Permitted Liens. Transferor enjoys
peaceful and undisturbed possession under its respective Leases for the Leased
Real Property.
(c) Fee and Leasehold Interests, etc. The Real Property constitutes
all the fee and leasehold interests in real property held for use in connection
with, necessary for the conduct of, or otherwise material to, the Business.
(d) No Proceedings. There are no eminent domain or other similar
proceedings pending or, to the Knowledge of Transferor, threatened affecting any
portion of the Real Property. There is no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding, pending or, to
the Knowledge of Transferor, threatened, relating to the ownership, lease, use,
occupancy or operation by any Person of any Real Property.
(e) Current Use. Transferor has received no written notice that the
use and operation of the Real Property in the conduct of the Business violates
<PAGE>
in any material respect any instrument of record or agreement affecting the Real
Property. Transferor has received no written notice that there is any violation
of any covenant, condition, restriction, easement or order of any Governmental
Authority having jurisdiction over such property or of any other Person entitled
to enforce the same affecting the Real Property or the use or occupancy
thereof. No damage or destruction has occurred with respect to any of the
Real Property since December 31, 1997 that would, individually or in the
aggregate, have a Material Adverse Effect.
(f) Compliance with Real Property Laws. Transferor has received no
written notice that the Real Property is not in full compliance with all
applicable building, zoning, subdivision and other land use and similar
Applicable Laws affecting the Real Property (collectively, the "Real Property
Laws"). To the Knowledge of Transferor, there is no pending or anticipated
change in any Real Property Law that will have or result in a Material Adverse
Effect upon the ownership, alteration, use, occupancy or operation of the Real
Property or any portion thereof. No current use by Transferor of the Real
Property is dependent on a nonconforming use or other Governmental Approval the
absence of which would materially limit the use of such properties or Assets
held for use in connection with, necessary for the conduct of, or otherwise
material to, the Business.
(g) Subdivision. To Transferor's Knowledge, no approvals are
necessary to subdivide the Owned Real Property from any Real Property included
in the Excluded Assets.
3.1.19. Environmental Matters. (a) Permits. Except for items set forth
on Schedule 3.1.19(b), with respect to which Transferor has Adequate Reserves,
Transferor currently holds, and at all times has held, all such Environmental
Permits necessary to the operation of the Business or the ownership, occupancy
or use of the Real Property or the Assets, and all such Environmental Permits
shall be validly transferred to the Company on the Closing Date. All such
Environmental Permits are in full force and effect. To Transferor's Knowledge,
Transferor has not been notified by any relevant Governmental Authority that any
Environmental Permit will be modified, suspended, canceled or revoked, or cannot
be renewed in the ordinary course of business.
(b) No Violations. Except for items set forth on Schedule 3.1.19(b),
with respect to which Transferor has Adequate Reserves, each of Transferor and
its Affiliates have complied and is in compliance in all material respects with
all Environmental Permits and all applicable Environmental Laws pertaining to
the Real Property (and the ownership, occupancy, use or transferability
thereof), the Business or the Assets. Except for items set forth on Schedule
3.1.19(b), with respect to which Transferor has Adequate Reserves, no Person has
alleged any violation by Transferor and its Affiliates of any Environmental
Permits or any applicable Environmental Law relating to the conduct of the
Business or the use, ownership or transferability of the Real Property or the
Assets.
(c) No Actions. Except for items set forth in Schedule 3.1.19(c) ,
with respect to which Transferor has Adequate Reserves, none of Transferor or
any of its Affiliates has caused or taken any action that has resulted or may
result in, or has been or is subject to, any liability or obligation relating to
(i) the environmental conditions on, under, about or emanating from any Real
Property, the Assets or other properties or assets owned, operated, leased or
used by Transferor held for use in connection with, necessary for the conduct
of, or otherwise material to, the Business, or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Substances, except for any such liabilities and
obligations that, individually and in the aggregate, are not material to the
Business and have not had or resulted in, and will not have or result in, a
Material Adverse Effect.
(d) Other. Except for items set forth in Schedule 3.1.19(d), with
respect to which Transferor has Adequate Reserves:
(i) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned property or assets of
Transferor used in the Business, including the Assets and the Real
Property, is related to or subject to any investigation or evaluation by
any Governmental Authority, as to whether any Remedial Action is needed to
respond to a Release or threatened Release of any Hazardous Substances.
(ii) Transferor is not subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual or other
obligation to or with, any Governmental Authority or other Person in
respect of which the Company may be required to incur any Environmental
Liabilities and Costs arising from the Release or threatened Release of a
Hazardous Substances.
(iii) None of the Real Property is, and none of Transferor or
any of its Affiliates has transported or arranged for transportation
(directly or indirectly) of any Hazardous Substances relating to the Assets
or the Real Property to any location that is, listed or proposed for
<PAGE>
listing under CERCLA, or on any similar state list, or the subject of
federal, state or local enforcement actions or investigations or Remedial
Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Assets pursuant to or to comply with
any Environmental Law, nor has Transferor or any of its Affiliates received
any notice of any such requirement, except for such work, repair,
construction or capital expenditure as is not material to the Business and
is in the ordinary course of business.
(e) Full Disclosure. Transferor has disclosed and made available to
the Company all information, including all studies, analyses and test results,
in the possession, custody or control of Transferor and its Affiliates relating
to (i) the environmental conditions on, under, about or emanating from the Real
Property, and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored, disposed of or Released by Transferor or any other
Person at any time on any Real Property, or otherwise in connection with the
operation of the Business or the ownership, operation, occupancy or use of the
Real Property, the Assets or other assets, equipment or facilities used in or
held for use in connection with the Business.
3.1.20. Employees, Labor Matters, etc. Except as set forth in Schedule
3.1.20, Transferor is not a party to or bound by any collective bargaining
agreement and there are no labor unions or other organizations representing,
purporting to represent or, to Transferor's Knowledge, attempting to represent
any employees employed in the operation of the Business. Since December 31,
1997, there has not occurred or, to Transferor's Knowledge, been threatened any
material strike, slowdown, picketing, work stoppage, concerted refusal to work
overtime or other similar labor activity with respect to any employees employed
in the operation of the Business. Except for items set forth on Schedule
3.1.20, with respect to which Transferor has Adequate Reserves, there are no
labor disputes currently subject to any grievance procedure, arbitration or
litigation and there is no representation petition pending or, to the Knowledge
of Transferor, threatened with respect to any employees employed in the
operation of the Business. Transferor has complied with all provisions of
Applicable Law pertaining to the employment of employees, including all such
Laws relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination or other similar employment practices or
acts, except for any failure so to comply that, individually or together with
all such other failures has not had or resulted in, and will not have or result
in, a Material Adverse Effect. Except for items set forth on Schedule 3.1.20,
with respect to which Transferor has Adequate Reserves, Transferor is not party
to any agreement with any employee employed in the Business that contains change
of control and/or severance provisions that would become operative by virtue of
the consummation of the transaction that is the subject of this Agreement.
3.1.21. Employee Benefit Plans and Related Matters. (a) Employee Benefit
Plans. Schedule 3.1.21(a) sets forth a true and complete list of each "employee
benefit plan," as such term is defined in section 3(3) of the ERISA, whether or
not subject to ERISA, and each bonus, incentive or deferred compensation,
severance, termination or other separation benefits, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, fringe benefits or payroll practices, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed in the operation of the Business or the
beneficiaries or dependents of any such employee or former employee (such
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained, contributed
to, or required to contribute to, or established, by Transferor or any of its
Affiliates or any other trade or business, whether or not incorporated, which,
together with Transferor is or would have been at any date of determination
occurring within the preceding six years treated as a single employer under
Section 414 of the Code or within the meaning of section 4001 of ERISA (such
other trades and business collectively, the "Related Persons"), or to which
Transferor or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which Transferor or the Business may
have any liability or obligation (collectively, the "Plans"). With respect to
each such Plan (other than a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan")), Transferor has provided the
Company and Thomas complete and correct copies, if applicable, of: the document
embodying or establishing each written Plan (including all amendments thereto);
a description of each unwritten Plan; all trust agreements, insurance contracts
or other funding arrangements; the two most recent actuarial and trust reports;
the two most recent Forms 5500 and all schedules thereto; the most recent IRS
determination letter; the current summary plan description; the two most recent
summary annual reports, all summaries of material modifications; all material
communications received from or sent to the IRS, including a request for a
compliance certificate under the IRS Voluntary Compliance Program (or similar
program), or an application under the IRS Closing Agreement Programs with
respect to any of the Plans, the Pension Benefit Guaranty Corporation or the
<PAGE>
Department of Labor (including a written description of any oral communication);
an actuarial study of any post-employment life or medical benefits provided
under any such Plan; and all amendments and modifications to any such document.
With respect to each Multiemployer Plan, Transferor has provided the Company and
Thomas a complete and correct copy of statements or other communications
regarding withdrawal or other multiemployer plan liabilities, and the most
recent available estimate from the Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal. Except as specifically set forth in
Schedule 3.1.21(a), Transferor has not communicated to any Employee any
intention or commitment to modify any Plan or to establish or implement any
other employee or retiree benefit or compensation arrangement.
(b) Qualification. Each of the Plans (other than a Multiemployer
Plan) that is intended to meet the requirements of Section 401(a) and, where
applicable, Section 401(k) of the Code, now meets, and since its inception has
met, the requirements for qualification under Section 401(a), and, where
applicable, Section 401(k) of the Code and its related trust is now, and since
its inception has been, exempt from taxation under Section 501(a) of the Code
and nothing has occurred that would adversely affect the qualified status of any
such Plan. Each such Plan and the trust forming a part thereof, has received a
favorable determination letter from the IRS pursuant to Revenue Procedure 93-39
and its progeny as to its qualification under the Code, and to the effect that
each such trust is exempt from taxation under section 501(a) of the Code, and,
to the Knowledge of the Transferor, nothing has occurred since the date of such
determination letter that could adversely affect such qualification or tax-
exempt status.
(c) Compliance; Liability.
(i) With respect to each Plan (other than a Multiemployer Plan)
that is subject to section 412 of the Code or section 302 or Title IV of
ERISA, (A) no "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code) has been or could be
expected to be incurred, whether or not waived, and no excise or other
taxes have been or could be expected to be incurred or are due and owing
with respect to the Plan because of any failure to comply with the minimum
funding standards of ERISA and the Code, (B) no proceeding has been or is
expected to be initiated to terminate such Plan, and (C) no security under
Section 401(a)(29) of the Code has been or could be expected to be
required.
(ii) No liability has been or is expected to be incurred by
Transferor, any Related Person or the Business (either directly or
indirectly, including as a result of an indemnification obligation) under
or pursuant to ERISA or otherwise or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans
that could, following the Closing, become or remain a liability of the
Business or become a liability of the Company or of any employee benefit
plan established or contributed to by the Company and, to the Knowledge of
each of Transferor, no event, transaction or condition has occurred or
exists that could result in any such liability to the Business or,
following the Closing, the Company.
(iii) Each of the Plans has been operated and administered in
all respects in compliance with all Applicable Laws and the provisions of
each Plan, except for any failure so to comply that, individually or
together with all other such failures, has not and will not result in a
material liability or obligation on the part of the Business, or, following
the Closing, the Company, and has not had or resulted in, and will not have
or result in, a Material Adverse Effect. There are no material pending or,
to the Knowledge of Transferor, threatened claims, lawsuits, arbitrations
or other action by or on behalf of any of the Plans, by any Employee or
otherwise involving any such Plan or the assets of any Plan (other than
routine claims for benefits).
No Plan is or is expected to be under audit or investigation by the IRS, DOL, or
any other Governmental Authority and no such completed audit, if any, has
resulted in the imposition of any tax or penalty. No "reportable event" within
the meaning of Section 4043(b) of ERISA has occurred with respect to any Plan.
Notwithstanding the foregoing, the representations set forth in this subsection
(c) with respect to any Multiemployer Plan shall be made to Transferor's
Knowledge.
(iv) No Plan is a "multiple employer plan" within the meaning of
section 4063 or 4064 of ERISA, and there has never been any "multiple
employer plan" covering any Employees. With respect to each Plan which is
a Multiemployer Plan:
(a) with respect to events prior to the Closing, none of the
Transferor, any Related Person, or their predecessors has incurred or
has any reason to believe it has incurred or will incur any withdrawal
liability; no event has occurred which with the giving of notice would
result in any liability under Section 4201 of ERISA as a result of a
<PAGE>
complete withdrawal (within the meaning of Section 4203 of ERISA) or a
partial withdrawal (within the meaning of Section 4205 of ERISA); none
of the Transferor, any Related Person, or their predecessors has
received any notice of any claim or demand for complete or partial
withdrawal liability;
(b) none of the Transferor, any Related Person, or their
predecessors has received any notice or has any reason to believe that
such Multiemployer Plan is in "reorganization" (within the meaning of
Section 4241 of ERISA), that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of an excise
tax, or that the Multiemployer Plan is or may become "insolvent"
(within the meaning of Section 4241 of ERISA);
(c) no Multiemployer Plan is a party to any pending merger or
asset or liability transfer under Part 2 of Subtitle E of Title IV of
ERISA; and
(d) the PBGC has not instituted proceedings against the
Multiemployer Plan.
(v) All contributions required to have been made by Transferor
and each Related Person to any Plan under the terms of any such Plan or
pursuant to any applicable collective bargaining agreement or Applicable
Law have been made within the time period prescribed by any such Plan,
agreement or Applicable Law.
(vi) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment in the Business, including
death or survivor benefits, medical or health benefits (whether or not
insured), other than (a) coverage provided pursuant to the terms of any
Plan specifically identified as providing such coverage in Schedule
3.1.21(c)(vi) or mandated by section 4980B of the Code, (b) retirement
benefits payable under any Plan qualified under section 401(a) of the Code
or (c) deferred compensation accrued as a liability on the Audited Balance
Sheet or incurred after December 31, 1997 in the ordinary course of
business consistent with the prior practice of Transferor, pursuant to the
terms of a Plan. The consummation of the transactions contemplated by this
Agreement or the Collateral Agreements will not (either alone or upon the
occurrence of any additional subsequent events) result in an increase in
the amount of compensation or benefits (whether of severance pay or
otherwise) or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee. No
amounts payable under any Plan will fail to be deductible for federal
income tax purposes by virtue of Sections 280G or 162(m) of the Code.
(vii) Transferor does not maintain any Plan that is funded by
a trust described in Section 501(c)(9) of the Code or subject to the
provisions of Section 505 of the Code. Transferor has complied with the
requirements of Section 4980B of the Code regarding the continuation of
health care coverage under any Plan and the provisions of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA").
(viii) No event, condition, or circumstance exists that could
result in a material increase of the benefits provided under any Plan or
the expense of maintaining any Plan from the level of benefits or expense
incurred for the most recent fiscal year ended before the Closing. No
event, condition, or circumstance exists that would prevent the amendment
or termination of any Plan.
3.1.22. Confidentiality. Except as set forth on Schedule 3.1.22,
Transferor has taken all steps reasonably necessary to preserve the confidential
nature of all material confidential information (including any proprietary
information) with respect to the Business, including the manufacturing or
marketing of any of Transferor's products or services.
3.1.23. No Guarantees. None of the obligations or liabilities of the
Business or of Transferor incurred in connection with the operation of the
Business is guaranteed by or subject to a similar contingent obligation of any
other Person other than Transferor. Other than guarantees by Transferor of the
obligations of its Affiliates, Transferor has not guaranteed or become subject
to a similar contingent obligation in respect of the obligations or liabilities
of any other Person related to the Business. There are no outstanding letters
of credit, surety bonds or similar instruments of Transferor or any of its
Affiliates in connection with the Business or the Assets.
3.1.24. Records. The minute books of Transferor insofar as they relate to
or affect the Business and the Assets are substantially complete and correct in
all material respects. The books of account of Transferor, insofar as they
relate to or affect the Business and the Assets, are sufficient to prepare the
Financial Statements in accordance with GAAP.
3.1.25. Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Agreements, and the transactions contemplated thereby,
<PAGE>
have been carried on without the participation of any Person acting on behalf of
Transferor or its Affiliates in such manner as to give rise to any valid claim
against the Company or any of its subsidiaries for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to any
officer, director, employee, agent or sales representative of or consultant to
Transferor or its Affiliates upon consummation of the transactions contemplated
hereby or thereby.
3.1.26. Disclosure. No representation or warranty by Transferor contained
in this Agreement nor any statement or certificate furnished or to be furnished
by or on behalf of Transferor to the Company or its representatives in
connection herewith or pursuant hereto or set forth in any reports filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934 contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
contained herein or therein not misleading. There is no fact (other than
matters of a general economic or political nature which do not affect the
Business uniquely) known to Transferor that has not been disclosed by Transferor
to the Company that might reasonably be expected to have or result in a Material
Adverse Effect.
3.1.27. Receivables. All of Transferor's receivables (including accounts
receivable, loans receivable and advances) which have arisen in connection with
the Business and which are reflected in the Audited Financial Statements, and
all such receivables which will have arisen since the Audited Balance Sheet
Date, shall have arisen only from bona fide transactions in the ordinary course
of business. Unless paid prior to the Closing Date, such receivables are or
will be as of the Closing Date current and collectible net of the respective
reserves shown on the Balance Sheet or on the accounting records of Transferor
as of the Closing Date (which reserves are adequate and calculated consistent
with past practices and, in the case of the reserve as of the Closing Date, will
not represent a greater percentage of such receivables as of the Closing Date
than the reserve reflected in the Balance Sheet represented of such receivables
reflected therein and will not represent a material adverse change in the
composition of such receivables in terms of aging).
3.1.28. Relationships With Related Entities. No Related Entity of
Transferor has, or since December 31, 1997 has had, any interest in property
(whether real, personal or mixed and whether tangible or intangible), used in or
pertaining to the Business. Neither Transferor nor any Related Entity of
Transferor is or since December 31, 1997 has owned (of record or as a beneficial
owner) an equity interest in or in any of the financial or profit interest in, a
Person that has (i) had business dealings or a material financial interest in
any transaction with Transferor relating to the Business, or (ii) engaged in
competition with Transferor with respect to any line of products or services of
Transferor relating to the Business in any market presently served by
Transferor. Neither Transferor nor any Related Entity of Transferor is a party
to any Contract with, or has any claim or right against, Transferor.
3.1.29. Year 2000 Compliance. (a) Transferor represents and warrants
that, (i) it is in the process of conducting a comprehensive review of its
Systems to identify those Systems that may be unable to process data accurately
beyond the year 1999; and (ii) a plan has been implemented whereby identified
Systems will either be replaced or modified over the next eighteen months and
that the execution of this plan will not cause significant disruptions in the
Business's operations or have a Material Adverse Effect.
3.1.30. Information Supplied for Joint Proxy Statement. None of the
information supplied or to be supplied by Transferor for inclusion or
incorporation by reference in the Joint Proxy Statement to be filed with the
Securities and Exchange Commission by Transferor and Thomas in connection with
the stockholder meetings of Transferor and Thomas to be held in connection with
the Master Transaction Agreement and the transactions contemplated hereby will,
at the date mailed to stockholders, or at the time of such meetings, 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
the light of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will, as of its mailing date, comply as to form in all
material respects with Applicable Law, including the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder, except
that no representation is made by Transferor with respect to information
supplied by Thomas or the stockholders of Thomas for inclusion therein.
3.1.31 Opinion of Financial Advisor. The financial advisor of
Transferor, Donaldson, Lufkin & Jenrette Securities Corporation, has rendered an
opinion to the Board of Directors of Transferor to the effect that, as of the
date thereof, the Membership Interest to be received by Transferor pursuant to
this Agreement is fair from a financial point of view to Transferor; it being
understood and acknowledged by the Company that such opinion has been rendered
for the benefit of the Board of Directors of Transferor and is not intended to,
and may not, be relied upon by the Company or its Affiliates.
<PAGE>
ARTICLE IV
COVENANTS
4.1. Covenants of Transferor.
4.1.1. Further Actions. (a) Subject to the terms and conditions of the
Master Transaction Agreement, Transferor agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated hereby by the Closing Date,
including obtaining the approval of Transferor's stockholders.
(b) Transferor will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to Applicable Law in connection
with this Agreement, the Collateral Agreements, the sale and transfer of the
Assets pursuant to this Agreement and the consummation of the other transactions
contemplated thereby, including filings pursuant to the HSR Act and the WARN
Act, to the extent required by Applicable Law.
(c) Transferor, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including all
Governmental Approvals and any Consents required under any Contract) necessary
to be obtained by any of them in order to consummate the contribution and
transfer of the Assets to the Company pursuant to this Agreement and the
consummation of the other transactions contemplated thereby.
4.1.2. Further Assurances. Following the Closing, Transferor shall, and
shall cause each of their Affiliates to, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take such
other actions as shall be necessary, or otherwise reasonably requested by the
Company, to confirm and assure the rights and obligations provided for in this
Agreement, and in the Collateral Agreements and render effective the
consummation of the transactions contemplated hereby and thereby.
4.1.3. Certificates of Tax Authorities. On or before the Closing Date, to
the extent such taxing authorities grant certificates, Transferor shall provide
to the Company copies of certificates from all taxing authorities in which
Transferor files (or should file) Tax Returns stating that no Taxes are due to
any such state or other taxing authority for which the Company could have
liability to withhold or pay Taxes with respect to the transfer of the Assets or
the Business
4.1.4. Use of Business Name. After the Closing, Transferor will not,
directly or indirectly, use or do business, or allow any Affiliate to use or do
business, or assist any third party in using or doing business, under the names
and marks listed on Schedule 4.1.4.
4.1.5. Compliance with ISRA.
(a) Securing a Remediation Agreement.
(i) With respect to each "industrial establishment" (as such
term is defined under ISRA) owned or operated by Transferor, Transferor shall,
prior to the Closing Date, obtain from the NJDEP and execute a Remediation
Agreement ("RA") permitting the consummation of the transactions contemplated by
this Agreement. Transferor and the Company shall be the ordered parties on the
RA. Transferor shall prepare and file all documents required by the NJDEP to
obtain such RA.
(ii) In connection with the Closing, Transferor shall obtain and
post or execute any remediation funding source (as such term is defined under
ISRA) required in connection with the RA obtained in connection with clause (i)
above. From and after the Closing Date, the Company shall maintain such
remediation funding source in full force and effect as required by ISRA.
(b) Conduct of ISRA Proceedings Following the Closing. To the extent
necessary to achieve Compliance with ISRA after the Closing, the Company shall
take all actions required under the RA or ISRA, including the preparation and
filing of any Preliminary Assessment, Site Investigation, Remedial Investigation
or Remedial Action Workplan or any other document or information required by the
NJDEP under the RA or ISRA and the implementation of all Remedial Actions.
(c) Payment of ISRA Compliance Costs. Transferor shall pay all costs
required to satisfy its obligations under subparagraph (a) above. Except as
limited by the preceding sentence, the Company shall pay all fees, costs and
expenses incurred by Transferor or the Company to achieve Compliance with ISRA,
including without limitation, environmental consultants' and contractors' fees,
attorneys' fees, NJDEP filing fees and oversight charges, costs (including any
surcharges) associated with securing and maintaining any remediation funding
source, laboratory and analytical costs and expenses, equipment charges,
industrial or hazardous waste disposal costs and all other fees, costs and
expenses incurred in connection with or relating to Remedial Actions.
<PAGE>
4.1.6. Environmental Compliance. Subject to Section 4.1.5 hereof,
Transferor shall comply in all material respects with the requirements of all
applicable Environmental Laws necessary to effect the lawful transfer of the
Real Property or the Business prior to the Closing Date.
4.1.7. Assumed Liabilities. Transferor agrees that the Company shall be
permitted to direct the defense and settlement of any litigation that is an
Assumed Liability and shall have sole discretion as to the manner of doing so,
provided that the Company takes all steps reasonably necessary to conduct a
competent and diligent defense or settlement thereof, and provided further that
such litigation does not seek injunctive or other equitable relief involving
Transferor or an adverse result in connection therewith could not reasonably be
expected to have a Material Adverse Effect on Transferor other than with respect
to this Agreement. In addition, to the extent that any litigation is reasonably
expected to exceed the Reserve attributable thereto, the Company shall consult
with Transferor regarding the settlement, disposition and strategy with respect
to such litigation and the Company shall not settle or dispose of such
litigation without Transferor's consent, which consent shall not be unreasonably
withheld.
4.1.8. Insurance. Transferor agrees that the Company shall have the
right to make claims against any product liability insurance or other insurance
maintained prior to Closing by Transferor for the Business, provided that the
cost of adding the Company as an additional named insured as well as any
deductible or self-insured retentions related to any claim asserted under these
insurance policies with respect to the Business shall be borne by the Company.
4.1.9. Adjusted Tax Basis. On or before the Closing Date, Transferor
shall prepare and deliver to the Company a schedule that accurately and
completely sets forth Transferor's adjusted tax basis in each of the Assets
having a value in excess of $10,000 which shall become the Company's tax basis
in the Assets by operation of Code Section 723, subject to adjustment in
accordance with the provisions of Code Sections 734(b) and 754, as set forth in
the LLC Agreement.
4.2. Covenants of the Company.
4.2.1. Further Assurances. Following the Closing, the Company shall, and
shall cause its members to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by Transferor,
to confirm and assure the rights and obligations provided for in this Agreement
and in the Collateral Agreements and render effective the consummation of the
transactions contemplated thereby.
4.2.2. Use of Business Names by the Company. To the extent the
trademarks, service marks, brand names or trade, corporate or business names of
Transferor or of any of Transferor's Affiliates or divisions are used by
Transferor or the Business on stationery, signage, invoices, receipts, forms,
packaging, advertising and promotional materials, products, training and service
literature and materials, computer programs or like materials ("Marked
Materials") or appear on Inventory at the Closing, the Company may use such
Marked Materials or sell such Inventory after the Closing for a period of 12
months without altering or modifying such Marked Materials or Inventory, or
removing such trademarks, service marks, brand names, or trade, corporate or
business names, but the Company shall not thereafter use such trademarks,
service marks, brand names or trade, corporate or business names in any other
manner without the prior written consent of Transferor. Within 13 months after
the Closing Date, the Company shall provide evidence reasonably satisfactory to
Transferor that all Marked Materials have been used or destroyed. The Company
shall defend, indemnify and hold Transferor harmless from any Loss from the use
of the Marked Materials, including any product liability or other claims arising
from products manufactured or sold by the Company using such Marked Materials
unless due to the fault of Transferor.
4.2.3. Liability for Transfer Taxes. The Company shall be responsible for
the timely payment of, and shall indemnify and hold harmless Transferor against,
all sales (including bulk sales), use, value added, documentary, stamp, gross
receipts, registration, transfer, conveyance, excise, recording, license and
other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection
with or attributable to the transactions effected pursuant to this Agreement.
The Company shall prepare and timely file all Tax Returns required to filed in
respect of Transfer Taxes (including all notices required to be given with
respect to bulk sales taxes), provided that Transferor shall be permitted to
prepare any such Tax Returns that are the primary responsibility of Transferor
under applicable law. Transferor's preparation of any such Tax Returns shall be
subject to the Company's approval, which approval shall not be withheld
unreasonably.
4.2.4. ISRA. The Company shall satisfy its obligations to achieve
Compliance with ISRA as set forth in Section 4.1.5 hereof.
4.2.5. Removal of Transferor as Guarantor. The Company shall use its best
efforts to, within thirty days of the Closing Date, cause Transferor and its
<PAGE>
Affiliates to be removed as guarantors with respect to any obligation or
liability related to the Business or any Asset. During the period prior to
removing Transferor and its Affiliates as guarantors, the Company shall
indemnify Transferor and its Affiliates from any and all Losses related to such
guaranties.
4.2.6. Records and Documents. For seven years following the Closing Date,
the Company shall grant Transferor and its representatives, at Transferor's
request, during normal business hours on two day's prior notice, access to and
the right to make copies of Books and Records, possession of which is held by
the Company, as may be necessary or useful in connection with Transferor's
preparation of its accounting records, tax returns, financial statements,
compliance with Applicable Laws related to Employee Benefits, filings with the
Securities and Exchange Commission or other related matters. If during such
period, the Company elects to dispose of such Books and Records, the Company
shall first give Transferor sixty (60) days' written notice during which period
Transferor shall have the right to take such Books and Records.
4.2.7. LIFO Method. The Company shall adopt the federal income tax
accounting methodology directed by Transferor for the inventories received by
the Company from Transferor.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. Master Transaction Agreement. All of the conditions of Thomas and
Transferor set forth in the Master Transaction Agreement shall have been
satisfied, the LLC Agreement shall be effective and the Thomas Capitalization
Agreement shall close simultaneously herewith.
5.2. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by the Company) on or prior to the Closing Date of
the following additional conditions, which Transferor agrees to use reasonable
good faith efforts to cause to be fulfilled:
5.2.1. Representations, Performance. The representations and warranties
of Transferor contained in this Agreements and in the Collateral Agreements
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
on and as of the Closing Date. Transferor shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement and each of the Collateral Agreements to be performed or complied
with by it prior to or on the Closing Date. Transferor shall have delivered to
the Company a certificate, dated the Closing Date and signed by its duly
authorized officers, to the foregoing effect.
5.2.2. Collateral Agreements. Transferor or one of its Affiliates, as the
case may be, shall have entered into each of the following agreements with the
Company:
(a) a transitional services agreement, in form and substance mutually
agreed upon by the parties (the "Services Agreement");
(b) the LLC Agreement; and
(c) the Master Transaction Agreement.
5.2.3. Opinion of Counsel. The Company shall have received an opinion,
addressed to it and dated the Closing Date, from McCarter & English, LLP,
counsel to Transferor, in substance and form reasonably satisfactory to the
Company.
5.2.4. Transfer Documents. Transferor shall have delivered to the Company
at the Closing all documents, certificates and agreements necessary to transfer
to the Company good and marketable title to the Assets, free and clear of any
and all Liens thereon, other than Permitted Liens, including:
(a) a bill of sale, assignment and general conveyance, in form and
substance reasonably satisfactory to the Company, dated the Closing Date, with
respect to the Assets, (other than any Asset to be transferred pursuant to any
of the instruments referred to in any other clause of this Section 5.2.4);
<PAGE>
(b) assignments of all Contracts, Intellectual Property and any other
agreements and instruments constituting Assets, dated the Closing Date,
assigning to the Company all of Transferor's right, title and interest therein
and thereto, with any required Consent endorsed thereon;
(c) a general warranty deed, dated as of the Closing Date, with
respect to each parcel of Owned Real Property in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations,
or other filings;
(d) an assignment of lease, dated as of the Closing Date, with
respect to each Lease and each Other Lease, in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations or
other filings;
(e) certificates of title to all motor vehicles included in the
Assets to be transferred to the Company hereunder, duly endorsed for transfer to
the Company as of the Closing Date; and
(f) stock certificates representing the Assets described in Section
1.1(p) together with stock powers executed by Transferor in blank.
5.2.5. Consents and Estoppels. The Company shall have received consents
from the lessor of each Lease listed on Schedule 3.1.18(b) to the assignment of
such Lease to the Company. The Company shall also have received estoppel
certificates addressed to the Company from the lessor of each Lease, dated
within 30 days of the Closing Date, identifying the Lease documents and any
amendments thereto, stating that the Lease is in full force and effect and, to
the best knowledge of the lessor, that the tenant is not in default under the
Lease and no event has occurred that, with notice or lapse of time or both,
would constitute a default by the tenant under the Lease and containing any
other information reasonably requested by the Company.
5.2.6. FIRPTA Certificate. The Company shall have received a certificate
of Transferor, dated the Closing Date and sworn to under penalty of perjury,
setting forth the name, address and federal tax identification number of
Transferor and stating that Transferor is not a "foreign person" within the
meaning of Section 1445 of the Code, such certificate to be in the form set
forth in the Treasury Regulations thereunder.
5.2.7. Environmental Compliance. Subject to Section 4.1.5 hereof,
Transferor shall have complied in all material respects with the requirements of
all applicable Environmental Laws necessary to effect the lawful transfer of the
Real Property or the Business.
5.2.8. Adjusted Tax Basis. Transferor shall have delivered to the Company
the schedule referred to in Section 4.1.9 in form and substance reasonably
satisfactory to the Company.
5.2.9. ISRA. With respect to each "industrial establishment" (as such
term is defined under ISRA) owned or operated by Transferor, Transferor shall
have secured a RA issued by the NJDEP under ISRA permitting the consummation of
the transactions contemplated by this Agreement.
5.3. Conditions to Obligations of Transferor. The obligation of
Transferor to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by Transferor), on or prior to the Closing Date,
of the following additional conditions, which the Company agrees to use
reasonable good faith efforts to cause to be fulfilled.
5.3.1. Representations, Performance, etc. The Company shall have duly
performed and complied in all material respects with all agreements and
conditions required by this Agreement and the Collateral Agreements to be
performed or complied with by it prior to or on the Closing Date. The Company
shall have delivered to Transferor a certificate, dated the Closing Date and
signed by its duly authorized officer, to the foregoing effect.
5.3.2. Assumption Agreement. Transferor shall have received from the
Company the Assumption Agreement.
5.3.3. Collateral Agreements. The Company shall have entered into each of
the Collateral Agreements to which it is a party.
5.3.4. ISRA. With respect to each "industrial establishment" (as such
term is defined under ISRA) owned or operated by Transferor, Transferor shall
have secured a RA issued by the NJDEP under ISRA permitting the consummation of
the transactions contemplated by this Agreement.
5.3.5. Environmental Compliance. Subject to Section 4.1.5 hereof,
Transferor shall have complied in all material respects with the requirements of
all applicable Environmental Laws necessary to effect the lawful transfer of the
Real Property or the Business.
<PAGE>
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1 Employment of Transferor's Employees
(a) Transferor will, and will cause each of its Affiliates to, use
all commercial efforts to cause the employees employed by Transferor in the
Business to make available their employment services to the Company. For a
period of two years from the Closing Date, Transferor will not, and will not
permit any of its Affiliates to, solicit, offer to employ, hire or retain the
services of or otherwise interfere with the relationship of the Company with any
person employed by or otherwise engaged to perform services for the Company in
connection with the operation of the Business.
(b) Effective as of the Closing Date, the Company shall offer
employment to all employees who are actively employed by Transferor ("Transferor
Employees"). Those Transferor Employees who accept such offers of employment
effective as of the Closing Date shall be referred to herein as the "Transferred
Employees". The Company shall provide any Transferred Employee who is
terminated by the Company within 180 days after the Closing Date with severance
pay equal to the severance pay that such Transferred Employee would have
received under the severance plans of Transferor listed on Schedule 3.1.21(a) if
such person's employment with Transferor were terminated as of the Closing
Date. Except as provided under the immediately preceding sentence,
Transferor shall remain responsible, and the Company shall not assume any
liability, for payment of any and all severance, termination pay, retention,
change in control or other similar compensation or benefits which are or may
become payable in connection with the consummation of the transactions
contemplated by this Agreement or the Collateral Agreements.
6.2 Assumption of Plans
Except as specifically provided under this Article VI, effective as of
the Closing Date, the Company will adopt and assume each Plan, and all rights
and Benefit Liabilities thereunder and all other non-material Benefit
Liabilities, and shall become a successor employer and be responsible for
Transferor's participation in and obligations and responsibilities with respect
to each Plan. Prior to and after the Closing, Transferor and the Company shall
cooperate in preparing any appropriate documents and use their reasonable best
efforts to take all other actions necessary to effectuate the intent of this
Section.
6.3 Multiemployer Plans
With respect to each Multiemployer Plan set forth on Schedule
3.1.21(a), the Company shall reimburse Transferor for any withdrawal liability
incurred by Transferor under such Multiemployer Plan as the result of the
transactions contemplated under this Agreement and the Collateral Agreements.
Notwithstanding the foregoing, the Company may elect prior to the Closing Date
that Section 4204 of ERISA shall apply to the transactions contemplated under
this Agreement and the Collateral Agreements with respect to any such
Multiemployer Plan, in which case Transferor and the Company shall take all
actions necessary to comply with Section 4204 of ERISA with respect to each such
Multiemployer Plan. Such compliance shall include the execution of any
necessary documentation and the posting of a bond or escrow (or letter of credit
if acceptable to the Multiemployer Plan) within the time required by Section
4204(a)(1)(B) of ERISA for each of the Multiemployer Plans for which a bond or
escrow (or letter of credit) is required, in an amount, for the period of time,
and in a form that complies with Section 4204 (a)(1)(B) of ERISA -- or, within
such time period obtaining a variance from such bonding or escrow requirement
from each of the applicable Multiemployer Plan or Multiemployer Plans or from
the Pension Benefit Guaranty Corporation (the "PBGC") -- so that a transfer of
contribution obligations to the Company under the Multiemployer Plans with
respect to Transferor Employees does not result in a complete or partial
withdrawal of Transferor from the applicable Multiemployer Plans under Sections
4203 or 4205 of ERISA, respectively. In order to assist the Company in making
any election contemplated by this Section 6.3, Transferor shall use its
reasonable best efforts to provide to the Company as soon as possible after the
date hereof a written estimate from each Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal as of the Closing.
6.4 Employment Taxes
(a) Transferor and the Company will, to the extent permitted by
Applicable Law, (i) treat the Company as a "successor employer" and Transferor
as a "predecessor employer," within the meaning of sections 3121(a)(1) and
3306(b)(1) of the Code, with respect to Transferred Employees who are employed
by the Company for purposes of Taxes imposed under the United States Federal
Unemployment Tax Act ("FUTA") or the United States Federal Insurance
Contributions Act ("FICA") and (ii) and cooperate with each other to avoid, to
the extent possible, the filing of more than one IRS Form W-2 with respect to
each such Transferred Employee for the calendar year within which the Closing
Date occurs.
<PAGE>
(b) At the request of the Company with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers' compensation, payroll, healthcare or other
similar Tax other than taxes imposed under FICA and FUTA, Transferor and the
Company will, to the extent permitted by Applicable Law, (i) treat the Company
as a successor employer and Transferor as a predecessor employer, within the
meaning of the relevant provisions of such Tax law, with respect to Transferred
Employees who are employed by the Company and (ii) cooperate with each other to
avoid, to the extent possible, the filing of more than one individual
information reporting form pursuant to each such Tax law with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
6.5. Other Plans. The Company shall not assume or have any Benefit
Liabilities with respect to either the Genlyte 1988 Stock Option Plan or the
Genlyte 1998 Stock Option Plan.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement shall be terminated at such time as the
Master Transaction Agreement is terminated. In the event of the termination of
this Agreement, this Agreement shall become void and have no effect, without any
liability to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors, members,
managers, officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except (i) as specified in Section 8.4, (ii) subject
to Article VIII of the Master Transaction Agreement, for any liability resulting
from such party's breach of this Agreement, and (iii) for the payment of any fee
pursuant to Article VIII of the Master Transaction Agreement.
ARTICLE VIII
DEFINITIONS, MISCELLANEOUS
8.1 Definition of Certain Terms. The terms defined in this Section 8.1,
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement. All
references herein to a Section, Article or Schedule are to a Section, Article or
Schedule of or to this Agreement, unless otherwise indicated.
Adequate Reserves: with respect to any asset or liability, an amount
of specific or general Reserves that equals or exceeds the amount of any
Loss associated with such asset or liability now or hereafter recognized.
Affiliate: when used with reference to a specified Person, any Person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with the specified Person.
Agreement: this Capitalization Agreement, including the Schedules
hereto.
Applicable Law: all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
Assets: as defined in Section 1.1.
Assumed Liabilities: as defined in Section 2.3.
Assumption Agreement: as defined in Section 2.3(b).
Audited Balance Sheet: the balance sheet contained in the Audited
Financial Statements.
Audited Balance Sheet Date: as defined in Section 3.1.4.
Audited Financial Statements: as defined in Section 3.1.4.
Benefit Liabilities: liabilities, obligations, commitments, damages,
costs, taxes and expenses, including reasonable fees and disbursements of
attorneys and other advisors, including any such expenses incurred in
connection with the enforcement of any applicable provision of this
Agreement payable to any Employee or other Person as a result of, with
respect to or under any Plan or similar employee benefit plan, agreement,
policy or practice.
Books and Records: as defined in Section 1.1(i).
<PAGE>
Business: the business of Transferor relating to the manufacture,
sale, marketing and distribution of consumer, commercial, industrial and
outdoor lighting.
Business Day: shall mean any day on which commercial banks in the
City of New York, New York are open for business.
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. section9601 et seq.
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code of 1986, as amended, or any successor
statute to such Code.
Collateral Agreements: the agreements and other documents and
instruments described in Section 5.2.2 and 5.2.4.
Company: as defined in the first paragraph of this Agreement.
Company Indemnitees: as defined in Section 8.2(a).
Company's Accountants: the accountants of the Company as determined
by the Company's management board.
Compliance with ISRA: with respect to each "industrial establishment"
(as such term is defined under ISRA) owned or operated by Transferor, the
receipt by the Company or Transferor of a Deminimis Quantity Exemption
approval, Negative Declaration approval or a No Further Action Letter and
Covenant Not to Sue (as such terms are defined under ISRA) from the NJDEP,
or other document or documents advising that the requirements of ISRA have
been satisfied.
Component: means any Hardware, Software, Databases and/or Embedded
Control of any System used in the Business.
Consent: any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of
registration, certificate, declaration or filing with, or report or notice
to, any Person, including but not limited to any Governmental Authority.
Contract: as defined in Section 3.1.12(a).
Database: shall mean all data and other information recorded, stored,
transmitted and retrieved in electronic form by a System or any Component,
whether located on any Component(s) of a System or archived in storage
media of a type employed or used in conjunction with any Component or
System used in the Business.
$ or dollars: lawful money of the United States.
Embedded Control: shall mean any microprocessor, microcontroller, PLC,
smart instrumentation or other sensor, driver, monitor, robotic or other
device containing a semiconductor, memory circuit, BIOS, PROM or other
microchip used in the Business.
Employees: as defined in Section 3.1.21(a).
Environmental Laws: all Applicable Laws relating to the protection of
the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, handling, holding, abatement, existence,
Release, threatened Release or transportation or disposal of any Hazardous
Substances, including (i) CERCLA, the Resource Conservation and Recovery
Act, and the Occupational Safety and Health Act, (ii) all other
requirements pertaining to reporting, licensing, permitting, investigation
or remediation of emissions, discharges, releases or threatened releases of
Hazardous Substances into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of Hazardous
Substances, and (iii) all other requirements pertaining to the protection
of the health and safety of employees or the public.
Environmental Liabilities and Costs: all Losses, whether direct or
indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including all Losses
related to Remedial Actions, and all fees disbursements and expenses of
counsel, experts, personnel and consultants based on, arising out of or
otherwise in respect of: (i) the ownership, operation, use or occupancy of
the Business, the Assets, the Real Property or Other Leases or any other
real properties, assets, equipment or facilities, by any Transferor, or any
of their predecessors or Affiliates; (ii) the environmental conditions
existing on the Closing Date on, under, above, about or emanating from any
Real Property, the Assets or property subject to Other Leases or any other
real properties, assets, equipment or facilities currently or previously
owned, leased, operated, occupied or used by the any Transferor, or any of
<PAGE>
their predecessors or Affiliates; and (iii) expenditures necessary to cause
any Real Property or any aspect of the Business or the Assets to be in
compliance with any and all requirements of Environmental Laws as of the
Closing Date, including all Environmental Permits issued or required under
or pursuant to such Environmental Laws, and reasonably necessary to make
full economic use of any Real Property or the Assets.
Environmental Permits: any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization with respect to the any Transferor
necessary for the conduct of the Business as currently conducted or
previously conducted under any Environmental Law.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Excluded Assets: as defined in Section 1.2.
Excluded Liabilities: as defined in Section 2.4.
Financial Statements: each of the financial statements required to be
provided by Section 3.1.4.
GAAP: generally accepted accounting principles as in effect in the
United States.
Governmental Approval: any Consent of, with or to any Governmental
Authority.
Governmental Authority: any nation of government, any state or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision, thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-
regulatory organization.
Hardware: shall mean all mainframes, midrange computers, personal
computers, notebooks, servers, switches, printers, modems, drives,
peripherals and any component of any of the foregoing used by the Business.
Hazardous Substances: any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" thereunder, or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental Authority or
Environmental Law.
HIPAA: as defined in Section 3.1.21(c)(viii).
HSR Act: the Hart-Scott-Rodino Anti-trust Improvements Act of 1976,
as amended.
Indemnified Party: as defined in Section 8.2(d).
Indemnifying Party: as defined in Section 8.2(d).
Intellectual Property: any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and
extensions), patent disclosures awaiting filing determination, inventions
and improvements thereto; (b) trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, and registrations and
applications for registration thereof; (c) copyrights (including software)
and registrations thereof; (d) inventions, processes, designs, formulae,
trade secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f) Software;
(g) intellectual property rights similar to any of the foregoing; (h)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media) used in the Business.
Intellectual Property Assets: as defined in Section 1.1(h).
Inventories: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
<PAGE>
ISRA: the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., and
the rules and regulations promulgated thereunder.
Joint Proxy Statement: the Joint Proxy Statement of Thomas and
Transferor to be filed with the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, pursuant to which each of
Thomas and Transferor will seek stockholder approval of the transactions
contemplated by the Master Transaction Agreement.
Knowledge: the actual knowledge after due inquiry of (i) any
"officer" of the Transferor, as such term is defined in Rule 16a-1(f) of
the General Rules and Regulations under the Securities Exchange Act of
1934, or (ii) any individual employed by Transferor as a manager of any
portion of the Business.
LLC Agreement: as defined in the WHEREAS clauses of this Agreement.
Leased Real Property: means all interests leased pursuant to the
Leases.
Leases: means the real property leases, subleases, licenses and
occupancy agreements relating the Business pursuant to which Transferor is
the lessee, sublessee, licensee or occupant.
Lien: any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment,
burden, title defect, title retention agreement, voting, trust agreement,
interest, equity, option, lien, right of first refusal, charge or other
restrictions or limitations of any nature whatsoever, including such as may
arise under any Contracts.
Losses: as defined in Section 8.2(a).
Marked Materials: as defined in Section 4.2.2.
Master Transaction Agreement: as defined in the WHEREAS clauses of
this Agreement.
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is adverse to the business, operations, prospects,
results of operations, condition (financial or otherwise), properties
(including intangible properties), assets (including intangible assets) or
liabilities of the Business in an amount equal to $5,000,000 or greater.
Membership Interests: as defined in Section 2.2.
Multiemployer Plan: as defined in Section 3.1.21(a).
Net Working Capital: current assets less current liabilities of the
Business (in each case excluding Excluded Assets and Excluded Liabilities),
all as determined in accordance with GAAP, consistently applied.
NJDEP: the New Jersey Department of Environmental Protection, its
divisions, bureaus and subdivisions.
Other Leases: the leases, subleases, licenses and occupancy
agreements pursuant to which Transferor is a lessor sublessor or licensor
of any part of the Real Property.
Owned Intellectual Property: as defined in Section 3.1.16(a).
Owned Real Property: the real property owned by the Transferor or any
Affiliate together with all other structures, facilities, improvements,
fixtures, systems, equipment and items of property presently or hereafter
located thereon attached or appurtenant thereto or owned by Transferor or
any Affiliate and located on Leased Real Property and all easements,
licenses, rights and appurtenances relating to the foregoing other than
owned real property included in Excluded Assets.
Permitted Liens: (i) Liens reserved against in the Audited Balance
Sheet to the extent so reserved, (ii) Liens for Taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
Transferor's books in accordance with GAAP, (iii) liens arising in the
ordinary course of business from a purchase money security interest or
related to indebtedness for borrowed money under Transferor's credit
facilities, or (iv) Liens that, individually and in the aggregate, do not
and would not materially detract from the value of any of the property or
assets of the Business or materially interfere with the use thereof as
currently used.
Person: any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
<PAGE>
Plan: as defined in Section 3.1.21(a).
Real Property: all of the real property, together with all buildings,
structures, fixtures and improvements, listed on Schedules 3.1.18(a) and
3.1.18(b).
Real Property Laws: as defined in Section 3.1.18(f).
Related Entity: with respect to any Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a material interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a material
interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee(or in a similar capacity); and
(f) any Related Entity of any individual described in clause (b)
or (c).
Related Persons: as defined in Section 3.1.21(a).
Release: any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including, the
moving of any materials through, into or upon, any land, soil, surface
water, ground water or air, or otherwise entering into the environment.
Remedial Action: all actions required to (i) clean up, remove, treat
or in any other way remediate any Hazardous Substances; (ii) prevent the
release of Hazardous Substances so that they do not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform studies, investigations and care related to any such Hazardous
Substances.
Reserves: the reserves shown on the Balance Sheet or in the
accounting records of Transferor for the Business as of the Closing Date.
Software: shall mean all software owned, developed, licensed or used
by Transferor or any of its Affiliates in the Business, including (i) all
modifications, enhancements, fixes, updates, upgrades, bypasses and work-
arounds, (ii) the source code and object code for any of the foregoing and
(iii) all operating systems, bridgeware, firmware, middleware or utilities
used by the Business.
Subsidiaries: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or
other equity interests.
System: shall mean any combination of any Software, Hardware, Database
or Embedded Control used by the Business.
Tax: any federal, state, provincial, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, goods and services, excise,
customs duties, transfer, conveyance, mortgage registration, stamp,
documentary, recording, premium, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or other similar tax, duty or
other governmental charge or assessment or deficiencies thereof (including
all interest and penalties thereon and additions thereto whether disputed
or not).
Tax Return: any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Thomas: as defined in the WHEREAS clauses of this Agreement.
Transaction Expenses: as defined in Section 8.4.
<PAGE>
Transferred Employees: as defined in Section 6.1(b).
Transfer Taxes: as defined in Section 4.2.3.
Transferor: as defined in the first paragraph of this Agreement.
Transferor's Accountants: Arthur Andersen LLP.
Transferor Employees: as defined in Section 6.1(b).
Treasury Regulations: the regulations prescribed pursuant to the
Code.
Withholding Taxes: as defined in Section 3.1.6(a)
8.2 Indemnification. (a) By Transferor. Transferor covenants and agrees
to defend, indemnify and hold harmless the Company, its officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively, the
"Company Indemnitees") from and against, and pay or reimburse the Company
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Transferor herein or under any Collateral Agreement or in connection
herewith or therewith;
(ii) any failure of Transferor to perform any covenant or
agreement hereunder or under any Collateral Agreement or fulfill any
other obligation in respect hereof or of any Collateral Agreement;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any and all Taxes of Transferor and all Affiliates thereof,
whether or not relating to or arising out of the Business; and
(v) any and all Benefit Liabilities not assumed by the Company.
Except for inaccuracies in the representations and warranties
contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.6 and 3.1.11 and breaches of
covenants contained herein or in any Collateral Agreement, Transferor shall not
be required to indemnify the Company Indemnitees with respect to any claim for
indemnification pursuant to this Section 8.2(a) unless and until the aggregate
amount of all Losses arising under this Section 8.2(a) exceeds $1,000,000 and
then only for the amount of such excess. Notwithstanding the immediately
preceding sentence, Transferor shall not be required to indemnify the Company
Indemnitees with respect to any claim for indemnification arising from
inaccuracies in the representations and warranties contained in Section 3.1.19
unless and until the aggregate amount of all such Losses exceeds $500,000 and
then only for the amount of such excess.
(b) By the Company. The Company covenants and agrees to defend,
indemnify and hold harmless Transferor and its officers, directors, employees,
agents, advisers, representatives and Affiliates (collectively, the "Transferor
Indemnitees") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty by the
Company made or contained in any Collateral Agreement or in connection
therewith; or
(ii) any failure of the Company to perform any covenant or
agreement made or contained in this Agreement or any Collateral
Agreement or fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities except to the extent that they
constitute Losses for which Transferor is required to indemnify the
Company Indemnitees under Section 8.2(a);
(iv) the use by the Company of any Transferor tradenames or
trademarks after the Closing Date as contemplated by Section 4.2.2;
and
(v) the operation of the Business by the Company or the
Company's ownership, operation or use of the Assets following the
Closing Date, except to the extent such Losses result from or arise
out of the Excluded Liabilities, Excluded Assets or constitute Losses
for which Transferor is required to indemnify the Company Indemnitees
under Section 8.2(a).
<PAGE>
(c) Adjustment to Indemnification Payments. Any payment made by
Transferor pursuant to Section 8.2(a) in respect of any Losses shall be net of
any Reserve maintained by Transferor for such Loss or category of Losses. Any
payment made by Transferor to the Company Indemnitees, on the one hand, or by
the Company to the Transferor Indemnitees, on the other hand, pursuant to this
Section 8.2 in respect of any Losses (i) shall be net of any insurance proceeds
realized by and paid to the Indemnified Party in respect of such Losses and (ii)
shall be (A) reduced by an amount equal to any Tax benefits attributable to such
Losses and (B) increased by an amount equal to any Taxes attributable to the
receipt of such payment, but only to the extent that such Tax benefits are
actually realized, or such Taxes are actually paid, as the case may be, by the
Indemnified Party or by a consolidated, combined or unitary group of which the
Indemnified Party is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any Losses for which it is seeking
indemnification pursuant to this Section 8.2; provided that the Indemnified
Party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes (based on written advice from
insurance brokers or providers) the cost of pursuing such an insurance claim
together with any corresponding increase in insurance premiums or other
chargebacks to the Indemnified Party, as the case may be, would exceed the value
of the claim for which the Indemnified Party is seeking indemnification. Any
amount paid by Transferor pursuant to Section 8.2(a) shall be characterized, for
tax purposes, as a contribution to the Company's capital and amounts paid by the
Company pursuant to Section 8.2(b) shall be characterized as a return of
capital. "Indemnified Party" means a party entitled to indemnification pursuant
to this Agreement.
(d) Indemnification Procedures. In the case of any claim asserted by
a third party against an Indemnified Party, notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate in such defense at
such Indemnified Party's expenses, and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of the Company to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.2 and the records of each shall be available to the other with respect
to such defense.
(e) Time Limitation. All claims for indemnification under clause (i)
of the first sentence of Section 8.2(a) or clause (i) of the first sentence of
Section 8.2(b) must be asserted prior to the termination of the respective
survival periods set forth in Section 8.3. Notwithstanding the foregoing, any
claim for indemnification that is asserted by written notice within the
applicable survival period shall survive until resolved and discharged by the
parties or pursuant to a final non-appealable judicial determination.
(f) Payment by Transferor. Notwithstanding any provision of this
Section 8.2 to the contrary, any payment required to be made by Transferor to
the Company pursuant to this Section 8.2 shall be deemed a liability of
Transferor owing to the Company and shall be deducted from the next distribution
made to Transferor pursuant to Section 6.2(b) of the LLC Agreement (other than
Tax Distributions, as such term is defined in the LLC Agreement), provided that
<PAGE>
in the event that the Loss payable by Transferor exceeds the amount of such
distribution, Transferor shall deliver to the Company a note in the amount of
such excess, which shall bear interest at the rate of the Company's primary
credit facility referenced in Sections 6.8 and 7.8 of the Master Transaction
Agreement, and shall be payable out of future distributions (other than Tax
Distributions) pursuant to the LLC Agreement. The mechanism provided in this
Section 8.2(f) shall be the sole and exclusive source of payment for any
obligation of Transferor pursuant to this Section 8.2.
(g) Application of Reserve. With respect to indemnification claims
for breach of representations or warranties to which a Reserve is applicable,
Transferor shall bear the burden of proving the amount of the Reserve.
(h) Exclusive Remedy. Except for the provisions of Section 7.1 and
subject to Article VIII of the Master Transaction Agreement, the
indemnifications contained in Section 8.2 shall be Transferor's and the
Company's sole and exclusive remedies with respect to money damages, against
each other, with respect to matters arising under this Agreement, of any kind or
nature, or relating to the Division, the Business, the Assets, the Assumed
Liabilities, the Excluded Assets or the Excluded Liabilities. Transferor and
the Company hereby waive and release any other rights, remedies, causes of
action or claims that they have or that may arise against the other with respect
to matters arising under this Agreement, of any kind or nature, or relating to
the Division, the Business, the Assets, the Assumed Liabilities, the Excluded
Assets or the Excluded Liabilities. The foregoing restrictions of this Section
8.2(h) shall not apply to any matter involving actual fraud or criminal
misconduct.
8.3. Survival of Representations and Warranties, etc. The representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Section 3.1 shall survive
to the date that is 60 days after the delivery of the audited
financial statements of the Company for the fiscal year 1999;
(b) the representations and warranties contained in Section 3.1.19
shall survive for a period of three years following the Closing Date;
(c) the representations and warranties contained in Sections 3.1.1,
3.1.2, 3.1.3 and 3.1.11 shall survive without limitation; and
(d) the representations and warranties of Transferor contained in
Section 3.1.6 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
by reason of waiver of such statute of limitations.
8.4. Expenses. Except as provided in Section 4.2.3 and in Section 8.2 of
the Master Transaction Agreement, Transferor, on the one hand, and the Company,
on the other hand, shall bear their respective expenses, costs and fees
(including attorneys', auditors' and financing commitment fees) in connection
with the transactions contemplated hereby, including the preparation, execution
and delivery of this Agreement and compliance herewith (the "Transaction
Expenses"), whether or not the transactions contemplated hereby shall be
consummated.
8.5. Partial Invalidity. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
8.6 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
(a) If to Transferor:
The Genlyte Group Incorporated
2345 Vauxhall Road
Union, New Jersey 07083-1948
Attention: Larry Powers, President & CEO
Telecopy No.: 908-964-7000
<PAGE>
With a copy to:
McCarter & English, LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attention: Bart J. Colli, Esq.
Telecopy No. 973-624-7070
(b) If to the Company:
GT Lighting, LLC
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, Kentucky 40232
Attention: Larry Powers, President & CEO
Telecopy No. 502-893-4685
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of
receipt.
8.7. Miscellaneous.
8.7.1. Other Rules of Construction. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "or" is not
exclusive. The word "including" shall mean including, without limitation. The
section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement
8.7.2. Entire Transaction. This agreement and the agreements and documents
referred to herein contain the entire agreement and understanding among the
parties with respect to the transactions contemplated hereby and supersede all
other agreements, understandings and undertakings among the parties on the
subject matter hereof. All exhibits and schedules hereto are hereby
incorporated by reference and made a part of this Agreement
8.7.3. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.7.4. Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Delaware without giving effect to the conflict of laws
rules thereof. The Company and Transferor hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware solely in respect
of the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that such party is not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any of such document may not be enforced in or by said
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The Company and Transferor hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8.6, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
8.7.5. Successors and Assigns This Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. This Agreement shall not be assigned by either party hereto
without the express prior written consent of the other party and any attempted
assignment, without such consents, shall be null and void, provided that the
Company may assign this Agreement to any Subsidiary of the Company, provided
further that the Company shall in all events remain liable hereunder. Except as
otherwise provided in the Master Transaction Agreement, this Agreement does not
create any rights, claims or benefits inuring to any person that is not a party
hereto nor create or establish any third-party beneficiary hereto.
8.7.6. Amendment; Waivers.
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
<PAGE>
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
8.7.7. Remedies. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of Transferor shall not be affected or deemed
waived by reason of any investigation made by or on behalf of the Company
(including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Company or any of such
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
8.7.8. Authorship. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over the construction
of this Agreement shall be decided without regard to events of authorship or
negotiation.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
GT LIGHTING, LLC
By: ______________________________
Larry K. Powers
President
THE GENLYTE GROUP INCORPORATED
By: ______________________________
Larry K. Powers
President
<PAGE>
LIST OF SCHEDULES
TO THE
CAPITALIZATION AGREEMENT
BETWEEN
GT LIGHTING, LLC
AND
THE GENLYTE GROUP INCORPORATED
DATED AS OF APRIL 28, 1998
Schedule 1.1(p): Stock, Partnership, Membership or Other Interests in
any Person Engaged in the Business
Schedule 1.2: Excluded Assets
Schedule 2.3: Excluded Liabilities
Schedule 3.1.2(a): State of Incorporation
Schedule 3.1.2(b): States in Which Qualified to do Business
Schedule 3.1.2(d): Subsidiaries
Schedule 3.1.3: Conflicts with Contracts; Governmental Approvals and
Consents Required
Schedule 3.1.5: Undisclosed Liabilities
Schedule 3.1.6(a): Contested Taxes
Schedule 3.1.6(b): Agreements or Powers of Attorney Extending Period of
Assessment or Collection of Taxes
Schedule 3.1.6(c): Taxes Due or Audit Issues
Schedule 3.1.6(d): Tax-Related Litigation or Administrative Appeal
Schedule 3.1.7: Changes in Conduct of Business Since the Audited
Balance Sheet Date
Schedule 3.1.8: Litigation Pending or Threatened
Schedule 3.1.9(a): Noncompliance with Applicable Law
Schedule 3.1.9(b): Governmental Approvals and Consents Required
Schedule 3.1.10: Conduct of the Business Outside of the Division
Schedule 3.1.11: Assets to Which The Genlyte Group Incorporated Does Not
Have Good Title; Assets Not in Reasonably Good Repair
and Operating Condition
Schedule 3.1.12(a): List of Contracts
Schedule 3.1.12(c): Defaults under Contracts; Consents Required
Schedule 3.1.13: Territorial Restrictions
Schedule 3.1.14: Pending or Threatened Claims Regarding Warranties in
Excess of $100,000
Schedule 3.1.16(a): Owned Intellectual Property
Schedule 3.1.16(d): Intellectual Property Litigation
Schedule 3.1.16(e): List of Names and Marks; Contractual Restrictions
Schedule 3.1.17: Insurance Policies; Claims Made within Last Two Years
Schedule 3.1.18(a): Owned Real Property
Schedule 3.1.18(b): Leases
Schedule 3.1.19(b): Noncompliance with Environmental Permits and Laws
Schedule 3.1.19(c): Actions Resulting in Liability or Obligation
Schedule 3.1.19(d): Environmental Exceptions
Schedule 3.1.20: Employees, Labor Matters, etc.
Schedule 3.1.21(a): Employee Benefit Plans, etc.
Schedule 3.1.21(c)(vi): List of Plans Providing Death or Survivor Benefits,
Medical or Health Benefits
<PAGE>
Schedule 3.1.22: Breaches of Confidentiality
Schedule 4.1.4: Names and Marks Under which Business Will be Conducted
After Closing
