STOCK PURCHASE AGREEMENT BY AND AMONG PRESTIGE BRANDS HOLDINGS, INC., BLACKSMITH BRANDS HOLDINGS, INC., AND THE STOCKHOLDERS OF BLACKSMITH BRANDS HOLDINGS, INC. DATED AS OF SEPTEMBER 14, 2010
Exhibit 2.1
BY
AND AMONG
BLACKSMITH
BRANDS HOLDINGS, INC.,
AND
THE
STOCKHOLDERS OF BLACKSMITH BRANDS HOLDINGS, INC.
DATED
AS OF SEPTEMBER 14, 2010
TABLE
OF CONTENTS
Page
| ARTICLE I DEFINITIONS AND DEFINITIONAL PROVISIONS |
1
|
| Section 1.1 |
Defined
Terms
|
1
|
|
| Section 1.2 |
Other Defined
Terms
|
14
|
|
|
|
Section
1.3
|
Other Definitional and
Interpretive Provisions
|
14
|
|
|
Section
1.4
|
Captions
|
15
|
|
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES
|
15
|
|
|
Section
2.1
|
Purchase and Sale of the
Purchased Shares at the Closing
|
15
|
|
ARTICLE III
PURCHASE PRICE; PAYMENT; ADJUSTMENT
|
16
|
|
|
Section
3.1
|
Purchase Price; Payment;
Adjustment
|
16
|
|
|
Section
3.2
|
Total
Consideration
|
19
|
|
ARTICLE IV
THE CLOSING
|
19
|
|
|
Section
4.1
|
Closing
|
19
|
|
|
Section
4.2
|
Actions at
Closing
|
20
|
|
|
Section
4.3
|
Deliveries at
Closing
|
20
|
|
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
|
21
|
|
|
Section
5.1
|
Organization; Corporate Power and
Authorization
|
21
|
|
|
Section
5.2
|
Binding Effect and
Noncontravention
|
21
|
|
|
Section
5.3
|
Brokerage
|
22
|
|
|
Section
5.4
|
Financing
|
22
|
|
|
Section
5.5
|
No
Litigation
|
22
|
|
|
Section
5.6
|
Investment
Intent
|
22
|
|
|
Section
5.7
|
Condition of the
Business
|
22
|
|
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING SELLERS
|
23
|
|
|
Section
6.1
|
Ownership
|
23
|
|
|
Section
6.2
|
Organization, Standing,
Qualification and Power
|
23
|
|
|
Section
6.3
|
Authority; Execution and
Delivery; Enforceability
|
23
|
|
|
Section
6.4
|
No Conflicts;
Consents
|
23
|
|
|
Section
6.5
|
Litigation
|
24
|
|
|
Section
6.6
|
Brokerage
|
24
|
|
ARTICLE VII
GENERAL REPRESENTATIONS AND WARRANTIES REGARDING HOLDCO AND ITS
SUBSIDIARIES
|
24
|
|
|
Section
7.1
|
XxXxxx
Agreement
|
25
|
|
|
Section
7.2
|
Capitalization and Constituent
Documents
|
25
|
|
|
Section
7.3
|
Organization, Qualification and
Power
|
26
|
|
|
Section
7.4
|
Absence of Conflicts; Required
Consents
|
26
|
|
|
Section
7.5
|
Charter
Documents
|
27
|
|
|
Section
7.6
|
Other
Entities
|
27
|
|
|
Section
7.7
|
Transactions in Capital Stock of
Holdco and its Subsidiaries
|
27
|
|
|
Section
7.8
|
No Liens on Holdco’s and
Subsidiaries’ Assets
|
27
|
|
|
Section
7.9
|
Related Party
Agreements
|
27
|
|
|
Section
7.10
|
Litigation and
Claims
|
28
|
|
|
Section
7.11
|
Financial
Information
|
28
|
|
|
Section
7.12
|
Compliance with
Laws
|
28
|
i
|
|
Section
7.13
|
Compliance with Health Care
Laws
|
29
|
|
|
Section
7.14
|
Certain Environmental
Matters
|
29
|
|
|
Section
7.15
|
Liabilities and
Obligations
|
29
|
|
|
Section
7.16
|
Real
Properties
|
29
|
|
|
Section
7.17
|
Other Tangible
Assets
|
30
|
|
|
Section
7.18
|
Intellectual
Property
|
30
|
|
|
Section
7.19
|
Contractual
Commitments
|
32
|
|
|
Section
7.20
|
Inventories
|
33
|
|
|
Section
7.21
|
Insurance
|
34
|
|
|
Section
7.22
|
Employee
Matters
|
34
|
|
|
Section
7.23
|
Taxes
|
35
|
|
|
Section
7.24
|
Absence of
Changes
|
36
|
|
|
Section
7.25
|
Books and
Records
|
38
|
|
|
Section
7.26
|
Compliance with ERISA,
etc.
|
38
|
|
|
Section
7.27
|
Directors and
Officers
|
39
|
|
|
Section
7.28
|
Bank
Accounts
|
39
|
|
|
Section
7.29
|
Receivables
|
39
|
|
|
Section
7.30
|
Trade and Marketing
Programs
|
40
|
|
|
Section
7.31
|
Product
Liability
|
40
|
|
|
Section
7.32
|
Product
Registration
|
40
|
|
ARTICLE
VIII
COVENANTS
|
40
|
|
|
Section
8.1
|
General
|
40
|
|
|
Section
8.2
|
Operation of
Business
|
41
|
|
|
Section
8.3
|
Full
Access
|
42
|
|
|
Section
8.4
|
Public
Announcements
|
43
|
|
|
Section
8.5
|
[Intentionally
Omitted]
|
43
|
|
|
Section
8.6
|
Transfer
Taxes
|
43
|
|
|
Section
8.7
|
Further
Assurances
|
43
|
|
|
Section
8.8
|
Regulatory
Approvals
|
43
|
|
|
Section
8.9
|
Supplemental
Schedules
|
44
|
|
|
Section
8.10
|
No
Shop
|
44
|
|
|
Section
8.11
|
Exculpation; Indemnification;
Insurance
|
44
|
|
|
Section
8.12
|
Access to Employees; Cooperation Throughout the Pre-Closing Process |
|
45
|
|
|
Section
8.13
|
Tax
Matters
|
45
|
|
|
Section
8.14
|
Release
|
48
|
|
|
Section
8.15
|
Severance Payment Obligations;
Shareholder Approval of Payments; Non-Hire of Certain
Employees
|
48
|
|
|
Section
8.16
|
Maintenance of
Insurance
|
49
|
|
|
Section
8.17
|
Financial
Statements
|
49
|
|
|
Section
8.18
|
PediaCare Recall
Claims
|
49
|
|
|
Section
8.19
|
Waiver of
Rights
|
50
|
|
|
Section
8.20
|
Maintenance of Certain Foreign
Trademarks
|
50
|
|
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
|
50
|
|
|
Section
9.1
|
Survival of Representations,
Warranties and Covenants; Escrow Period
|
50
|
|
|
Section
9.2
|
Indemnification Obligations of
Holdco and the Sellers
|
51
|
|
|
Section
9.3
|
Indemnification Obligations of
the Buyer
|
51
|
|
|
Section
9.4
|
Conditions of
Indemnification
|
52
|
ii
|
|
Section
9.5
|
Indemnification
Procedures
|
52
|
|
|
Section
9.6
|
Miscellaneous Indemnification
Provisions
|
54
|
|
|
Section
9.7
|
Certain Other Indemnity
Matters
|
55
|
|
|
Section
9.8
|
Jurisdiction and
Venue
|
55
|
|
ARTICLE X
CONDITIONS TO THE
CLOSING
|
55
|
|
|
Section
10.1
|
Closing Conditions – The
Buyer
|
55
|
|
|
Section
10.2
|
Closing Conditions – The
Sellers
|
56
|
|
|
Section
10.3
|
Frustration of Closing
Conditions
|
56
|
|
|
Section
10.4
|
Specific
Performance
|
57
|
|
ARTICLE XI
TERMINATION
|
57
|
|
|
Section
11.1
|
Termination of
Agreement
|
57
|
|
|
Section
11.2
|
Effect of
Termination
|
58
|
|
ARTICLE XII
MISCELLANEOUS
|
58
|
|
|
Section
12.1
|
Treatment of Confidential
Information
|
58
|
|
|
Section
12.2
|
Assignment; No Third Party
Beneficiaries
|
59
|
|
|
Section
12.3
|
Entire Agreement; Amendment;
Waivers
|
59
|
|
|
Section
12.4
|
Expenses
|
60
|
|
|
Section
12.5
|
Notices
|
60
|
|
|
Section
12.6
|
Governing
Law
|
61
|
|
|
Section
12.7
|
Exercise of Rights and
Remedies
|
62
|
|
|
Section
12.8
|
Conflicts and
Privilege
|
62
|
|
|
Section
12.9
|
Non-Recourse
|
62
|
|
Section
12.10
|
Reformation and
Severability
|
62
|
|
Section
12.11
|
Counterparts
|
63
|
|
Section
12.12
|
Construction
|
63
|
|
Section
12.13
|
Payments to the Sellers’
Representative
|
63
|
|
ARTICLE XIII
SELLERS’ REPRESENTATIVE; POWER OF ATTORNEY
|
63
|
|
|
Section
13.1
|
Appointment
|
63
|
|
|
Section
13.2
|
Authorization
|
64
|
|
|
Section
13.3
|
Indemnification of Sellers’
Representative
|
64
|
|
|
Section
13.4
|
Access to
Information
|
65
|
|
|
Section
13.5
|
Reasonable
Reliance
|
65
|
|
|
Section
13.6
|
Orders
|
65
|
|
|
Section
13.7
|
Removal of Sellers’
Representative; Authority of Sellers’
Representative
|
65
|
|
|
Section
13.8
|
Expenses of the Sellers’
Representative
|
66
|
|
|
Section
13.9
|
Irrevocable
Appointment
|
66
|
iii
TABLE
OF EXHIBITS AND SCHEDULES
Schedules
|
Schedule
1.01(a)
|
List
of Products
|
|
Schedule
1.01(b)
|
Material
Customers
|
|
Schedule
1.01(c)
|
Material
Suppliers
|
|
Schedule
1.01(d)
|
Owned
Trademark Rights
|
|
Schedule
5.2(b)
|
Buyer
Consents
|
|
Schedule
6.4(a)
|
Seller
Conflicts and Consents
|
|
Schedule
7.1
|
XxXxxx
Agreement
|
|
Schedule
7.4(a)
|
Holdco
Conflicts and Consents
|
|
Schedule
7.8
|
Liens
|
|
Schedule
7.9
|
Related
Party Agreements
|
|
Schedule
7.10
|
Litigation
|
|
Schedule
7.13(c)
|
Compliance
with Health Care Laws
|
|
Schedule
7.14
|
Environmental
Matters
|
|
Schedule
7.16
|
Real
Properties
|
|
Schedule
7.17
|
Other
Tangible Assets
|
|
Schedule
7.18
|
Intellectual
Property
|
|
Schedule
7.19
|
Contractual
Commitments
|
|
Schedule
7.20
|
Inventories
|
|
Schedule
7.21
|
Insurance
|
|
Schedule
7.22
|
Employee
Matters
|
|
Schedule
7.23
|
Tax
|
|
Schedule
7.24
|
Absence
of Changes
|
|
Schedule
7.26
|
ERISA
Matters
|
|
Schedule
7.27
|
Directors
and Officers
|
|
Schedule
7.28
|
Bank
Accounts
|
|
Schedule
7.29
|
Receivables
|
|
Schedule
7.30
|
Trade
and Marketing Programs
|
|
Schedule
7.32
|
Product
Registrations
|
|
Schedule
8.2(b)
|
Operation
of Business
|
|
Schedule
8.14
|
Release
|
|
Schedule
8.15
|
Non-Hire
|
Exhibits
|
Exhibit
A
|
Holdco
Stockholders
|
|
Exhibit
B
|
Form
of Escrow Agreement
|
|
Exhibit
C
|
Form
of Employee Release
|
iv
THIS STOCK PURCHASE AGREEMENT
(the “Agreement”) dated as of the 14th day
of September, 2010 (the “Effective Date”), by
and among Prestige Brands Holdings, Inc., a Delaware corporation (the “Buyer”), Blacksmith
Brands Holdings, Inc., a Delaware corporation (“Holdco”), and the
stockholders of Holdco, as set forth on Exhibit A (the “Holdco
Stockholders”). The Holdco Stockholders are referred to herein
as the “Sellers,” and the
Buyer, Holdco, and the Sellers are hereinafter sometimes referred to
collectively as the “Parties” or singly as
a “Party”.
WHEREAS, Holdco owns 100% of
the issued and outstanding shares of the common stock, $0.01 par value per share
(the “Target
Shares”), of Blacksmith Brands, Inc., a Delaware corporation (the “Target”);
WHEREAS, the Holdco
Stockholders own 100% of the issued and outstanding shares of Holdco’s common
and preferred stock, $0.01 par value per share (the “Holdco Shares”) as
set forth on Exhibit A;
WHEREAS, each of the Sellers
(i) owns that number of Holdco Common Shares and Holdco Preferred Shares set
forth opposite such Seller’s name under the heading “No. of Shares” on Exhibit A
(the “Outstanding
Stock”); and (ii) that number of unvested Holdco Common Shares set forth
opposite such Seller’s name under the heading “Restricted Stock That Will Vest
on Closing” on Exhibit A (the “Unvested Restricted
Stock” and, collectively with the Outstanding Stock, the “Purchased Shares”);
and
WHEREAS, the Sellers desire to
sell to the Buyer, and the Buyer desires to purchase from the Sellers, all of
the Purchased Shares on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in
consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties and covenants herein contained,
the Parties agree as follows.
ARTICLE
I
DEFINITIONS
AND DEFINITIONAL PROVISIONS
|
Section 1.1
|
Defined
Terms
|
“Accounting Firm” has
the meaning specified in Section 3.1(d)(vi).
“Accounting Policies”
has the meaning specified in Section 3.1(d)(iii).
“Accrued Bonus Amount”
means the aggregate amount of any accrued and unpaid bonus owed to the employees
(including its sales force) of Holdco or any of its Subsidiaries or under the
Xxxxxxx Agreement (including, without limitation, Section 4.02 of the Xxxxxxx
Agreement for the period ending on the Closing Date notwithstanding any language
to the contrary as to the performance period) as of the Closing.
“Actual Working
Capital” has the meaning specified in Section 3.1(e).
“Acquisition Proposal”
has the meaning specified in Section 8.10.
“Affiliate” means, as
to any specified Person, any other Person that, directly or indirectly through
one or more intermediaries or otherwise, controls, is controlled by or is under
common control with the
1
“Agreement” means this
Agreement, including all Schedules and Exhibits to this Agreement.
“Assumed Tax Rate” has
the meaning specified in Section 8.13(k).
“Business” means the
OTC dental care, respiratory care, pediatric and throat lozenge businesses of
Holdco and its Subsidiaries and including the sale of the products listed on
Schedule
1.01(a) (the “Products”), which
businesses are only conducted in the United States and, with respect to the OTC
dental care business, also in Canada.
“Buyer” has the
meaning specified in the Preamble.
“Buyer Indemnitees”
has the meaning specified in Section 9.2(a).
“Cap” means, with
respect to any Seller, that Seller’s Pro Rata Share of the Final Purchase
Price.
“Capital Stock” means,
with respect to: (i) any corporation, any share, or any depositary receipt or
other certificate representing any share, of an equity ownership interest in
that corporation; and (ii) any other Entity, any share, membership, joint
venture, partnership or other ownership interest, unit of participation or other
equivalent (however designated) of an equity interest in that
Entity.
“Cash” shall mean the
consolidated cash and cash equivalents of Holdco and its Subsidiaries computed,
as of the applicable date, in accordance with GAAP.
“Cash Compensation”
means, as applied to any employee, nonemployee director or officer of Holdco or
any of its Subsidiaries, the wages, salaries, bonuses (discretionary and
formula), fees and other cash compensation paid or payable by Holdco or any of
its Subsidiaries to that employee, nonemployee director or officer.
“Charter Documents”
means, with respect to any Entity at a specific time, in each case as amended,
modified and supplemented at such time, (i) the articles or certificate of
formation, incorporation or organization (or the equivalent organizational
documents), including any certificate of designations, of that Entity, and (ii)
the bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of that Entity.
“Claim” has the
meaning specified in Section 8.11(a).
“Closing” has the
meaning specified in Section 4.1 and shall be effective at 12:01 a.m. on the
Closing Date.
“Closing Cash” means
Cash as of immediately prior to the Closing.
“Closing Date” has the
meaning specified in Section 4.1.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time.
“Confidential
Information” means, with respect to any Person, all Trade Secrets and
other confidential, nonpublic or proprietary information prepared for, or by or
on behalf of, that Person including any such information derived from reports,
investigations, research, studies, work in progress,
2
“Contractual
Commitment” has the meaning specified in Section 7.19(a).
“Copyrights” has the
meaning specified in Section 7.18(a).
“Xxxxxxxxx” has the
meaning specified in Section 12.8.
“Credit Facility”
means that certain Credit Agreement, dated as of October 29, 2009, by and among
Holdco, the Target, the lending institutions from time to time party thereto,
Keybank National Association, as the Administrative Agent, and Ares Capital
Corporation, as Collateral Agent, as it may be amended from time to
time.
“Damage” to any
specified Person means any loss, cost, damage, expense (including reasonable
fees and actual disbursements by attorneys, consultants, experts or other
Representatives, including Litigation costs), fine of, penalty on, or liability
of any other nature of that Person; provided, however, that the term “Damage”
shall not include loss of earnings or profits or any consequential, exemplary,
punitive or treble damages of such Person. Notwithstanding any other
provisions of this Agreement, for purposes of Article IX of this
Agreement, in calculating the amount of Damages arising from a breach of any
representations, warranties, and covenants contained in this Agreement which is
qualified by the words “material,” “materiality” or “Material Adverse Effect” or
similar terms, or by a specific dollar threshold, such Damages shall be
calculated as if such qualifier or threshold were not contained therein, it
being understood that the exclusion of such qualifier or threshold shall apply
solely for the purposes of calculation of Damages, and not for the purpose of
determining whether or not a breach has occurred.
“D&O Tail” has the
meaning specified in Section 8.11(b).
“Deductible” means
$1,900,000.
“Derivative
Securities” of a specified Entity means any Capital Stock, debt security
or other Indebtedness of the specified Entity or any other Person which is
convertible into or exchangeable for, or any option, warrant or other right to
acquire (i) any unissued Capital Stock of the specified Entity or (ii) any
Capital Stock of the specified Entity which has been issued and is being held by
the Entity directly or indirectly as treasury Capital Stock.
“Disclosure Schedule”
has the meaning specified in the first paragraph of Article VI.
“Disputed Claim” has
the meaning Section 9.5(b) specifies.
“Dispute Resolution
Procedure” has the meaning Section 3.1(d)(vi) specifies.
“Effective Date” has
the meaning specified in the preamble to this Agreement.
“Xxxxxxx Agreement”
means the Sales Representation Agreement, dated as of September 15, 2009,
between the Target and X. Xxxxxxx Group, Inc.
3
“Employee Policies and
Procedures” means Holdco’s or any Subsidiary’s current written employee manuals
and material policies, procedures and work-related rules that apply to Holdco’s
or any Subsidiary’s employees.
“Employee Release” has
the meaning specified in Section 8.15(a).
“Employment Agreement”
means any agreement to which Holdco or any of its Subsidiaries is currently a
party (or under which any of them has continuing obligations to an employee)
that relates to the employment of an employee of Holdco or any of its
Subsidiaries, including all employee leasing agreements and/or agreements which
restrict competition with Holdco or any of its Subsidiaries in relation to the
Business.
“Entity” means any
sole proprietorship, corporation, partnership of any kind having a separate
legal status, limited liability company, business trust, unincorporated
organization or association, mutual company, joint stock company or joint
venture.
“Environmental Laws”
means any applicable Law relating to (i) the protection of the environment
(including air, water, vapor, surface water, groundwater, drinking water supply,
surface or subsurface land), (ii) occupational health and safety or (iii) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, recycling, release or disposal
of hazardous materials.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
means, with respect to any specified Person at any time, any other Person,
including an Affiliate of the specified Person, that is, or at any time within
two years of that time was, a member of any ERISA Group of which the specified
Person is or was a member at the same time.
“ERISA Affiliate Pension
Plan” has the meaning Section 7.22(g) specifies.
“ERISA Employee Benefit
Plan” means any “employee benefit plan” as defined in Section 3(3) of
ERISA and includes any ERISA Pension Plan.
“ERISA Group” means
any “group of organizations” within the meaning of Section 414(b), (c), (m) or
(o) of the Code or any “controlled group” as defined in Section 4001(a)(14) of
ERISA.
“ERISA Pension Plan”
means any “employee pension benefit plan,” as defined in Section 3(2) of ERISA,
including any plan that is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code (excluding any
Multiemployer Plan).
“Escrow Agent” has the
meaning specified in Section 3.1(f)(i).
“Escrow Agreement” has
the meaning specified in Section 3.1(f)(i).
“Escrow Amount” means
an amount equal to $8,700,000.
“Escrow Consideration”
has the meaning specified in Section 3.1(f)(i).
“Escrow Fund” has the
meaning specified in Section 3.1(f)(i).
“Estimated Closing
Statement” has the meaning specified in Section 3.1(d)(i).
4
“Estimated Working
Capital” has the meaning specified in Section 3.1(d)(i).
“FDA” means the U.S.
Food and Drug Administration or any successor Governmental Authority
thereto.
“FDA Act” means the
U.S. Federal Food, Drug, and Cosmetic Act, as amended (21 U.S.C. §§ 301 et
seq.).
“Final Closing
Statement” has the meaning specified in Section 3.1(d)(vii).
“Final Determination
Date” has the meaning specified in Section 3.1(d)(vii).
“Final Purchase Price”
has the meaning specified in Section 3.1(b).
“Financial
Information” means (i) the audited consolidated balance sheets of Holdco
as of March 31, 2010, and the related consolidated statements of operations,
stockholders' equity and cash flows of Holdco for the period ending March 31,
2010, and (ii) the Latest Balance Sheet and the related consolidated statements
of operations, stockholders' equity and cash flows of Holdco for the four (4)
month period ending July 31, 2010.
“Formulae and
Specifications” shall mean the (i) percentages and specifications of
ingredients used to manufacture the Products for the Business, and (ii)
processes and specifications for the design, composition, manufacture,
packaging, labeling, product safety assurance, quality control, storage and
shipping of the Products for the Business, in each case, as of the date hereof
and as of the Closing.
“Fundamental
Representation” shall mean the representations and warranties set forth
in Section 5.1, Section 5.2(a), Section 5.3, Section 6.1, Section 6.2, Section
6.3, Section 6.6, Section 7.2 and Section 7.3.
“Funded Indebtedness”
means an amount equal to the sum of:
(i) the
outstanding principal and accrued and unpaid interest (as well as prepayment,
breakage and similar charges payable), as of immediately prior to the Closing
Date, under the Credit Facility; and
(ii) any other
Indebtedness for money borrowed by Holdco or any Subsidiary of Holdco,
Indebtedness for borrowed money guaranteed in any manner, other than any
guarantee in connection with any lease agreement, by Holdco or any Subsidiary of
Holdco, and all accrued and unpaid interest or fees, penalties or other amounts
due with respect to any of the foregoing, in each case, as of immediately prior
to the Closing Date.
“GAAP” means generally
accepted accounting principles in the United States of America, as amended from
time to time.
“Governmental
Approval” means as of any specific time any authorization, consent,
approval, Permit, franchise, certificate, license, implementing order or
exemption of any Governmental Authority at that time.
“Governmental
Authority” means (i) any federal, state, county, municipal or other
government, domestic or foreign, or any agency, board, bureau, commission,
court, department or other instrumentality
5
of any
such government, and (ii) any Person having the authority under any applicable
Legal Requirement to assess and collect Taxes for its own account.
“Guaranty” means, for
any specified Person, without duplication, any liability, contingent or
otherwise, of that Person guaranteeing or otherwise becoming liable for any
obligation of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including without limitation any liability of the
specified Person, direct or indirect, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) that obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment of
that obligation, (ii) to purchase property or other assets, securities or
services for the purpose of assuring the owner of that obligation of its payment
or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay that obligation; provided, that the term “Guaranty” does not
include endorsements for collection or deposit in the ordinary course of the
endorser’s business.
“Health Care Laws”
shall mean (i) the FDA Act and the regulations promulgated thereunder,
(ii) all applicable laws, rules and regulations, ordinances, judgments,
decrees, orders, writs and injunctions administered by the FDA and other United
States regulatory authorities governing or relating to good laboratory
practices, good clinical practices, recordkeeping, the manufacture, import,
export, testing, development, approval, processing, reporting, packaging,
labeling, storage, marketing, sale, distribution and use of any compounds or
products manufactured by or on behalf of the Company, including, without
limitation, the FDA’s current Good Manufacturing Practice Regulations at 21
C.F.R. Parts 210 and 211, and (iii) any and all other applicable federal,
state, local, health care Laws, rules and regulations, ordinances, judgments,
decrees, orders, writs, and injunctions, each of (i) through (iv) as
may be amended from time to time.
“Holdco” has the
meaning specified in the Preamble to this Agreement.
“Holdco Benefit Plan”
has the meaning specified in Section 7.22(g).
“Holdco Common Shares”
means the $0.01 par value common stock of Holdco.
“Holdco Pension Plan”
has the meaning specified in Section 7.22(g).
“Holdco Personnel” has
the meaning specified in Section 8.11(a).
“Holdco Preferred
Shares” means the $0.01 par value Series A preferred stock of
Holdco.
“Holdco Stockholders”
has the meaning specified in the Preamble to this Agreement.
“Holdco Shares” has
the meaning specified in the second WHEREAS clause.
“HSR Act” means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Indebtedness” of any
Person means, without duplication, (i) all indebtedness for borrowed money; (ii)
that portion of obligations with respect to capital leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (iii)
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money; (iv) any obligation owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six (6) months from the date of incurrence of
the obligation in respect thereof; (v) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless of
6
“Indemnification Claim
Notice” has the meaning specified in Section 9.5(a).
“Indemnification Fund”
has the meaning specified in Section 3.1(f)(i)(x).
“Indemnification
Period” means the period of time through and including 365 days after the
Closing Date. If that day is other than a business day, the
Indemnification Period shall run through and including the next succeeding
business day.
“Indemnified Party”
has the meaning specified in Section 9.5(a).
“Indemnified Party Tax
Increase” has the meaning specified in Section 8.13(f).
“Indemnifying Party”
has the meaning specified in Section 9.5(a).
“Indemnity Claim” has
the meaning specified in Section 13.1.
“Indemnity Claim
Threshold” means $10,000.
“Initial Payment
Amount” has the meaning specified in Section 3.1(b).
“Intellectual
Property” shall mean all intellectual property of any kind, including
those arising from or in respect of the following, created, protected or arising
under any Law, including: (i) all Patents; (ii) all Marks; (iii) all Copyrights;
and (iv) all Know-How.
“Intellectual Property
Assets” has the meaning specified in Section 7.18(a).
“Interest Rate
Agreement” means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest rate hedging
agreement or other similar agreement or arrangement, each of which is for the
purpose of hedging the interest rate exposure associated with the Target and its
Subsidiaries’ operations and not for speculative purposes.
7
“Inventories” shall
mean all finished goods inventory of the Products in packaged form held for use
in the Business; provided, that such
finished goods of each Product shall only constitute Inventories if such
finished goods (i) are packaged in Holdco’s or Holdco’s Subsidiary’s packaging
for such Product (which, for the avoidance of doubt, shall not include any
packaging with the names of any former owner of the Products), (ii) are not
discontinued Products, and (iii) for finished goods that have an expiration
date, have a remaining shelf-life as of July 31, 2010 equal to or greater than
fifteen (15) months.
“Key Executives” means
the following executives of Holdco and its Subsidiaries: Xxxxx X. Xxxx, Xxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxx and
Xxxxxxx Xxxxxxx.
“Know-How” shall mean,
collectively, all inventions (whether or not patentable), discoveries, Trade
Secrets, know-how, designs, industrial designs, design rights, concepts, rights
in research and development, compounds, formulae, commercially practiced and
other processes, quality control and testing procedures, validation methods and
procedures, technology, data, databases, manufacturing, processes and
specifications, engineering, formulation, packaging, labeling, validation,
chemical, pharmacological, toxicological, pharmaceutical, physical, analytical,
stability, safety, and clinical information, marketing, and all other
proprietary, technical or confidential information and knowledge, in each case,
whether written or oral, in any form or media, and whether or not
patentable. Know-How shall not be deemed to include any software or
any information technology systems (but shall include anything otherwise
constituting Know-How which is or are embodied in any software or information
technology systems).
“Latest Balance Sheet”
means the unaudited consolidated balance sheet of Holdco as of July 31,
2010.
“Law” shall mean any
statute, law, ordinance, rule or regulation of any Governmental
Authority.
“Leased Real Property”
has the meaning specified in Section 7.16(b).
“Legal Requirement”
means as of any specific time any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, writ, edict, award, authorization or
other requirement of any Governmental Authority in effect at such
time.
“Letter of Intent”
means the Letter of Intent and attached term sheet dated August 4, 2010,
executed by Buyer and certain Holdco Stockholders relating to the acquisition of
Holdco.
“Licensed Know-How”
shall mean, other than the Owned Know-How, collectively, all Know-How that is or
has been used or held for use by Holdco or any Affiliate thereof solely or
primarily in the Business as conducted as of the date hereof and/or as of the
Closing Date, and all other Know-How used or held for use by Holdco and its
Subsidiaries in the conduct of the Business and necessary for Holdco and its
Subsidiaries to provide for the manufacturing, packaging and labeling of the
Products by third party manufacturers and to market and sell the Products
immediately following the Closing in the manner the Products were marketed and
sold by Holdco and its Subsidiaries, in each case, since October 29,
2009.
“Lien” means, with
respect to any property or other asset of any Person any mortgage, lien,
security interest, pledge, attachment, levy or other charge or encumbrance of
any kind thereupon or in respect thereof, including without limitation any
“adverse claim” (as Section 8-102(a)(1) of each applicable Uniform Commercial
Code defines that term) in the case of any Capital Stock. For
purposes of this Agreement, a Person will be deemed to own subject to a Lien any
asset that it has acquired or
8
“Litigation” means any
action, case, proceeding, claim, suit, or investigation conducted by or pending
before any Governmental Authority.
“Marks” means,
collectively, all trademarks, service marks, trade names, service names, brand
names, trade dress, certification marks, logos, symbols, slogans, tag lines and
designs, together with any goodwill associated with any of the foregoing, and
all applications, registrations, extensions and renewals for any of the
foregoing.
“Material Adverse
Effect” means any fact, event, series of events, change, effect or
circumstance that, individually or in the aggregate with other facts, events,
series of events, changes, effects or circumstances, has had or is reasonably
likely to have a material adverse effect on the business, results of operations,
assets or financial condition of Holdco and its Subsidiaries, taken as a whole;
provided, however, that in no
event shall any of the facts, events, series of events, changes, effects or
circumstances resulting from or relating to the following, either alone or in
combination, constitute a Material Adverse Effect, or be taken into account in
determining whether there has been a Material Adverse Effect: (i) any change in
economic or financial conditions generally except to the extent that such change
has had, or is reasonably likely to have, a disproportionate effect on Holdco
and its Subsidiaries, taken as a whole, relative to other Persons in its
industry; (ii) the execution of, compliance with the terms of, or the taking of
any action required by this Agreement or the consummation of the transactions
contemplated by this Agreement or the public announcement of the transactions
contemplated by this Agreement and the other Transaction Documents; (iii) any
change in GAAP after the Effective Date; (iv) changes in national or
international political or social conditions, including the engagement by the
United States in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist attack
or any earthquakes, hurricanes or other natural disasters; (v) any change in the
financial, banking, credit, securities, or commodities markets, the economy in
general or prevailing interest rates of the United States or any other
jurisdiction, where Holdco and its Subsidiaries have operations or significant
revenues; or (vi) any changes in any Law or the interpretation thereof after the
Effective Date.
“Material Contracts”
of any Person means any contract or agreement, whether written or oral, to which
that Person is a party, or by which that Person is bound or to which any
property or other assets of that Person is subject and, in each case, that is
material to that Person.
“Material Customer”
means any of the 10 largest customers of Holdco or its Subsidiaries, with
respect to the Products, during the fiscal year ended March 31, 2010, as set
forth on Schedule
1.01(b).
“Material Supplier”
means any of the 9 suppliers of Holdco or its Subsidiaries, with respect to the
Products, set forth on Schedule
1.01(c).
“XxXxxx Agreement”
means that certain Asset Purchase Agreement, dated as of September 15, 2009, by
and between XxXXXX-PPC, Inc., a New Jersey corporation, as Seller, and the
Target, as Purchaser.
“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, Section
414 of the Code or Section 3(37) of ERISA.
“Non-Obligated Person”
has the meaning specified in Section 12.9.
9
“Notice of
Disagreement” has the meaning specified in Section
3.1(d)(iv).
“OTC” means
over-the-counter.
“Other Compensation
Plans” means any compensation arrangement, plan, policy, practice or
program established, maintained or sponsored by Holdco or any of its
Subsidiaries or to which Holdco or any of its Subsidiaries contributes, on
behalf of any of its employees (i) including all such arrangements, plans,
policies, practices or programs providing for severance or termination pay,
deferred compensation, incentive, bonus or performance awards or the actual or
phantom ownership of any Capital Stock or Derivative Securities of Holdco or any
of its Subsidiaries, but (ii) excluding all ERISA Pension Plans and Employment
Agreements of Holdco or any of its Subsidiaries.
“Outstanding Stock”
has the meaning specified in the third WHEREAS clause.
“Owned Copyrights”
shall mean, collectively, Copyrights used or held for use solely in the
Business.
“Owned Domain Names”
shall have the meaning set forth in Section 7.18(b).
“Owned Intellectual
Property” shall mean, collectively, (i) the Owned Trademark Rights, (ii)
the Formulae and Specifications, (iii) the Owned Copyrights, and (iv) the Owned
Know-How.
“Owned Know-How” shall
mean, collectively, all Know-How used or held for use solely in the Business and
owned by Holdco or its Subsidiaries.
“Owned Trademark
Rights” shall mean, collectively, all registered and unregistered Marks
in the United States and Canada used solely in the Business, including those set
forth on Schedule
1.01(d).
“Party” or “Parties” has the
meaning specified in the Preamble to this Agreement.
“Patents” has the
meaning specified in Section 7.18(a).
“PBGC” means the
Pension Benefit Guaranty Corporation and any successor thereto.
“PediaCare Recall
Claims” has the meaning specified in Section 8.18.
“Permits” means all
licenses, certificates of occupancy and other permits, consents and approvals
required by any Governmental Authority to lawfully operate the Business
(including any pending applications for such licenses, certificates, permits,
consents or approvals).
“Permitted Liens”
means, with respect to the property or other assets of any Person (or any
revenues, income or profits of that Person therefrom): (i) Liens for
Taxes if the same are not at the time due and delinquent; (ii) Liens of
carriers, warehousemen, mechanics, laborers and materialmen for sums not yet
due; (iii) Liens incurred in the ordinary course of that Person’s business in
connection with worker’s compensation, unemployment insurance and other social
security legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (iv) Liens incurred in the ordinary course of that Person’s business in
connection with deposit accounts or to secure the performance of bids, tenders,
trade contracts, statutory obligations, surety and appeal bonds, performance and
return of money bonds and other obligations of like nature; (v) easements,
rights of way, reservations, restrictions and other similar encumbrances
incurred in the ordinary course of that Person’s business or existing on
property and not materially interfering with the ordinary conduct of that
Person’s business or the use of that property; (vi)
10
“Person” means an
individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Authority.
“Plan” has the meaning
specified in Section 7.26(a).
“Post-Closing Transaction Tax
Deductions” has the meaning specified in Section 8.13(k).
“Prior Period” has the
meaning specified in Section 8.13(a).
“Proceeding” has the
meaning specified in Section 9.5(a).
“Product
Registrations” has the meaning specified in Section 7.32(a).
“Prohibited
Transaction” means any transaction either Section 4975 of the Code or
Section 406 of ERISA prohibits and for which there is no individual, statutory,
or class exemption available.
“Proposed Closing
Statement” has the meaning specified in Section 3.1(d)(ii).
“Pro Rata Share” means
each Seller’s pro-rata share of the estimated aggregate value of Holdco Common
Shares and Holdco Preferred Shares at the Closing, expressed as a percentage,
and set forth on Exhibit A as of the
Effective Date.
“Purchased Shares” has
the meaning specified in the third WHEREAS clause.
“Purchase Price” has
the meaning specified in Section 3.1(a).
“Qualified Plans” has
the meaning specified in Section 7.26(b).
“Registered Intellectual
Property” has the meaning specified in Section 7.18(b).
“Related Party
Agreement” means any contract or other agreement, (i) to which Holdco or
any of its Subsidiaries is a party or is bound or by which any property or other
asset of Holdco or any of its Subsidiaries is bound and (ii) to which any
Affiliate of Holdco or any of its Subsidiaries (other than Holdco and its
Subsidiaries) also is a party or a beneficiary.
“Repaid Indebtedness”
has the meaning specified in Section 4.3(a)(vi).
“Representatives”
means, with respect to any Person, the directors, officers, employees,
Affiliates, accountants (including independent certified public accountants),
advisors, attorneys, consultants or other agents of that Person.
“Returns” of a Person
means the returns, reports or statements (including any information returns) any
Legal Requirement requires that Person to file for purposes of any
Tax.
“SEC” means the
Securities and Exchange Commission.
11
“Securities Act” means
the Securities Act of 1933, as amended.
“Securities Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Seller Indemnitees”
has the meaning specified in Section 9.3.
“Sellers” has the
meaning specified in the Preamble to this Agreement.
“Sellers’ Expense
Amount” means the amount of $500,000.
“Sellers’
Representative” has the meaning specified in Section 13.1.
“Severance Payments”
shall mean any severance payment or other benefit under any employee benefit
plan or other arrangement maintained by Holdco or its Subsidiaries (including
any Employment Agreement) to which any employee of Holdco or its Subsidiaries
becomes entitled as the result of the termination of that person’s employment
with Holdco or any of its Subsidiaries in connection with the purchase of the
Purchased Shares.
“Severance Payment
Amount” shall mean the sum of all Severance Payments payable to the
Terminated Employees identified by the schedule to be provided by the Buyer
pursuant to Section 8.15(a) and deducted from the Purchase Price in accordance
with Section 3.1(b), including the cost of any benefit under any employee
benefit plan maintained by Holdco or its Subsidiaries to which any such
Terminated Employee becomes entitled pursuant to the terms of his or her
Employment Agreement.
“Stockholders
Agreement” means that certain Stockholders Agreement, dated as of October
29, 2009, among Holdco and the Stockholders listed therein.
“Stock Plan” means
Holdco's 2009 Equity Incentive Plan permitting the grant of options or
restricted share awards to employees of Holdco and its Subsidiaries for up to
1,200,000 Holdco Shares.
“Straddle Period” has
the meaning Section 8.13(a) specifies.
“Subsidiary” means any
corporation, partnership, limited liability company or other business Entity
with respect to which a specified Person (or a Subsidiary thereof) owns a
majority of the ownership interests therein or has the power to vote or direct
the voting of sufficient securities thereof to elect a majority of its directors
or other persons performing similar functions.
“Target” has the
meaning specified in the first WHEREAS clause.
“Target Shares” has
the meaning specified in the first WHEREAS clause.
“Target Working
Capital” means $12,800,000.
“Tax” or “Taxes” means all net
or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental or other
taxes, assessments, duties, fees, levies or other governmental charges or
assessments of any nature whatever imposed by any Legal Requirement, whether
disputed or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
“Tax Benefit” has the
meaning specified in Section 9.6(a).
12
“Tax Claim” has the
meaning specified in Section 8.13(e).
“Tax Dispute Notice”
has the meaning specified in Section 8.13(a).
“Tax Indemnified
Party” has the meaning specified in Section 8.13(e).
“Tax Indemnifying
Party” has the meaning specified in Section 8.13(e).
“Tax Losses” has the
meaning specified in Section 8.13(c).
“Taxing Authority”
means any Governmental Authority having or purporting to exercise jurisdiction
with respect to any Tax.
“Tax Returns” has the
meaning specified in Section 8.13(a).
“Terminated Employees”
has the meaning specified in Section 8.15(a).
“Termination Date” has
the meaning specified in Section 11.1(b).
“Termination Fee”
means $7,500,000.
“Third Party Claim”
has the meaning specified in Section 9.5(a).
“Third Party
Indemnity” has the meaning specified in Section 9.6.
“Trade Secrets” has
the meaning specified in Section 7.18(a).
“Transaction
Documents” means this Agreement and the other written agreements,
documents, instruments and certificates executed under or in connection with
this Agreement.
“Transaction Expenses”
means any and all legal and other expenses incurred by Holdco, the Target or any
Subsidiary thereof in connection with the purchase and sale of the Purchased
Shares (excluding any Transaction Expenses that are paid prior to the Closing
and thereby reduce Cash at the Closing).
“Transactions” means
the transactions contemplated by this Agreement and the other Transaction
Documents.
“Transaction Tax NOL”
has the meaning specified in Section 8.13(k).
“Transfer Taxes” has
the meaning Section 8.6 specifies.
“Unvested Restricted
Stock” has the meaning specified in the third WHEREAS
clause.
“W/C Release Amount”
has the meaning Section 3.1(f)(i)(x) specifies.
“Working Capital”
shall mean the consolidated current assets of Holdco and its Subsidiaries minus
the consolidated current liabilities of Holdco and its Subsidiaries, computed in
accordance with GAAP and consistent with Holdco’s past practices, subject to the
following adjustments: (i) any accrual for the Severance Payment Amount shall be
excluded from the computation thereof; (ii) Cash shall be excluded from the
computation thereof, to the extent taken into account in determining the Initial
Payment Amount in Section 3.1(b); (iii) Repaid Indebtedness shall be excluded
from the computation
13
“Working Capital Deficiency
Adjustment Fund” has the meaning specified in Section
3.1(f)(i)(x).
|
Section
1.2
|
Other
Defined Terms
|
Words and
terms this Agreement uses which other Sections of this Agreement define are used
in this Agreement as those other Sections define them.
|
Section
1.3
|
Other
Definitional and Interpretive
Provisions
|
(a) Except as
this Agreement otherwise specifies, all references herein to any Law or any
Legal Requirement defined or referred to herein, including the Code and ERISA
are references to that Law or Legal Requirement or any successor Law or Legal
Requirement, as the same may have been amended or supplemented from time to time
through the Closing Date, and any rules or regulations promulgated
thereunder.
(b) This
Agreement uses the words “herein,” “hereof” and “hereunder” and words of similar
import to refer to this Agreement as a whole and not to any particular provision
of this Agreement, and the words “Article,” “Section,” “Preamble,” “Schedule”
and “Exhibit” refer to Articles and Sections of, the Preamble, Schedules and
Exhibits to, this Agreement unless it otherwise specifies.
(c) Whenever
the context so requires, the singular number includes the plural and vice versa,
and a reference to one gender includes the other gender and the
neuter.
(d) The word
“including” (and, with correlative meaning, the word “include”) means including,
without limiting the generality of any description preceding that word, and the
words “shall” and “will” are used interchangeably and have the same
meaning.
(e) The term
“business day” means any day other than a day on which commercial banks are
authorized or required to close in New York.
(f) The
phrase “to the knowledge of the Sellers,” “to the knowledge of Holdco” and “to
the knowledge of the Target” or phrases with similar wording, when used in this
Agreement to qualify any representation or warranty contained in Article VI or
VII, means the actual knowledge of each of the Key Executives on the applicable
date after reasonable inquiry based on the books, records, files or other
documents or information in the possession of such Person (including discussions
with direct reports) on or prior to such date, but not including inquiry of any
third parties.
(g) The
phrases “Holdco and its Subsidiaries” or “Holdco or its Subsidiaries” and words
of similar import, in each instance, include the Target.
(h) The words
“material,” “materiality” and “materially” mean, as applied to any Person,
material to the business, operations, property or other assets, liabilities,
financial condition, or results of operations of that Person, taken as a
whole.
14
(i) Notwithstanding
anything to the contrary contained herein, any representation or warranty made
by Holdco with respect to the operation of the Business shall be deemed, to the
extent that such representation or warranty is applicable to any period prior to
October 29, 2009, to be qualified by the knowledge of Holdco.
(j) The
phrase “fiscal year ended March 31, 2010” shall mean the fiscal year of Holdco
and its Subsidiaries, which began on October 27, 2009 and ended on March 31,
2010.
(k) Disclosure
in any section or subsection of the Disclosure Schedule shall be deemed to be
disclosed for all purposes of this Agreement and all other sections or
subsections of the Disclosure Schedule, notwithstanding the omission of a
reference or cross-reference thereto, to the extent that the applicability of
such disclosure to this Agreement or to such section or subsection of the
Disclosure Schedule is reasonably apparent from such disclosure on its
face. The mere inclusion of an item in the Disclosure Schedule as an
exception to a representation or warranty shall not be deemed to constitute an
admission, or otherwise imply, that such item represents a material exception or
material fact, event or circumstance or that such item has had or would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, or would have been material. If a document which is
required to be delivered by the Sellers to Buyer was included in the data room
created in connection with the Transactions prior to the date of this Agreement,
such document shall be deemed to have been delivered.
(l) The
language this Agreement uses will be deemed to be the language the Parties
hereto have chosen to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
(m) All
references to dollars in this Agreement shall mean U.S. dollars.
|
Section
1.4
|
Captions
|
This
Agreement includes captions to Articles, Sections and subsections of, and
Schedules and Exhibits to, this Agreement for convenience of reference only, and
these captions do not constitute a part of this Agreement or any other
Transaction Document for any other purpose or in any way affect the meaning or
construction of any provision of this Agreement or any other Transaction
Document.
ARTICLE
II
PURCHASE
AND SALE OF PURCHASED SHARES
|
Section
2.1
|
Purchase
and Sale of the Purchased Shares at the
Closing
|
In
accordance with, and subject to, the provisions of this Agreement, at the
Closing the Buyer shall purchase from each Seller, and each Seller shall
transfer, convey, assign, and deliver to the Buyer, all of such Seller’s right,
title and interest in and to the Purchased Shares owned by such Seller as set
forth on Exhibit
A, free and clear of any Liens, warrants, options, calls, commitments,
proxies and voting agreements and with no restriction (other than restrictions
pursuant to Holdco’s Charter Documents and state and federal securities
laws) on the voting
rights, if any, and other incidents of record and beneficial ownership
pertaining thereto, including community property or other spousal
rights. The Purchased Shares purchased pursuant to this Section 2.1
shall constitute 100% of the equity interest in Holdco as of the Closing
Date.
15
ARTICLE
III
PURCHASE
PRICE; PAYMENT; ADJUSTMENT
|
Section
3.1
|
Purchase
Price; Payment; Adjustment
|
(a) Purchase
Price. The Parties agree that the aggregate purchase price to
be paid by the Buyer to or as directed by the Sellers’ Representative for the
account of the Sellers for all the Purchased Shares shall be $190,000,000 (the
“Purchase
Price”) subject to adjustment pursuant to the provisions of Section
3.1(b) and Section 8.13(j) and (k).
(b) Initial Payment Amount;
Final Purchase Price. The aggregate amount to be paid by the
Buyer to or as directed by the Sellers’ Representative for the account of the
Sellers on the Closing Date shall equal:
(i) the
Purchase Price, plus
(ii) the
amount, if any, by which the Estimated Working Capital exceeds the Target
Working Capital, less
(iii) the
amount, if any, by which the Estimated Working Capital is less than the Target
Working Capital, less
(iv) the
Escrow Amount; less
(v) an amount
that is equal to (i) one hundred percent (100%) minus the Assumed Tax
Rate, multiplied by (ii)
the Severance Payment Amount; less
(vi) the
Transaction Expenses; less
(vii) the
Repaid Indebtedness; less
(viii) the
Sellers’ Expense Amount; less
(ix) the
Accrued Bonus Amount; plus
(x) the
Closing Cash.
(such
resulting amount, the “Initial Payment
Amount”). The final aggregate amount to be paid by the Buyer
to the Sellers’ Representative hereunder, for the account of the Sellers, (i.e., the Initial Payment
Amount, plus or
minus the
aggregate of any payments made pursuant to Sections 3.1(d), 3.1(e), 8.13(j),
8.13(k)and
8.18, plus any additional
Escrow Consideration paid to or as directed by Sellers’ Representative pursuant
to the Escrow Agreement) shall be the “Final Purchase
Price”.
(c) Payments at
Closing. At
the Closing, the Buyer shall pay to or as directed by the Sellers’
Representative, by wire transfer of immediately available United States funds to
the bank account or accounts designated by the Sellers’ Representative, the
following amounts:
(i) for the
account of the Sellers, the Initial Payment Amount;
(ii) the
Transaction Expenses;
(iii) the
Repaid Indebtedness; and
16
(iv) the
Accrued Bonus Amount.
(d) Delivery of Estimated
Closing Statement and Proposed Closing Statement.
(i) No less
than one (1) business day prior to the Closing Date, the Sellers’ Representative
shall, or shall cause Holdco to, deliver to the Buyer a statement (the “Estimated Closing
Statement”) setting forth a good faith estimate, as of the opening of
business on the Closing Date, of (v) Repaid Indebtedness; (w) Accrued Bonus
Amount; (x) Severance Payment Amount; (y) Working Capital (the “Estimated Working
Capital”), and (z) Transaction Expenses.
(ii) As
promptly as practicable, but no later than sixty (60) days after the Closing,
the Buyer shall deliver to the Sellers’ Representative, on behalf of the
Sellers, a statement setting forth a good faith determination of the Working
Capital as of the opening of business on the Closing Date (the “Proposed Closing
Statement”). The Buyer shall and shall cause Holdco and its
Subsidiaries and its and their respective Representatives to assist the Sellers’
Representative and its Representatives in its review of the Proposed Closing
Statement and shall provide the Sellers’ Representative and its Representatives
access at reasonable times to the personnel, properties, books and records of
Holdco and its Subsidiaries for such purpose and for the other purposes set
forth in this Section 3.1, in each case, without cost to the
Sellers.
(iii) Unless
otherwise provided for herein or agreed upon by the Buyer and the Sellers’
Representative, the Estimated Closing Statement, the Proposed Closing Statement
and the Final Closing Statement shall be prepared in accordance with GAAP
applied in a manner consistent with the same accounting principles, policies,
methodologies or procedures (the “Accounting Policies”)
used in preparing the Latest Balance Sheet.
(iv) In the
event the Sellers’ Representative disputes any aspect of the Proposed Closing
Statement, the Sellers’ Representative shall notify the Buyer in writing of its
objections within forty-five (45) days
after receipt of the Proposed Closing Statement and shall set forth, in writing
and in reasonable detail, the reasons for the Sellers’ Representative’s
objections (a “Notice
of Disagreement”).
(v) During
the fifteen (15) days immediately following the delivery of any Notice of
Disagreement (or such longer period as may be agreed in writing by the Buyer and
the Sellers’ Representative), the Buyer and the Sellers’ Representative shall
seek in good faith to resolve any differences that they may have with respect to
any matter specified in such Notice of Disagreement. During such
period, the Buyer and the Sellers’ Representative shall each have access to the
other Party’s working papers, trial balances and similar materials prepared in
connection with the other Party’s preparation of the Proposed Closing Statement
and the Notice of Disagreement, as the case may be.
(vi) If, at
the end of such period specified in Section 3.1(d)(v), the Buyer and the
Sellers’ Representative have not been able to resolve, in writing, all
differences that they may have with respect to any matter specified in such
Notice of Disagreement, the Buyer and the Sellers’ Representative shall submit
to Deloitte & Touche LLP (the “Accounting Firm”) for
review and resolution of any and all matters that remain in dispute (and as to
no other matter), and the Accounting Firm shall reach a final, binding
resolution of all matters that remain in dispute, which final resolution shall
not be subject to collateral attack for any reason (other than fraud) and shall
be (u) in writing, within the range of the amount contested by the Sellers’
Representative and the Buyer and signed by the Accounting Firm, (v) furnished to
the Buyer and the Sellers’ Representative as soon as practicable after the items
in dispute have been referred to the Accounting Firm, which the Sellers’
Representative and the Buyer shall request not to be more than thirty (30) days
after such referral, (w) made in accordance with this Agreement and (x)
conclusive and binding upon the Parties on the date of delivery of such written
resolution. The Buyer
17
and the
Sellers’ Representative agree to execute, if requested by the Accounting Firm, a
reasonable engagement letter in customary form and shall cooperate fully with
the Accounting Firm and promptly provide all documents and information requested
by the Accounting Firm so as to enable it to make such determination as quickly
and as accurately as practicable. The procedure outlined in this
Section 3.1(d)(vi) is referred to as the “Dispute Resolution
Procedure”.
(vii) The
Proposed Closing Statement shall become the “Final Closing
Statement” (x) on the forty-sixth (46th) day following the receipt of the
Proposed Closing Statement by Sellers’ Representative if a Notice of
Disagreement has not been delivered to the Buyer by the Sellers’ Representative,
(y) with such changes as are necessary to reflect matters resolved pursuant to
any written resolution executed pursuant to Section 3.1(d)(v) or Section
3.1(d)(vi), on the date such resolution is executed, if all outstanding matters
are resolved through such resolution and (z) with such changes as are necessary
to reflect the Accounting Firm’s resolution of matters in dispute, on the date
the Accounting Firm delivers its final, binding resolution pursuant to Section
3.1(d)(vi). The date on which the Proposed Closing Statement shall
become the Final Closing Statement pursuant to the immediately foregoing
sentence is referred to as the “Final Determination
Date”.
(viii) The
Buyer, the Sellers’ Representative and the Sellers shall each pay their own
costs and expenses incurred in connection with such Dispute Resolution
Procedure; provided, that the
fees and expenses of the Accounting Firm shall be borne in the same proportion
that the Sellers’ Representative’s position, on the one hand, and the Buyer’s
position, on the other hand, initially presented to the Accounting Firm (based
on the aggregate of all differences taken as a whole) bear to the final
resolution as determined by the Accounting Firm.
(e) Working Capital Purchase
Price Adjustments. If the Working Capital set forth in the
Final Closing Statement (the “Actual Working
Capital”) is greater than the Estimated Working Capital, the Buyer shall
pay such excess to or as directed by the Sellers’ Representative for the account
of the Sellers, pro rata in accordance with each such Seller’s Pro Rata Share,
within five (5) business days of the Final Determination Date, by wire transfer
of immediately available United States funds to an account or accounts
designated by the Sellers’ Representative. If the Estimated Working
Capital is greater than the Actual Working Capital, such excess shall be
distributed by the Escrow Agent from the Escrow Fund to the Buyer within five
(5) business days of the Final Determination Date.
(f) Escrow
Amount.
(i) At the
Closing, the Buyer shall deposit with U.S. Bank, National Association (the
“Escrow
Agent”), by wire transfer of immediately available funds, an amount equal
to the Escrow Amount, such amount plus all accumulated earnings thereon (such
amounts, if any, “Escrow
Consideration”) to constitute an escrow fund (the “Escrow Fund”) to be
governed in accordance with the terms of this Agreement and the escrow agreement
in substantially the form attached hereto as Exhibit B (the “Escrow Agreement”),
among the Buyer, the Escrow Agent and the Sellers’ Representative.
(x) The
Escrow Fund shall initially consist of a $1,200,000 portion (the "Working Capital Deficiency
Adjustment Fund") and $7,500,000 portion (the “Indemnification
Fund”) and shall be used to satisfy any amounts owed to the Buyer from
the Sellers pursuant to this Agreement, including Working Capital adjustments
pursuant to Section 3.1(e) and indemnification amounts owed
hereunder. In the event an amount determined pursuant to Section
3.1(e) for Working Capital is owing to the Buyer (such amount, which shall equal
zero if no amount is owing to the Buyer, the “W/C Release Amount”),
the Buyer and the Sellers’ Representative shall jointly instruct the Escrow
Agent to distribute the W/C Release Amount to the Buyer. To the
extent the W/C Release Amount distributed to the Buyer pursuant to the preceding
sentence is less than the amount of the Working Capital Deficiency Adjustment
18
Fund, the
Buyer and the Sellers’ Representative shall jointly instruct the Escrow Agent to
distribute an amount equal to the difference thereof to or as instructed by the
Sellers’ Representative for the account of the Sellers, in accordance
with their respective Pro Rata Shares. The Buyer and the Sellers’
Representative shall provide such joint instructions timely so that
distributions can be made by the Escrow Agent within the time period required by
Section 3.1(e). The Indemnification Fund shall be used to satisfy any
other amounts owed to the Buyer from the Sellers pursuant to this
Agreement.
(y) The
portion of the Escrow Fund that is not used to satisfy any other amounts owing
to the Buyer and its Affiliates from the Sellers under this Agreement, including
indemnification amounts, or not subject to any claims hereunder, shall be
released to the Sellers’ Representative on the date that is one (1) business day
after the expiration of the Indemnification Period; provided that if
there are any claims hereunder that are pending on such date, the applicable
portion of the Escrow Fund that is subject to any such claims shall not be
released to or as instructed by the Sellers’ Representative until such
applicable claims are finally resolved and satisfied. Upon the final
release of all the Escrow Fund, the Escrow Agreement shall
terminate. All funds so released from the Escrow Fund to or as
instructed by the Sellers’ Representative shall include any Escrow Consideration
and shall be distributed by the Escrow Agent to or as instructed by the Sellers’
Representative for the account of the Sellers in accordance with their
respective Pro Rata Shares.
(ii) The
Sellers acknowledge and agree that none of the Escrow Fund may be used to
reimburse the Sellers’ Representative for the services contemplated by this
Agreement, except upon any release that would otherwise be made to the Sellers’
Representative. The Escrow Fund shall be held as a trust fund and shall not be
subject to any Lien, and shall be held and disbursed solely for the purposes and
in accordance with the terms of this Agreement and the Escrow
Agreement.
(g) Sellers’ Expense
Amount
At the
Closing, the Buyer shall deposit cash in an amount equal to the Sellers’ Expense
Amount into an account designated by the Sellers’ Representative. The
Sellers’ Expense Amount shall be used to fund any expenses incurred by the
Sellers’ Representative in the performance of its duties and obligations
hereunder. The Sellers’ Expense Amount will be held by the Sellers’
Representative until such time as the Sellers’ Representative determines, in its
sole discretion, that the Sellers shall have no further expenses to be incurred
in connection with the transactions contemplated by this
Agreement. Any portion of the Sellers’ Expense Amount remaining after
such date shall be paid by the Sellers’ Representative to the Sellers, with each
Seller receiving its Pro Rata Share of such remaining amounts.
|
Section
3.2
|
Total
Consideration
|
The
payments to be made pursuant to Section 3.1 shall constitute all of the
consideration to be paid by the Buyer in connection with the purchase of the
Purchased Shares as contemplated by this Agreement. The Sellers
hereby acknowledge that the consideration stated herein is adequate for the
transfer of the Purchased Shares. The Sellers further agree that they
will not raise as a defense to this Agreement the allegation of lack of
consideration after the Buyer has paid the same.
ARTICLE
IV
THE
CLOSING
|
Section
4.1
|
Closing
|
The
closing of the purchase and sale of the Purchased Shares contemplated by this
Agreement (the “Closing”) shall take
place at the offices of Xxxxxxxxx & Xxxxxxx LLP, located at The New York
19
Times
Building, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 9:00 a.m.
local time on November 1, 2010 (or as soon thereafter as practicable), following
the satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the purchase of the Purchased Shares (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or on
such other later date as the Buyer and the Sellers’ Representative may mutually
determine (the “Closing
Date”).
|
Section
4.2
|
Actions
at Closing
|
Subject
to the terms and conditions of this Agreement, at the Closing, (i) the Sellers
will deliver to the Buyer (A) certificates evidencing all the outstanding
Purchased Shares duly endorsed in blank, or accompanied by stock powers duly
executed in blank; (B) a receipt for the Initial Payment Amount; and (C) the
deliveries listed in Section 4.3(a), and (ii) the Buyer will (A) deliver to or
as instructed by the Sellers’ Representative, for the account of the Sellers,
the Initial Payment Amount by wire transfer in immediately available United
States funds to a bank account or accounts as directed by the Sellers’
Representative; (B) deliver to the Escrow Agent, the Escrow Amount; (C) deliver
the deliveries listed in Section 4.3(b); and (D) cause the payments specified in
Section 3.1(c)(ii) through (iv) to be made.
|
Section
4.3
|
Deliveries
at Closing
|
At the
Closing:
(a) Holdco
will deliver or cause to be delivered to the Buyer:
(i) A
certificate signed by a duly authorized officer of Holdco, dated the Closing
Date, expressly certifying that the conditions set forth in Section 10.1(a) have
been satisfied;
(ii) A
certificate of the Secretary of Holdco, dated the Closing Date, attaching and
certifying the Charter Documents of Holdco and the resolutions of the Board of
Directors of Holdco approving the Transactions, terminating the Stock Plan as of
the Closing, attaching instruments or documents in forms reasonably satisfactory
to the Buyer, as may be necessary to effect the termination as of the Closing
Date of the Related Party Agreements to the extent contemplated by
Section
7.9, and certifying the incumbency and specimen signature of each
Holdco officer executing this Agreement;
(iii) The
resignations, effective as of the Closing Date, or evidence of removal as of the
Closing Date, of all members of the board of directors of Holdco and its
Subsidiaries;
(iv) The
Escrow Agreement, duly executed by the Sellers’ Representative;
(v) Such
instruments of transfer or consents in forms reasonably satisfactory to the
Buyer, as may be necessary to effect the conveyance, transfer, assignment and
delivery of the Purchased Shares, in accordance with the terms of this
Agreement;
(vi) A list of
all the Funded Indebtedness of Holdco and its Subsidiaries, the aggregate amount
of which, including accrued interest, fees and other charges, if any, as of the
Closing Date shall be repaid and satisfied in full at the Closing (the “Repaid
Indebtedness”);
(vii) A list of
the Transaction Expenses of Holdco and its Subsidiaries, which amounts shall be
paid and satisfied at the Closing; and
20
(viii) A duly
executed certificate that complies with the requirements of the Treasury
regulations promulgated under Section 1445 of the Code to exempt the Buyer from
the obligation to deduct and withhold Tax pursuant to Section 1445 of the Code
from any amounts payable to the Sellers pursuant to this Agreement.
(b) The Buyer
will deliver to the Sellers, the Sellers’ Representative or the Escrow Agent, as
the case may be:
(i) The
Initial Payment Amount determined in accordance with Section
3.1(b);
(ii) To the
Sellers’ Representative, a certificate, dated as of the Closing Date and signed
by an officer of the Buyer, expressly certifying that the conditions in Section
10.2(a) have been satisfied and to which is attached the resolutions of the
Buyer approving the Transactions; and
(iii) To the
Sellers’ Representative, the Escrow Agreement, duly executed by the Buyer and
the Escrow Agent.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
As a
material inducement to the Sellers to enter into this Agreement and for the
Sellers to sell the Purchased Shares to the Buyer, the Buyer hereby represents
and warrants to the Sellers that as of the Effective Date:
|
Section
5.1
|
Organization;
Corporate Power and Authorization
|
Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has the requisite corporate
company power and authority necessary to enter into, deliver and carry out its
obligations pursuant to each of the Transaction Documents. Buyer has
duly authorized the execution, delivery and performance by the Buyer of the
Transaction Documents.
|
Section
5.2
|
Binding
Effect and Noncontravention
|
(a) Each
Transaction Document to which the Buyer is a party constitutes a legal valid and
binding obligation of the Buyer and is enforceable against the Buyer in
accordance with its terms, except as such enforceability may be limited by (i)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and (ii) applicable equitable
principles (whether considered in a proceeding at law or in
equity).
(b) The
execution, delivery and performance by the Buyer of each of the Transaction
Documents to which it is a party do not and shall not: (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under or result in a violation of or (iii) except as set forth on Schedule 5.2(b),
require any authorization, consent, approval, exemption, filing or other action
by or declaration or notice to any third Person or Governmental Authority
pursuant to: (A) the Charter Documents of the Buyer, (B) any agreement,
instrument, or other document to which the Buyer is a party or (C) any
constitution, statute, regulation, rule, injunction, judgment, order, Legal
Requirement or other restriction of any Governmental Authority, to which the
Buyer or any of its assets are subject.
21
|
Section
5.3
|
Brokerage
|
The Buyer
has no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the Transactions for which the Sellers could
become liable or obligated.
|
Section
5.4
|
Financing
|
Buyer’s
obligations hereunder are not subject to any conditions regarding Buyer’s
ability to obtain financing for the Transactions. Buyer has, and/or
will have as of the Closing, sufficient cash available to pay the Purchase
Price, subject to adjustment as set forth herein, and all other amounts to be
paid by Buyer in connection with this Agreement and the
Transactions.
|
Section
5.5
|
No
Litigation
|
There is
no Litigation pending or, to its knowledge, threatened against the Buyer, its
properties or businesses, which is reasonably expected to have a material
adverse effect on the Buyer or restrict the ability of the Buyer to consummate
the Transactions and otherwise perform its obligations hereunder.
|
Section
5.6
|
Investment
Intent
|
The Buyer
is an “accredited investor” as defined in the Securities Act and possesses such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment hereunder. The
Purchased Shares are being acquired by the Buyer in a private transaction for
its own account and not with a view to, or for offer or resale in connection
with, any distribution within the meaning of Section 2(a)(11) of the Securities
Act. The Buyer hereby acknowledges that the Purchased Shares are
unregistered and must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. The Buyer acknowledges and agrees that it will not make
any disposition of the Purchased Shares which will or may involve Holdco, the
Target or the Sellers in a violation of the Securities Act, the Securities
Exchange Act or of any state securities laws.
|
Section
5.7
|
Condition
of the Business
|
The Buyer
and its Representatives have made all inspections and investigations of the
Business and the Purchased Shares deemed necessary or desirable by the
Buyer. The Buyer acknowledges and agrees that it is purchasing the
Purchased Shares based on the results of its inspections and investigations, and
not on any representation or warranty of the Sellers or Holdco, or any of their
Affiliates, not expressly set forth in this Agreement or the other Transaction
Documents. Any claims the Buyer may have for breach of representation
or warranty shall be based solely on the respective representations and
warranties of the Sellers or Holdco expressly set forth in this Agreement or the
other Transaction Documents. ALL WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE, AND ALL OTHER WARRANTIES ARISING UNDER THE
UNIFORM COMMERCIAL CODE (OR SIMILAR APPLICABLE FOREIGN LAWS), ARE HEREBY WAIVED
BY THE BUYER. The Buyer further acknowledges that neither
Seller nor Holdco, nor any of their Affiliates, nor any other Person has made
any representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Sellers, Holdco, the Target, the
Business or the Purchased Shares, including in any confidential memoranda
distributed by or on behalf of the Sellers or Holdco relating to the Target, the
Business or the Purchased Shares, or in any other publication, document or
information provided to the Buyer or its Representatives in any “data room” or
otherwise in connection with the Business or the sale of the Purchased Shares,
not expressly set forth in this Agreement or the other Transaction
Documents.
22
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES REGARDING SELLERS
Each
Seller represents and warrants to the Buyer, solely with respect to such Seller,
that the statements contained in this Article VI are correct and complete as of
the Effective Date, except as set forth in the Schedules identified in this
Article VI (all of the Schedules identified in this Agreement, collectively the
“Disclosure
Schedule”). The numbering of the Disclosure Schedule
corresponds to the numbered Sections in this Agreement.
|
Section
6.1
|
Ownership
|
Such
Seller is the lawful record and beneficial owner of the Purchased Shares set
forth opposite such Seller’s name on Exhibit A and has
good and marketable title to such Purchased Shares, free and clear of any Liens,
warrants, options, calls, commitments, proxies and voting agreements, and with
no restriction on the voting rights and other incidents of record and beneficial
ownership pertaining thereto, including community property or other spousal
rights (other than for Liens which will be released prior to the Closing and
rights and obligations under the Stockholders Agreement, which will be
terminated at the Closing). Such Seller is not the subject of any
bankruptcy, reorganization or similar proceeding.
|
Section
6.2
|
Organization,
Standing, Qualification and Power
|
Such
Seller, if not a natural person, is duly organized, validly existing and in good
standing under the laws of the state or country of its formation and has all
requisite power and authority to own the Purchased Shares set forth opposite such
Seller’s name on Exhibit
A.
|
Section
6.3
|
Authority;
Execution and Delivery;
Enforceability
|
Such
Seller has all power and authority to execute this Agreement and the Transaction
Documents to which it is, or is specified to be, a party and to consummate the
Transactions. The execution and delivery by such Seller of this
Agreement and the Transaction Documents and the consummation of the Transactions
have been duly authorized by all necessary action on the part of such
Seller. Such Seller has duly executed and delivered this Agreement
and prior to the Closing will have duly executed and delivered each Transaction
Document to which it is, or is specified to be, a party, and this Agreement
constitutes, and each Transaction Document to which it is, or is specified to
be, a party will after the Closing constitute, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally and
general equitable principles.
|
Section
6.4
|
No
Conflicts; Consents
|
(a) As of the
Effective Date, no consent, approval, license, permit, order, qualification or
authorization of, or registration, declaration, notice or filing with, any
Governmental Authority or any other Person is required for or in connection with
the execution and delivery by such Seller of this Agreement and each other
Transaction Document to which it is a party, and the consummation by such Seller
of the Transactions, other than (i) those set forth on Schedule 6.4(a),
(ii) those the failure of which to obtain or make, individually or in the
aggregate, would not materially impair the ability of such Seller to perform its
obligations under this Agreement and (iii) those that may be required
solely by reason of the Buyer’s (as opposed to any other third party’s)
participation in the Transactions.
23
(b) The
execution, delivery and performance in accordance with their respective terms of
each of the Transaction Documents by such Seller and the effectuation of the
transactions this Agreement and those Transaction Documents contemplate do not
and will not (i) violate, breach or constitute a default under (A) the Charter
Documents, if applicable, of such Seller, (B) any Legal Requirement applicable
to such Seller, subject to obtaining all necessary consents and approvals set
forth in Schedule 6.4(a),
or (C) except as set forth on Schedule 6.4(a), any
Material Contract of such Seller, except in the case of (B) or (C) as would not
materially impair the ability of such Seller to perform its obligations under
this Agreement, or (ii) cause or result in the imposition of, or afford any
Person the right to enforce or to obtain, any Lien upon any of Purchased
Shares.
(c) Except as
Schedule 6.4(a)
lists, no Legal Requirement requires such Seller to obtain any Governmental
Approval, or make any filings, including any report or notice, with any
Governmental Authority, in connection with the execution, delivery or
performance by such Seller of the Transaction Documents, the enforcement against
such Seller of its obligations thereunder or the effectuation of the
transactions the Transaction Documents contemplate, except in each case where
the failure to obtain such Governmental Approval or make such filing would not
materially impair the ability of such Seller to perform its obligations under
the Transaction Documents.
(d) Except as
Schedule 6.4(a)
sets forth, no material Contractual Commitment or other material agreement or
material arrangement to which such Seller is a party or is bound or to which any
of its properties or other assets are subject, requires such Seller to obtain
any consent or approval from, or make any filing (including any report or
notice) with, any Person in connection with the execution, delivery or
performance by such Seller of the Transaction Documents, the enforcement against
such Seller of its obligations thereunder or the effectuation of the
transactions the Transaction Documents contemplate, except in each case where
the failure to obtain such consent or approval, or make such filing, would not
materially impair the ability of such Seller to perform its obligations under
the Transaction Documents.
|
Section
6.5
|
Litigation
|
There (a)
are no outstanding judgments against such Seller, (b) are no Proceedings pending
or, to the knowledge of such Seller, threatened against such Seller, and (c) is
no Litigation by any Governmental Authority that is pending or, to the knowledge
of such Seller, threatened against such Seller, other than in the case of (a),
(b), or (c) that would not prevent or materially impair such Seller’s ability to
consummate the Transactions.
|
Section
6.6
|
Brokerage
|
Such
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the Transactions for which the Buyer
could become liable or obligated.
ARTICLE
VII
GENERAL
REPRESENTATIONS AND WARRANTIES REGARDING HOLDCO
AND
ITS SUBSIDIARIES
Holdco
represents and warrants to the Buyer that the statements contained in this
Article VII are correct and complete as of the Effective Date or such earlier
date, if any specifically provided for herein, except as set forth in the
Disclosure Schedule.
24
|
Section
7.1
|
XxXxxx
Agreement
|
Except as
set forth in Schedule
7.1, Holdco has no knowledge of any material breach of the XxXxxx
Agreement or of any material representation in the XxXxxx Agreement being untrue
or false in any material respect, at the time made therein. As of the
date hereof, Holdco has not made any additional claims for indemnification with
respect to breaches of the XxXxxx Agreement other than with respect to the
PediaCare Recall Claims. For purposes of this Section 7.1,
“knowledge” means the actual knowledge of Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxx, Xxxxxxx Xxxx and Xxxx X. Xxxxxx, and shall not require any
inquiry or investigation.
|
Section
7.2
|
Capitalization
and Constituent Documents
|
(a) The
authorized capital stock of Holdco consists of 6,000,000 Holdco Preferred Shares
and 9,000,000 Holdco Common Shares. As of the Effective Date,
5,377,292.28 Holdco Preferred Shares are issued and outstanding. As
of the Effective Date, 6,139,345.352 Holdco Common Shares are issued and
outstanding, including 762,052.072 restricted Holdco Common Shares issued
pursuant to the Stock Plan that will be issued and outstanding as of the Closing
Date. As of the Closing Date, all of the issued and outstanding
Holdco Common Shares are voting shares. All issued and outstanding
Holdco Shares have
been duly authorized and validly issued and are fully paid and are
nonassessable. The Charter Documents of Holdco provide for no
preemptive rights. Except for this Agreement, the other Transaction
Documents and, as of the Effective Date, the nonvested Holdco Shares issued
pursuant to the Stock Plan, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other Derivative Securities or other contracts or commitments that
could require Holdco to issue, sell or
otherwise cause to become outstanding any of Holdco Shares or other Capital
Stock. There are no outstanding or authorized equity appreciation,
phantom equity, or similar rights with respect to Holdco. True and
complete copies of all stock, minute books and records of Holdco have been furnished by
the Sellers for inspection by the Buyer. Such stock records
accurately reflect all transactions and the current ownership of
Holdco. The minute books and records of Holdco contain true and
complete copies of all resolutions adopted by the stockholders and the board of
directors of Holdco.
(b) The
authorized capital stock of Target consists of 1,000 Target
Shares. As of the Effective Date, one Target Share is issued and
outstanding. As of the Closing Date, one Target Share will be issued
and outstanding. Holdco is the lawful record and beneficial owner of
100% of the Target Shares and has good and marketable title to the Target
Shares, free and clear of any Liens (other than for Liens which will be released
prior to the Closing), warrants, options, calls, commitments, proxies and voting
agreements, and with no restriction on the voting rights and other incidents of
record and beneficial ownership pertaining thereto. All issued and
outstanding Target Shares have been duly
authorized and validly issued and are fully paid and are
nonassessable. The Charter Documents of Target provide for no
preemptive rights. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other Derivative Securities or other contracts or commitments that
could require Target to issue, sell or otherwise cause to become outstanding any
Target Shares or other Capital Stock. There are no outstanding or
authorized equity appreciation, phantom equity, or similar rights with respect
to Target. True and complete copies of all stock, minute books and
records of Target have been furnished by
the Sellers for inspection by the Buyer. Such stock records
accurately reflect the current ownership of Target. The minute books
and records of Target contain true and complete copies of all resolutions
adopted by the stockholders and the board of directors of Target.
(c) Except
for its ownership of the Target Shares, Holdco has, and previously has had, no
assets or operations.
25
|
Section
7.3
|
Organization,
Qualification and Power
|
(a) Holdco is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Holdco is qualified and duly
authorized to conduct the Business and is in good standing under the laws of
each jurisdiction in which the character and location of its properties or the
nature of its business require qualification, except as would not reasonably be
expected to have a Material Adverse Effect.
(b) The
Target is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Target is qualified and
duly authorized to conduct the Business and is in good standing under the laws
of each jurisdiction in which the character and location of its properties or
the nature of its business requires qualification, except as would not
reasonably be expected to have a Material Adverse Effect. The Target
has full legal power and authority to own its properties and to carry on the
Business that it presently is conducting. Target is not in default
under or in violation of any provision of its Charter Documents.
|
Section
7.4
|
Absence
of Conflicts; Required Consents
|
(a) The
execution, delivery and performance in accordance with their respective terms of
each of the Transaction Documents by the Sellers and Holdco and the effectuation
of the transactions this Agreement and those other Transaction Documents
contemplate do not and will not (i) violate, breach or constitute a default
under (A) the Charter Documents of Holdco, Target or any of their Subsidiaries,
(B) in any material respect, any Legal Requirement applicable to Holdco, Target
or any of their Subsidiaries, subject to obtaining all necessary consents and
approvals set forth in Schedule 7.4(a), or
(C) in any material respect, except as set forth on Schedule 7.4(a), any
Material Contract of Holdco or any of its Subsidiaries, (ii) cause or result in
the imposition of, or afford any Person the right to enforce or to obtain, any
Lien upon any Purchased Shares, or (iii) except as set forth on Schedule 7.4(a),
result in the revocation, cancellation, suspension or material modification, in
any single case or in the aggregate, of any Governmental Approval possessed by
Holdco or any of its Subsidiaries and necessary for the ownership or lease or
the operation of the Business or Business, as appropriate, including any
necessary Governmental Approval under applicable Environmental Laws and Health
Care Laws.
(b) Except as
set forth on Schedule
7.4(a), no Legal Requirement requires Holdco or any of its Subsidiaries
to obtain any material Governmental Approval, or make any material filings,
including any report or notice, with any Governmental Authority, in connection
with the execution, delivery or performance by the Sellers of the Transaction
Documents, the enforcement against the Sellers of their obligations thereunder
or the effectuation of the transactions the Transaction Documents
contemplate.
(c) Except as
set forth on Schedule
7.4(a), no material Contractual Commitment or other Material Contract or
material arrangement to which the Sellers, Holdco or any of its Subsidiaries is
a party or is bound or to which any of their or its properties or other assets
are subject, requires the Sellers, Holdco or any of its Subsidiaries to obtain a
consent or approval from, or make any filing (including any report or notice)
with, any Person in connection with the execution, delivery or performance by
the Sellers of the Transaction Documents, the enforcement against the Sellers,
Holdco or the Target of their or its obligations thereunder or the effectuation
of the transactions the Transaction Documents contemplate.
26
|
Section
7.5
|
Charter
Documents
|
The
Sellers have caused true, complete and correct copies of the Charter Documents
as currently in effect and the minute books or similar corporate or other Entity
records of Holdco and each of its Subsidiaries to be made available to the
Buyer.
|
Section
7.6
|
Other
Entities
|
(a) Holdco
does not own (of record or beneficially, directly or indirectly through any
Person) or control (directly or indirectly through any Person or otherwise) any
Capital Stock or Derivative Securities of any Entity other than the
Target.
(b) Holdco
has not been a Subsidiary or division of any Entity during the past five (5)
years.
(c) Target
does not own (of record or beneficially, directly or indirectly through any
Person) or control (directly or indirectly through any Person or otherwise) any
Capital Stock or Derivative Securities of any Entity.
(d) Target
has not been a Subsidiary or division of another Entity other than Holdco during
the past five (5) years.
|
Section
7.7
|
Transactions
in Capital Stock of Holdco and its
Subsidiaries
|
(a) Except as
set forth in the Charter Documents of Holdco, none of Holdco or any of its
Subsidiaries has any obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire or reacquire any of its Capital Stock or any interests therein
or to pay any dividend or make any distribution in respect thereof.
(b) No
transaction has been effected (or contemplated) in connection with the
transactions described in this Agreement (other than the transactions
contemplated by this Agreement and the other Transaction Documents), respecting
the equity ownership of Holdco or any of its Subsidiaries.
|
Section
7.8
|
No
Liens on Holdco’s and Subsidiaries’
Assets
|
Each of
Holdco’s and each of Holdco’s Subsidiary’s material properties and assets
(whether tangible or intangible), other than properties and assets that are
leased by Holdco or its Subsidiaries, are owned by Holdco or such Subsidiary, as
the case may be, free of Liens other than Liens set forth on Schedule 7.8 (each of
which will be discharged prior to or simultaneously with the Closing) and Permitted
Liens.
|
Section
7.9
|
Related
Party Agreements
|
Schedule 7.9 sets
forth all Related Party Agreements with respect to Holdco and its
Subsidiaries. Except for any Employment Agreements and as otherwise
set forth on Schedule
7.9 or in Section 8.11, each Related Party Agreement will have been
terminated, and all Indebtedness owed thereunder by or to Holdco and/or its
Affiliates will have been paid in full or otherwise satisfied, prior to the
Closing, and no Related Party Agreement then will exist.
27
|
Section
7.10
|
Litigation
and Claims
|
(a) Except as
set forth on Schedule
7.10, (i) no Litigation is pending or, to the knowledge of Holdco,
threatened in writing by or against Holdco or any of its Subsidiaries, (ii)
Holdco and its Subsidiaries are not in receipt of any inquiry, notice, citation,
investigation or complaint from any Governmental Authority, in the case of
either (i) or (ii), which relates to or involves more than $50,000; and
(iii) none of Holdco or its Subsidiaries is subject to any material judgment,
order, writ, injunction or decree of any court or administrative
agency.
(b) To the
knowledge of Holdco and except as set forth on Schedule 7.10, no
Litigation is pending or threatened in writing by or against any Material
Supplier that would reasonably be expected to adversely affect the Business in
any material respect.
|
Section
7.11
|
Financial
Information
|
The
Financial Information (including in each case the related notes, as applicable)
(i) presents fairly, in all material respects, the consolidated financial position of
Holdco and its Subsidiaries at the date of the balance sheet included therein
and the results of operations and statement of stockholders’ equity and cash flows of Holdco
and its Subsidiaries on a consolidated basis, for the respective periods set
forth therein and (ii) have been prepared in accordance with GAAP consistently
applied by Holdco (except as otherwise disclosed thereon and, with respect to
any unaudited Financial Information, subject to the absence of footnotes and
year-end adjustments). Since the date of the Latest Balance Sheet,
neither Holdco nor any of its Subsidiaries has incurred liabilities or
obligations of any kind (including contingent obligations, tax assessments or
unusual forward or long term commitments), or any unrealized or anticipated loss
which liabilities, obligations or losses are reasonably expected to have a
Material Adverse Effect. None of Holdco nor its Subsidiaries has
committed any act of bankruptcy, is insolvent, has proposed a compromise or
arrangement to its creditors generally, has had any petition for a receiving
order in bankruptcy filed against it, has made a voluntary assignment in
bankruptcy, has taken any proceeding with respect to a compromise or
arrangement, has taken any proceeding to have itself declared bankrupt or
wound-up, has taken any proceeding to have a receiver appointed to any part of
its assets, or has had any creditor take possession of any of its
property.
|
Section
7.12
|
Compliance
with Laws
|
(a) (i) Each
of Holdco and its Subsidiaries possesses all material certifications
and licenses from Governmental Authorities and similar material Governmental
Approvals required for the Business conducted by it, and (ii) each of Holdco and
its Subsidiaries is in material compliance with the terms and conditions of all
Governmental Approvals necessary for the ownership or lease and operation of its
properties and other assets. All such Governmental Approvals are
valid and in full force and effect, and none of Holdco or its Subsidiaries or
any such employee has received any written notice from a Governmental Authority
of its intention to cancel, terminate, restrict, limit or otherwise qualify or
not renew any of those Governmental Approvals.
(b) The
Target and its Subsidiaries (i) have been and continue to be in compliance in
all material respects with all Legal Requirements applicable to the Business, as
appropriate; and (ii) have not received, nor to the knowledge of Holdco has any
officer, director or employee of Holdco or its Subsidiaries received, any
written notice from any Governmental Authority which asserts any material
noncompliance with any of those Legal Requirements with respect to the Business
which noncompliance has not been corrected.
28
|
Section
7.13
|
Compliance
with Health Care Laws
|
(a) Holdco
and each of its Subsidiaries has made all requisite filings with the FDA and is
in compliance in all material respects with all Laws applicable to them in
respect of the manufacture, packaging, marketing, storing, testing, and
distributing of the Products including, but not limited to, those relating to
the adulteration, mislabeling and misbranding of the Products and current good
manufacturing practices in the United States of America (“cGMPs”).
(b) Since
October 31, 2009, Holdco and its Subsidiaries have filed all serious adverse
event reports required to be made to the FDA and other Governmental Authorities
under applicable Laws relating to the Products.
(c) Except as
set forth on Schedule
7.13(c), no Product or product candidate currently being manufactured,
developed, tested, distributed or marketed by either Holdco or any of its
Subsidiaries has been recalled or withdrawn from market (whether voluntarily or
otherwise). Except as set forth on Schedule 7.13(c), no
proceedings (whether completed or pending) seeking the recall, withdrawal,
suspension or seizure of any such Product or product candidate or pre-market
approvals or marketing authorizations are pending, or to the knowledge of
Holdco, threatened, against Holdco or any of its Subsidiaries, nor have any such
proceedings been pending at any time. Neither Holdco nor any of its
Subsidiaries is considering any recall or warning in respect of the
Products. To the knowledge of Holdco and its Subsidiaries, no
Governmental Authority has threatened to implement any recall with respect to
the Products.
(d) To the
knowledge of Holdco, each Material Supplier (A) is in compliance in all material
respects with all Laws applicable to the manufacture, packaging, storing,
testing, and distributing of the Products including, but not limited to, those
relating to cGMPs and FDA’s quality system regulations (“QSRs”), applicable to
the functions performed by it for Holdco or its Subsidiaries in respect of the
Products, and (B) possesses, and is in compliance with, all material
Governmental Approvals necessary for the manufacture, packaging, storing,
testing, and distributing of the Products including, but not limited to,
facility establishment registrations, applicable to the functions performed by
it for Holdco or its Subsidiaries in respect of such Products.
|
Section
7.14
|
Certain
Environmental Matters
|
Except as
set forth on Schedule
7.14, each of Holdco and its Subsidiaries is in Material compliance with
the provisions of all Environmental Laws applicable to the
Business.
|
Section
7.15
|
Liabilities
and Obligations
|
Holdco
and its Subsidiaries have no material liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent or
otherwise), other than (i) those reflected in, reserved against, or otherwise
described in the Latest Balance Sheet, (ii) liabilities or obligations
incurred after the date of the Latest Balance Sheet in the ordinary course of
business, (iii) liabilities or obligations incurred in connection with the
Transactions, (iv) liabilities or obligations under any contract or other
agreement to which Holdco or any of its Subsidiaries is a party, or (v)
liabilities or obligations disclosed in the Disclosure Schedule.
|
Section
7.16
|
Real
Properties
|
(a) None of
Holdco or any of its Subsidiaries has, at any time, owned any real
properties.
29
(b) Holdco
has made available to the Buyer true, correct and complete copies of all lease
agreements under which any property Schedule 7.16(b) (the
“Leased Real
Property”) lists as being leased are leased. Except as set
forth on Schedule
7.16(b) and the Leased Real Property, none of Holdco or any of its
Subsidiaries has, at any time, leased any real property.
(c) Except as
set forth on Schedule
7.16(c), the material fixed assets of Holdco and its Subsidiaries that
are affixed to real property are affixed only to one or more of the real
properties Schedule
7.16(b) lists and are maintained in accordance with prudent practices for
the purposes for which they presently are being used or held for use, ordinary
wear and tear excepted.
|
Section
7.17
|
Other
Tangible Assets
|
(a) Schedule 7.17(a)
lists and correctly describes all material leases, including capital leases, of
property, plant, equipment or other tangible assets (other than real property)
that are used by Holdco and its Subsidiaries in the Business.
(b) Except as
Schedule
7.17(b) sets forth, (i) each of the personal property leases described on
Schedule
7.17(a) is valid and binding on Holdco or its applicable Subsidiary and,
to the knowledge of the Sellers and Holdco, lessor and (ii) none of Holdco or
its Subsidiaries has sublet any of its leased tangible personal property to any
other Person.
(c) Except as
Schedule
7.17(c) sets forth, all the tangible material personal property of Holdco
and its Subsidiaries is in good working order and condition in accordance with
industry practice, ordinary wear and tear excepted, and adequate in all material
respects for the purposes for which they presently are being used or held for
use.
|
Section
7.18
|
Intellectual
Property
|
(a) The term
“Intellectual Property
Assets” means (i) all Marks; (ii) all patents, patent applications and
inventions and discoveries that may be patentable (collectively, “Patents”); (iii) all
copyrights in both published works and unpublished works (collectively, “Copyrights”); (iv)
Formulae and Specifications; (v) Owned Domain Names; and (vi) information,
including a formula, pattern, compilation, program, device, method, technique or
process, that derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other Persons who can obtain economic value from its disclosure or use, and
that is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy (collectively, “Trade Secrets”)
owned, used, or licensed (as licensee or licensor) by Holdco or any of its
Subsidiaries.
(b) For all
Owned Trademark Rights, in each case that have been or are registered, granted
or issued, or have been or are subject to an application for registration, grant
or issuance, in each case, as of the date of this Agreement (collectively, the
“Registered
Intellectual Property”), Schedule 7.18(b) sets
forth (i) whether the Registered Intellectual Property has been applied for
and/or registered in the United States, Canada or both, and (ii) the
registration number, issuance number, serial number or application number, as
applicable, of the Registered Intellectual Property. Schedule 7.18(b) also
sets forth a list of all domain names and addresses used or held for use by
Holdco and its Subsidiaries solely in the conduct of the Business (the “Owned Domain
Names”). All material registration, renewal, maintenance,
recordation (including assignment recordations) and other applicable filings and
fees have been timely made and paid in connection with the Registered
Intellectual Property and the Owned Domain Names.
(c) None of
the execution and delivery of this Agreement or any other agreement contemplated
hereby, the consummation of the transactions contemplated hereby or thereby, or
the
30
(d) Holdco
and its Subsidiaries are the sole and exclusive owners of all Owned Intellectual
Property and of all registrations for the Owned Domain Names free and clear of
any Liens, other than Permitted Liens, and upon the Closing, will be the sole
and exclusive owners of all Owned Intellectual Property and of all registrations
for the Owned Domain Names, free and clear of all Liens, other than Permitted
Liens (other than pursuant to clause (iii) of the definition thereof) and Liens
created by Buyer. Except as set forth on Schedule 7.18(d),
none of Holdco or any of its Subsidiaries has granted any rights or licenses of
any kind relating to any Owned Intellectual Property or Owned Domain Names,
except for nonexclusive licenses to customers, Holdco’s Affiliates in connection
with the Business and suppliers, in each case, in the ordinary course of
business.
(e) All
registered Owned Trademark Rights and all other Owned Trademark Rights, if any,
that are material to the Business, are enforceable, valid and
subsisting. All Owned Domain Names are valid and
subsisting. All Owned Intellectual Property (other than the Owned
Trademark Rights) and all Licensed Know-How, in each case, that is material to
the Business, is valid and subsisting, and to the knowledge of Holdco and its
Subsidiaries, is enforceable.
(f) Except as
set forth on Schedule
7.18(f), to the knowledge of Holdco, (i) the operation of the Business as
it has been operated since October 31, 2009 and is currently operated and
conducted has not and does not infringe, misappropriate or dilute any
Intellectual Property of any other Person. Neither Holdco nor any of
its Subsidiaries has been since October 31, 2009, or is currently the subject of
any pending or, to the knowledge of Holdco and its Subsidiaries, threatened
cease and desist letter (or other similar letter), notice, or proceeding which
(i) involves a
claim or notice of infringement, misappropriation, dilution, or unauthorized
use, in any respect material to the Business, of any Intellectual Property of
any third party, or (ii) involves a claim or notice affecting, in any respect
material to the Business, the ownership, use, validity, priority, duration,
right to use, enforceability or effectiveness of any Owned Intellectual Property
or of any Licensed Know-How or Owned Domain Names. To the knowledge
of Holdco and its Subsidiaries, no third party is infringing, diluting or
misappropriating, in any respect material to the Business, any Owned
Intellectual Property.
(g) Holdco
and its Subsidiaries have taken all reasonable precautions to protect the
secrecy, confidentiality, and value of its Trade Secrets, the Formulae and
Specifications and its other Confidential Information that is material to the
Business.
(h) Except as
Schedule
7.18(h) sets forth, none of the Owned Intellectual Property or Owned
Domain Names and none of the Licensed Know-How is subject to any outstanding
injunction, judgment, order, decree, ruling, charge, settlement or other
disposition of any dispute. Except as set forth on Schedule 7.18(h),
after the Closing, none of Holdco or its Subsidiaries will be obligated to make
any royalty or other similar payments (i) with respect to any Owned Intellectual
Property or Owned Domain Names, or (ii) with respect to any Licensed Know-How,
for any uses or purposes relating to the Products or the Business, in each case,
other than as a result of any agreement, commitment or other obligation incurred
by or other action (other than the continued operation of the Business) of
Buyer.
31
(i) Schedule 7.18(i) sets
forth all material contracts and material agreements relating to the
Intellectual Property Assets to which Holdco or any of its Subsidiaries is a
party or by which Holdco or any of its Subsidiaries is bound, except for any
license implied by the sale of a product and perpetual, paid-up licenses for
commonly available software programs with an aggregate value of less than
$10,000. Except as Schedule 7.18(i) sets
forth, there are no pending or, to the knowledge of Holdco, threatened in
writing, disputes or disagreements, existing defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice or lapse
of time or both, would constitute material defaults or material events of
default of Holdco or any of its Subsidiaries under any such contract or
agreement, or, to the knowledge of Holdco, of any other party
thereto.
(j) Schedule 7.18(j) sets
forth all registered fictitious or doing business as names owned or used by
Holdco and its Subsidiaries and each Entity that uses each such
name.
|
Section
7.19
|
Contractual
Commitments
|
(a) Schedule 7.19 sets
forth a complete list (or refers to a list that is set forth in any other
Schedule), as of the Effective Date, of each of the following (each a “Contractual
Commitment”), to which Holdco or any of its Subsidiaries is a party or by
which any of its or their properties or assets are bound and which remains, as
of the Effective Date, executory in whole or in any part:
(i) Each
partnership, joint venture, operating, management or cost sharing
agreement;
(ii) Each
guaranty or suretyship, indemnification or contribution agreement or performance
bond;
(iii) Each
instrument, agreement or other obligation evidencing or relating to any
Indebtedness of Holdco or any of its Subsidiaries;
(iv) Each
contract to purchase or sell real property;
(v) Each
agreement with sales or commission agents, public relations or advertising
agencies, accountants or attorneys (other than in connection with this Agreement
and the transactions this Agreement contemplates) involving total payments
within any twelve (12) month period in excess of $50,000 and which do not exceed
in the aggregate $250,000, and which is not terminable without penalty and on no
more than thirty (30) days’ prior notice;
(vi) Each
agreement for the acquisition or provision of services, supplies, goods,
equipment, inventory, fixtures or other property or assets involving more than
$25,000 individually or $100,000 in the aggregate (other than services, goods,
equipment, inventory, fixtures or other property or assets acquired or provided
on a purchase order basis in the ordinary course of business);
(vii) Each
Related Party Agreement;
(viii) Each
contract containing any noncompetition agreement, covenant or undertaking or
otherwise purporting to limit or restrict the business activity of Holdco or any
of its Subsidiaries or Affiliates with respect to the Business, as
appropriate;
(ix) Each
agreement providing for the purchase from a supplier of all or substantially all
the requirements of Holdco or any of its Subsidiaries of a particular product or
service, involving total payments within any twelve (12) month period in excess
of $25,000;
32
(x) Each
power of attorney that is currently effective and outstanding;
(xi) Each
written warranty, guaranty or similar undertaking by Holdco or any of its
Subsidiaries that is material to Holdco and its Subsidiaries with respect to its
products or services;
(xii) Each
other Material Contract or contract or agreement with a Material Supplier (other
than Material Contracts, contracts and agreements made on a purchase order
basis); and
(xiii) Each
amendment, supplement or other modification (and, to the knowledge of Holdco,
each proposed amendment, supplement or other modification) with respect to any
of the foregoing.
(b) There are
no oral Contractual Commitments that, if in writing, would be required to be
included on Schedule
7.19. True, correct and complete copies of all written
Contractual Commitments have heretofore been made available by Holdco to the
Buyer. Except as Schedule 7.19 sets
forth: (A) there are no existing defaults, events of default or events,
occurrences, acts or omissions that, with the giving of notice or lapse of time
or both, would constitute material defaults or material events of default of
Holdco or any of its Subsidiaries under any material Contractual Commitment or,
to the knowledge of Holdco, of any other party thereto; and (B) no material
penalties have been incurred that are presently outstanding, nor are amendments
pending, with respect to any material Contractual Commitment. Each
Contractual Commitment listed or required to be listed in Schedule 7.19 to this
Agreement is in full force and effect and is the valid and enforceable
obligation of Holdco or its Subsidiaries, as the case may be, and, to the
knowledge of the Sellers and Holdco, the other parties
thereto in accordance with its terms, except as enforceability may be limited by
(i) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law).
(c) As of the
Effective Date, except as Schedule 7.19 sets
forth or as this Agreement or any other Transaction Document to which Holdco or
any of its Subsidiaries is a party contemplates, Holdco has no knowledge of any
plan or intention of any other party to any Contractual Commitment set forth on
Schedule 7.19
to this Agreement to exercise any right to cancel or terminate that Contractual
Commitment.
(d) Except as
set forth in Schedule
7.19(d), all Products sold by the Target since October 29, 2009 have been
in conformity in all material respects with all applicable Contractual
Commitments of the Target and all express and implied warranties of the
Target. Except as set forth in Schedule 7.19(d), no
product or Product sold by the Target is subject to any express guaranty,
express warranty or other express indemnity beyond the applicable standard terms
and conditions of sale of the Target which are attached hereto in Schedule
7.19(d).
|
Section
7.20
|
Inventories
|
Schedule 7.20 sets
forth the Inventories as of July 31, 2010, including detail by SKU, calculated
on a basis consistent with Holdco’s accounting practices and using standard
cost. The Inventories are free from any latent defect which would
render such Inventories defective or not fit for sale or adulterated within the
meaning set forth in any applicable Law in any respect material to the
Business. All Inventories in existence on the Closing Date will have
been manufactured in accordance with cGMPs, as defined by the FDA
Act.
33
|
Section
7.21
|
Insurance
|
Except as
Schedule 7.21
sets forth: (i) Holdco has made available to the Buyer: (A) all
insurance policies then carried by Holdco and its Subsidiaries; (B) all
insurance loss runs and workers’ compensation claims for Holdco and its
Subsidiaries received for the fiscal year ended March 31, 2010 and for the
incremental period April 1, 2010 through the date of this Agreement; and (C)
true, complete and correct copies of all insurance policies carried by Holdco
and its Subsidiaries that are in effect; (ii) no insurance carried by Holdco and
its Subsidiaries has been canceled by the insurer during the fiscal year ended
March 31, 2010 and for the incremental period April 1, 2010 through the date of
this Agreement, and none of Holdco or its Subsidiaries has been denied coverage
during such periods; and (iii) as of the Effective Date, none of Holdco or its
Subsidiaries has received any written notice or other written communication from
any issuer of any such insurance policy of any material increase after the date
hereof in any deductibles, retained amounts or the premiums payable
thereunder.
|
Section
7.22
|
Employee
Matters
|
(a) Current
Employees. Schedule 7.22(a)
lists the names of all employees employed by Holdco and its Subsidiaries as of
the Effective Date and their respective titles, lengths of service and rates of
annual Cash Compensation (and the portions thereof attributable to salary or the
equivalent, fixed bonuses, discretionary bonuses and other Cash Compensation,
respectively).
(b) Employment
Agreements. Schedule 7.22(b)
lists all Employment Agreements with the Target or any of its Subsidiaries in
effect (or under which Holdco or any of its Subsidiaries have continuing
obligation) in whole or in part on the Effective Date, and the Sellers have
provided the Buyer with true, complete and correct copies of all those
Employment Agreements. Except as set forth on Schedule 7.22(b),
none of Holdco or its Subsidiaries is a party to any oral Employment Agreement,
other than with respect to employment at will arrangements that are terminable
by either party thereto without liability on the part of either party thereto
(except for earned but unpaid salaries or wages, including accrued but unused
vacation time).
(c) Employee Policies and
Procedures. Schedule 7.22(c)
lists all Employee Policies and Procedures. The Sellers have provided
the Buyer with a copy of all Employee Policies and Procedures used in connection
with the Business.
(d) Labor
Compliance. Except as Schedule 7.22(d) sets
forth, each of Holdco and its Subsidiaries has been and is now in material
compliance with all applicable Legal Requirements respecting employment and
employment practices, terms and conditions of employment, wages and hours and
workplace health and safety at its facilities and work sites, and to the
knowledge of Holdco, none of Holdco or its Subsidiaries has been alleged to be
liable for any arrears of wages or penalties for failure to comply with any of
the foregoing. None of Holdco or its Subsidiaries has engaged in any
unfair labor practice or discriminated on the basis of race, color, religion,
sex, sexual orientation, national origin, age, disability or handicap in its
employment conditions or practices. Except as Schedule 7.22(d) sets
forth, there are no (i) unfair labor practice charges or complaints or racial,
color, religious, sex, sexual orientation, national origin, age, disability or
handicap discrimination charges or complaints pending or, to the knowledge of
Holdco, threatened against Holdco or any of its Subsidiaries before any
Governmental Authority or (ii) existing or, to the knowledge of Holdco,
threatened labor strikes, disputes, grievances, controversies or other labor
troubles affecting Holdco or any of its Subsidiaries.
(e) Change of Control
Benefits. Except as Schedule 7.22(e) sets
forth, none of Holdco or its Subsidiaries is a party to any agreement and has
not established any plan, policy, practice or program, requiring it to make a
payment or provide any other form of compensation or benefit or vesting rights
to
34
(f) Other Compensation
Plans. Schedule 7.22(f)
lists all Other Compensation Plans remaining executory at the Effective
Date. The Sellers have provided the Buyer with a true, correct and
complete copy of each of those Other Compensation Plans that is in writing and
an accurate written description of each of those Other Compensation Plans that
is not written. Except as Schedule 7.22(f) sets
forth, each of the Other Compensation Plans may be unilaterally amended or
terminated by Holdco or its Subsidiaries without liability to Holdco or its
Subsidiaries, except as to benefits accrued thereunder prior to that amendment
or termination.
(g) ERISA Benefit
Plans. Schedule
7.22(g) (i) lists (A) each ERISA Pension Plan (1) the funding
requirements of which (under Section 301 of ERISA or Section 412 of the Code)
are, or at any time during the two (2) year period ended on the date hereof
were, in whole or in part, the responsibility of Holdco or any of its
Subsidiaries or (2) respecting which Holdco or any of its Subsidiaries is, or at
any time during that period was, a “contributing sponsor” or an “employer” as
defined in Sections 4001(a)(13) and 3(5), respectively, of ERISA (each plan this
clause (A) describes is called a “Holdco Pension
Plan”), (B) each other ERISA Pension Plan respecting which an ERISA
Affiliate is, or at any time during that period was, such a “contributing
sponsor” or “employer” (each plan this clause (B) describes is called an “ERISA Affiliate Pension
Plan”) and (C) each other ERISA Employee Benefit Plan that is currently
being sponsored, maintained or contributed to by Holdco or any of its
Subsidiaries (each plan this clause (C) describes and each Holdco Pension Plan
is called a “Holdco
Benefit Plan”), and (ii) states the termination date of each Holdco
Benefit Plan and ERISA Affiliate Pension Plan, if any, that has been
terminated. The Sellers have provided the Buyer with true, complete
and correct copies of (i) each Holdco Benefit Plan and ERISA Affiliate Pension
Plan currently in effect, (ii) each trust agreement related thereto and (iii)
all amendments to those plans and trust agreements. Except as Schedule 7.22(g) sets
forth, none of Holdco or any of its Subsidiaries is, and none has at any time
during the two (2) year period ended on the date hereof been, a member of any
ERISA Group.
(h) Copies. True and
correct copies of the following documents, as they have been amended to the
Effective Date, relating to the Holdco Benefit Plans currently in effect, have
been made available to the Buyer by Holdco: (i) the most recently completed
actuarial valuation for all such Holdco Benefit Plans (if any); and (ii) the
annual report (Form 5500 series) for each such Holdco Benefit Plan for the two
most recent plan years (if any).
|
Section
7.23
|
Taxes
|
(a) Each of
the following representations and warranties in this Section 7.23 is qualified
to the extent Schedule 7.23
sets forth.
(b) All
Returns required to be filed with respect to any Tax for which Holdco or any of
its Subsidiaries is liable have been duly and timely filed with the appropriate
Taxing Authority, each such Return is true, correct and complete in all material
respects, each Tax shown to be payable on each such Return has been timely paid
in full, any other material Tax payable by Holdco or any of its Subsidiaries has
been timely paid or adequate reserves have been established on the books of
Holdco for all material Taxes for which Holdco or any of its Subsidiaries is
liable, but the payment of which is not yet due. Each of Holdco and
its Subsidiaries has timely filed true, correct and complete (in all material
respects) declarations of estimated Tax in each jurisdiction in which any such
declaration of such Tax is required to be filed. No Liens for Taxes
exist upon the property or assets of Holdco and its Subsidiaries, except for
Taxes not yet due. Holdco and its Subsidiaries are not and have never
been subject to Tax in any
35
(c) None of
Holdco or its Subsidiaries has filed a consent under Section 341(f) of the Code
or any comparable provision of any other tax statute or have agreed to the
application of Section 341(f)(2) of the Code or any comparable provision of any
other tax statute to any disposition of an asset. Neither Holdco nor
any of its Subsidiaries will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any:
(i) change in
the method of accounting for a taxable period ending on or prior to the Closing
Date;
(ii) “closing
agreement” as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax Law) executed on or
prior to the Closing Date; or
(iii) intercompany
transaction or excess loss account described in Treasury Regulations under Code
Section 1502 (or any corresponding or similar provision of state or local Tax
Law).
(d) None of
Holdco nor any of its Subsidiaries has engaged in a “reportable transaction”
within the meaning of Section 6707A(c)(1) of the Code.
(e) None of
Holdco or its Subsidiaries has made or is obligated to make or is a party to any
agreement that could require it to make any payment that is not deductible as a
result of the application of Section 280G of the Code or any corresponding or
similar provision of State or local Tax Law.
(f) Neither
Holdco nor any of its Subsidiaries has made any elections under Section
338(h)(10) of the Code.
|
Section
7.24
|
Absence
of Changes
|
Since the
date of the Latest Balance Sheet, except for such matters occurring in the
ordinary course of business of Holdco and its Subsidiaries or as Schedule 7.24 sets
forth, none of the following has occurred with respect to each of Holdco and its
Subsidiaries:
(a) any
circumstance, condition, event or state of facts (either singly or in the
aggregate) which has caused, or is causing or is reasonably likely to cause a
Material Adverse Effect;
36
(b) any
change in its authorized Capital Stock or in any of its outstanding Capital
Stock or Derivative Securities or any declaration or payment of any dividend or
other distribution, direct or indirect, on account of any of its Capital
Stock;
(c) any
direct or indirect redemption, retirement, purchase or other acquisition for
value of, or any direct or indirect purchase, payment or sinking fund or similar
deposit for the redemption, retirement, purchase or other acquisition for value
of, or to obtain the surrender of, any of its Capital Stock or any outstanding
warrants, options or other rights to acquire or subscribe for or purchase
unissued or treasury Capital Stock;
(d) any
payment or distribution of, or any commitment to pay or distribute, any cash,
property or other asset if, for purposes of the Code, that payment or
distribution would (or reasonably could be expected to) constitute a
constructive dividend;
(e) any
increase in, or any commitment or promise to increase the rates of Cash
Compensation, or the amount or other benefits paid or payable under any ERISA
Pension Plan or Other Compensation Plan, except for ordinary and customary
bonuses and salary increases for employees at the times and in the amounts
consistent with its past practice;
(f) any work
interruptions, labor grievances or claims filed, or any similar event or
condition of any character;
(g) any
distribution, sale or transfer of, or commitment to distribute, sell or
transfer, any of its properties or other assets of any kind other than (i) sales
of Inventory, and (ii) other distributions, sales or transfers, in the case of
both (i) and (ii), in the ordinary course of its business and consistent with
its past practices;
(h) any
cancellation, or agreement to cancel, any Indebtedness, obligation or other
liability owing to it, including any Indebtedness, obligation or other liability
of Holdco, any of its Subsidiaries or any related Person or Affiliate thereof,
provided that Holdco and its Subsidiaries may negotiate and adjust invoices in
the course of good faith disputes with customers;
(i) any plan,
agreement or arrangement granting any preferential right to purchase or acquire
any interest in any of its properties, rights or other assets or requiring the
consent of any Person to the transfer and assignment of any such properties,
rights or other assets;
(j) any
purchase or acquisition of, or agreement, plan or arrangement to purchase or
acquire, any property, rights or other assets outside of the ordinary course of
its business;
(k) any
waiver of any of its rights or claims that singly is or in the aggregate are
material to it;
(l) any
incurrence by it of any Indebtedness or any Guaranty not constituting its
Indebtedness, or any Contractual Commitment to incur any Indebtedness or any
such Guaranty, singly or in the aggregate in excess of $50,000, other than the
incurrence of Indebtedness under the Credit Facility;
(m) any
investment in the Capital Stock, Derivative Securities or Indebtedness of any
Person;
(n) any
capital expenditure or series of related capital expenditures by Holdco and its
Subsidiaries in excess of $50,000 for any individual commitment and $50,000 for
all commitments in the aggregate;
37
(o) any
material change in the terms of payment by its customers outside the ordinary
course of business;
(p) any
material change in its practices with respect to timely payment of accounts
payable or other obligations payable to vendors, suppliers or other third
parties outside the ordinary course of business;
(q) any
change in its methods of accounting (including any tax method of accounting)
that in the aggregate are material to it;
(r) until the
date hereof, (i) none of the Material Customers or the Material Suppliers has
canceled, terminated or changed in any material respect its relationship with
the Business or the terms thereof, or threatened in writing or provided written
notice of its intent to do so; (ii) none of the Material Customers or the
Material Suppliers has limited materially or threatened in writing to limit
materially its purchases from, or sales to, the Business; and (iii) to the
knowledge of Holdco, as of the date hereof, none of the Material Customers has
provided written notice to Holdco of its intent to delist any material SKU of
any of the Products;
(s) neither
Holdco nor any of its Subsidiary has engaged in any practice of soliciting
purchases by the Material Customers, taken as a whole, of Products regularly
purchased by them intended to result in seasonally-adjusted inventory levels of
Products of the Material Customers materially in excess of levels required to
meet the good faith estimates of Holdco;
(t) any
cancellation or termination of a Material Contract; or
(u) any
agreement or commitment to take any action described in this Section
7.24.
|
Section
7.25
|
Books
and Records
|
The books
of account and other records of Holdco and its Subsidiaries, all of which have
been made available to the Buyer by Holdco and its Subsidiaries, are complete
and correct in all material respects and have been maintained in all material
respects in accordance with Holdco’s and its Subsidiaries’ usual and customary
business practices. Holdco and its Subsidiaries have established and
maintain a system of internal control over financial reporting sufficient to
provide reasonable assurance (i) that transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP, consistently
applied, (ii) that transactions are executed only in accordance with the
authorization of management and (iii) regarding prevention or timely detection
of the unauthorized acquisition, use or disposition of their respective
assets.
|
Section
7.26
|
Compliance
with ERISA, etc.
|
(a) Compliance. Each
of the ERISA Employee Benefit Plans and Other Compensation Plans currently
sponsored or maintained by Holdco and its Subsidiaries (each, a “Plan”) (i) is in
material compliance with all applicable provisions of ERISA, as well as with all
other applicable Legal Requirements, and (ii) has been administered, operated
and managed in accordance with its governing documents in all material
respects.
(b) Qualification. Holdco
and its Subsidiaries have no Plans that are intended to qualify under Section
401(a) of the Code (the “Qualified Plans”)
other than its 401(k) plan. Each Qualified Plan has
received a favorable determination letter or opinion letter from the Internal
Revenue Service indicating that such Qualified Plan is so qualified or the
prototype plan for such Qualified Plan is so
38
(c) No Prohibited
Transactions. None of Holdco, its Subsidiaries or any Plan has
engaged in any Prohibited Transaction that would result in material liability to
Holdco, its Subsidiaries or any Plan.
(d) Multiemployer
Plans. Except as Schedule 7.26(d) sets
forth, none of Holdco, any of its Subsidiaries, or any of its or their ERISA
Affiliates are, or at any time during the two (2) year period ended on the date
hereof were, obligated to contribute to a Multiemployer Plan.
(e) Claims and
Litigation. Except as set forth Schedule 7.26(e), no
Litigation or claims (other than routine claims for benefits) are pending or, to
the knowledge of Holdco and its Subsidiaries, threatened against, or with
respect to, any of the Plans or with respect to any fiduciary, administrative or
sponsor thereof (in their capacities as such), or any party in interest
thereof.
(f) Excise Taxes, Damages and
Penalties. No act, omission or transaction of Holdco or any of
its Subsidiaries has occurred which would reasonably result in the imposition on
Holdco or any of its Subsidiaries with respect to any Plan of (i) any breach of
fiduciary duty liability damages under Section 409 of ERISA, (ii) a civil
penalty assessed under subsection (c), (i) or (l) of Section 502 of ERISA or
(iii) any excise tax under applicable provisions of the Code.
(g) Welfare
Trusts. Any trust funding a Plan, which is intended to be
exempt from Federal income taxation under Section 501(c)(9) of the Code,
satisfies in all material respects the requirements of that Section and has
received a favorable determination letter from the IRS regarding that exempt
status and, to the knowledge of Holdco and its Subsidiaries, has not, since
receipt of the most recent favorable determination letter, been amended or
operated in a way that would materially adversely affect that exempt
status.
|
Section
7.27
|
Directors
and Officers
|
Schedule 7.27
contains a list of the directors and officers of Holdco and its Subsidiaries as
of the date hereof.
|
Section
7.28
|
Bank
Accounts
|
Schedule 7.28
contains a list of each bank or other financial institution in which Holdco or
any of its Subsidiaries has an account, safe
deposit box or lock box arrangement, the name of Holdco or its Subsidiary in whose name such
account, box or arrangement is held, the identifying numbers or symbols of the
account, box or arrangement, and the name of each person authorized to draw
thereon or to have access thereto.
|
Section
7.29
|
Receivables
|
(a) Except as
set forth on Schedule
7.29(a), all of the accounts and other advances receivable of Holdco and
its Subsidiaries are valid and enforceable claims in all material respects
arising in the ordinary course of business.
(b) Schedule 7.29(b) sets
forth all accounts receivable of Holdco and its Subsidiaries reflected on the
Latest Balance Sheet and includes an accurate aging of all such receivables in
all material respects.
39
|
Section
7.30
|
Trade
and Marketing Programs
|
Schedule 7.30 lists
all material programs, practices or arrangements committed to by the Target as
of the Effective Date with respect to the customer obligations and consumer
support that relate to trade discounts, trade promotions, marketing, media
(including, without limitation, TV, radio, print and FSIs) and other marketing
vehicles, promotional sales or coupons related to the Products sold by the
Target.
|
Section
7.31
|
Product
Liability
|
There are
no material defects in the designs, specifications, or processes developed
and/or owned by the Target with respect to any Product sold or otherwise
distributed by the Target that will give rise to any material liabilities,
damages, fines, assessments, losses, penalties, or expenses, and to Holdco’s
knowledge, there are no material defects in the designs, specifications, or
processes developed and/or owned by others and used by the Target with respect
to any such Product sold or otherwise distributed.
|
Section
7.32
|
Product
Registration
|
(a) Schedule 7.32 sets
forth, as of the date hereof, a list of all material Governmental Authorizations
granted to Holdco and any of its Subsidiaries by, or pending with, any
Governmental Authority to manufacture, market or sell any of the Products, and,
except as set forth on such schedule, Holdco or such Subsidiary is the sole and
exclusive owner of each such material Government Authorizations. The
material Governmental Authorizations set forth or required to be set forth on
Schedule 7.32
as well as all drug monographs, tentative final monographs (TFMs) or proposed
monographs pursuant to which Holdco and any of its Subsidiaries manufactures,
labels, markets, or sells any of the Products are referred to herein as the
“Product
Registrations.”
(b) Except as
set forth on Schedule
7.32, all Products sold under or pursuant to the Product Registrations
are manufactured, labeled, stored, tested, distributed, marketed, and sold in
all material respects in accordance with the specifications, standards, and
other requirements contained in such Product Registrations.
ARTICLE
VIII
COVENANTS
The
Parties mutually agree as follows:
|
Section
8.1
|
General
|
Each of
the Parties will use his, her or its good faith commercially reasonable efforts
to cooperate with each other and take all action and to do all things necessary
in order to consummate and make effective the Transactions as soon as possible
on or after November 1, 2010 (including satisfaction, but not waiver, of the
closing conditions set forth in Article X), including defending against any
lawsuits, actions or proceedings, judicial or administrative, challenging this
Agreement or the consummation of the Transactions, and seeking to have any
preliminary injunction, temporary restraining order, stay or other legal
restraint or prohibition entered or imposed by any court or other Governmental
Authority that is not yet final and nonappealable vacated or
reversed. Holdco agrees to provide, upon the reasonable request of
the Buyer and at reasonable times, reasonable cooperation in connection with the
Buyer’s arrangements for the financing to be consummated contemporaneously with
the Closing.
40
|
Section
8.2
|
Operation
of Business
|
(a) Up and
until the Closing or the earlier termination of this Agreement, except as the
Buyer may approve otherwise, or as otherwise expressly contemplated or permitted
by the Transaction Documents, Holdco shall (i) conduct its Business and that of
its Subsidiaries in the ordinary course of business, (ii) not deplete, other
than in the ordinary course of business, the assets of Holdco and its
Subsidiaries and (iii) use commercially reasonable efforts to maintain the
goodwill of vendors and customers of Holdco and its Subsidiaries.
(b) Prior to
the Closing or earlier termination of this Agreement, except (i) as required by
applicable Law, (ii) as expressly contemplated or permitted by this Agreement,
(iii) as set forth on Schedule 8.2(b), or
(iv) with the prior written consent of the Buyer (which consent shall not be
unreasonably withheld, delayed or conditioned), from the Effective Date to the
Closing, Holdco shall not (and shall not permit any of Holdco’s Subsidiaries to)
and, with respect to subsection (ii) below, each Seller shall not:
(i) declare,
set aside, make or pay any dividend or other distribution of any type, including
with respect to the Purchased Shares or repurchase, redeem or otherwise acquire
any outstanding Capital Stock or Derivative Securities in Holdco or any of
Holdco’s Subsidiaries;
(ii) transfer,
issue, sell or dispose of any Capital Stock or Derivative Securities of Holdco
or any of Holdco’s Subsidiaries;
(iii) grant any
Derivative Securities of Holdco or any of Holdco’s Subsidiaries or effect any
recapitalization, reclassification or like change in the capitalization of
Holdco or any of Holdco’s Subsidiaries;
(iv) amend the
Charter Documents of Holdco or any of Holdco’s Subsidiaries;
(v) (A)
increase the annual level of compensation of any director or executive officer
of Holdco or any of its Subsidiaries, (B) grant any increased bonus, benefit or
other direct or indirect compensation to any director or executive officer, (C)
increase the coverage or benefits available under any (or create any new) Plan
or (D) enter into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which
Holdco or any of Holdco’s Subsidiaries is a party or involving a director or
executive officer of Holdco or any of its Subsidiaries, except, in each case, as
required by applicable Law from time to time in effect or in the ordinary course
of business;
(vi) subject
to any Lien any of the material properties or assets (whether tangible or
intangible) of Holdco or any of its Subsidiaries, except for Permitted
Liens;
(vii) acquire
any material properties or assets or sell, assign, license, transfer, convey,
lease or otherwise dispose of any of the properties or assets of Holdco and its
Subsidiaries (except in the ordinary course of business or for the purpose of
disposing of obsolete assets or assets no longer useful to the
Business);
(viii) cancel or
compromise any debt or claim or waive or release any right of Holdco or any of
its Subsidiaries, except in the ordinary course of business;
41
(ix) enter
into any commitment for a capital expenditure or series of related capital
expenditures by Holdco and its Subsidiaries in excess of $50,000 for any
individual commitment and $50,000 for all commitments in the
aggregate;
(x) enter
into, modify or terminate any labor or collective bargaining agreement of Holdco
or any of its Subsidiaries;
(xi) permit
Holdco or any of its Subsidiaries to enter into or agree to enter into any
merger or consolidation with any Person;
(xii) except as
required by applicable Law, make or rescind any election relating to Taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or make any
change to any of its methods of accounting or methods of reporting income or
deductions for Tax or accounting practice or policy from those employed in the
preparation of its most recent Tax Return or Financial Information, as
applicable;
(xiii) amend,
modify or terminate, any Material Contract or group of related Material
Contracts, other than in the ordinary course of business;
(xiv) incur any
Indebtedness not in the ordinary course of business, singly or in the aggregate,
in an amount in excess of $50,000, other than under the Credit
Facility;
(xv) engage in
any transaction, arrangement or contract with any officer, director, shareholder
or other insider except in the ordinary course of business;
(xvi) delay the
payment of any accounts payable except in the ordinary course of
business;
(xvii) accelerate
the collection of or discounting any accounts receivable except in the ordinary
course of business ;
(xviii) make any
change in its customs or practices regarding cash management except in the
ordinary course of business;
(xix) make any
material reduction or material increase in the marketing plans or trade
promotions set forth on Schedule 7.30 (it
being understood that, from the Effective Date until the Closing, Holdco shall,
and shall cause its Subsidiaries to, use commercially reasonable efforts to
implement the marketing plans and trade promotions set forth on Schedule 7.30);
or
(xx) authorize
any of, or commit or agree to do anything prohibited by this Section
8.2.
|
Section
8.3
|
Full
Access
|
(a) Until the
Closing or earlier termination of this Agreement, Holdco and its Subsidiaries
shall provide the Buyer and its accountants, counsel and other representatives
and financing sources reasonable access during normal business hours to all the
properties, books, contracts, commitments, tax returns and records and employees
of Holdco and its Subsidiaries that the Buyer may reasonably request;
provided, however, that such
access does not unreasonably disrupt the normal operations of Holdco or any of
its Subsidiaries. Except as otherwise set forth in this Agreement, no
information obtained pursuant
42
to this
Section 8.3 shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
(b) Neither
the Buyer nor any of its Affiliates or Representatives shall, prior to the
Closing Date, have any contact whatsoever with respect to Holdco or any of its
Subsidiaries or with respect to the transactions contemplated by this Agreement
with any partner, lender, lessor, vendor, supplier, employee or consultant of
Holdco or any of its Subsidiaries, except in consultation with the Sellers’
Representative and then only with the express prior written approval of the
Sellers’ Representative, which approval shall not be unreasonably withheld,
conditioned or delayed. All requests by the Buyer and its Affiliates
and Representatives for access or information shall be submitted or directed
exclusively to an individual or individuals to be designated by the Sellers’
Representative in writing.
|
Section
8.4
|
Public
Announcements
|
Prior to the Closing, none of the
Parties to this Agreement shall make, or permit any agent or Affiliate to make,
any public statements, including, without limitation, any press releases, with
respect to this Agreement and the transactions contemplated hereby without the
prior written consent of the other Parties (which consent shall not be
unreasonably withheld, conditioned or delayed), except as such release or
announcement may be required by Law or the rules or regulations of any United
States or foreign securities exchange, in which case the Party required to make
the release or announcement shall allow the other Parties reasonable time to
comment on or seek a protective order with respect to such release or
announcement in advance of such issuance.
|
Section
8.5
|
[Intentionally
Omitted]
|
|
Section
8.6
|
Transfer
Taxes
|
Each of
the Sellers, on the one hand, in accordance with their Pro Rata Share and the
Buyer, on the other hand, shall be responsible for and shall pay one-half of all
transfer, documentary, sales, use, registration, value-added and other similar
Taxes (including any filing and recording fees) and related amounts (including
any penalties, interest and additions to Tax) incurred in connection with this
Agreement, the other Transaction Documents and the Transactions (“Transfer
Taxes”). The Party responsible under Law to make any Return
with respect to Transfer Taxes shall file such Return and be reimbursed promptly
for the other Party’s share of such Transfer Taxes.
|
Section
8.7
|
Further
Assurances
|
From and
after the Closing, the Buyer and the Sellers shall execute and deliver such
further instruments of conveyance and transfer and take such other action as
reasonably may be necessary to further effectuate the transactions contemplated
by the Transaction Documents.
|
Section
8.8
|
Regulatory
Approvals
|
Each of
the Parties will give any notices to, make any filings with, and use its
commercially reasonable best efforts to file such applications and obtain any
authorizations, consents and approvals of Governmental Authorities in connection
with the matters referred to in Section 5.2(b), Section 6.4(a) and Section
7.4(a). Without limiting the generality of the foregoing, within
three (3) business days after the Effective Date, each of the Parties will file
any Notification and Report Forms and related material required to be filed with
the Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act and will use commercially reasonable
efforts to obtain an early
43
|
Section
8.9
|
Supplemental
Schedules
|
(a) Every
thirty (30) days between the Effective Date and the Closing and at least once
during the five (5) days immediately preceding the Closing, each of Holdco and
the Buyer will give written notice to the other Party of any notice or
development of which Holdco or the Buyer, as applicable, has actual knowledge
(without any requirement of inquiry or investigation on the part thereof) that,
if existing or known on the Effective Date, would have been required to be set
forth or described in the Disclosure Schedule (it being understood that no such
written notice shall be provided in the absence of the occurrence of any such
notice or development). Subject to Section 8.9(b), no such written
notice shall be deemed to have amended and qualified the representations and
warranties in Articles V, VI and VII, or to have cured any breach of or
inaccuracy in a representation or warranty that otherwise might have
existed.
(b) Holdco
shall have the right from time to time prior to the Closing to supplement the
Disclosure Schedule with respect to any matter that (a) both arises and
becomes known after the Effective Date and that would have been required or
permitted to be set forth or described in the Disclosure Schedule had such
matter existed as of the Effective Date and (b) does not arise from a
breach of this Agreement; provided, that
(i) no such supplemental disclosure, if material, will be deemed to have
amended or qualified the representations and warranties in this Agreement or to
have cured any breach of or inaccuracy in a representation or warranty that
otherwise might have existed and (ii) any such supplemental disclosure, if
not material, will be deemed to have amended or qualified the representations
and warranties in this Agreement and to have cured any breach of or inaccuracy
in a representation or warranty that otherwise might have existed.
|
Section
8.10
|
No
Shop
|
The
Sellers and Holdco agree that during the period beginning on the Effective Date
and ending on the earlier of the Closing or the termination of this Agreement,
the Sellers and Holdco will not, and shall not permit their respective
Subsidiaries, or any of its or their Affiliates through any of their respective
employees, officers, directors, managers, advisors, agents or other
Representatives or otherwise, directly or indirectly, to initiate with, solicit
from, encourage or respond to (including by way of furnishing non-public
information or assistance), or enter into discussions or negotiations of any
type, directly or indirectly, or enter into a confidentiality agreement, letter
of intent or purchase agreement, merger agreement or other similar agreement
with, any Person other than the Buyer and its Affiliates and advisors with
respect to a sale of the assets of Holdco and its Subsidiaries other than in the
ordinary course of business, or a sale of stock, merger, consolidation, business
combination, or the liquidation or similar extraordinary transaction with
respect to Holdco and its Subsidiaries (any of the foregoing, an “Acquisition
Proposal”). The Sellers and Holdco will immediately cease any
and all contacts, discussions and negotiations with third parties (other than
the Buyer and its Affiliates and advisors) regarding any Acquisition
Proposal.
|
Section
8.11
|
Exculpation;
Indemnification; Insurance
|
(a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative (a “Claim”), including
any such Claim in which any individual who is now, or has been at any time
before the date of this Agreement, or who becomes before Closing, a director,
member or officer of Holdco or any of its Subsidiaries or who is or was serving
at the request of Holdco or any of its Subsidiaries as a director, member or
officer of another person (in each case,
44
“Holdco
Personnel”) is, or is threatened to be, made a party based in whole or in part
on, or arising in whole or in part out of, or pertaining to (i) the fact that he
is or was a director, member or officer of Holdco or any of its Subsidiaries
before the Closing, or (ii) this Agreement or any of the Transactions, whether
asserted or arising before or after the Closing, the parties shall cooperate and
use their commercially reasonable efforts to defend against such Claim and
respond thereto. All rights to indemnification and exculpation
(including advancement of expenses) from liabilities for acts or omissions
occurring at or prior to Closing now existing in favor of any Holdco Personnel
or any Seller or Affiliate thereof as provided in the Charter Documents of
Holdco and its Subsidiaries, and any agreements existing on the date
hereof, shall survive the Closing pursuant to their terms.
(b) Prior to
the Closing, at the discretion of the Sellers, Holdco may purchase an extended
reporting period endorsement under Holdco’s existing directors’ and officers’
liability insurance coverage policies (the “D&O Tail”) for
the Holdco Personnel in a form acceptable to Holdco. If the D&O
Tail is purchased by Holdco prior to the Closing, then, from and after the
Closing, the Buyer shall, and shall cause Holdco to, maintain the D&O Tail
in full force and effect, and continue to honor the obligations thereunder (it
being understood that no premium or other payments shall be required to be paid
by the Buyer thereunder).
(c) The
obligations under this Section 8.11 shall not be terminated or modified in such
a manner as to adversely affect any Holdco Personnel or any other Person to whom
this Section 8.11 applies without the consent of such affected Holdco Personnel
or other Person (it being expressly agreed that the Holdco Personnel or other
Person to whom this Section 8.11 applies shall be third party beneficiaries of
this Section 8.11 and shall be entitled to enforce the covenants contained
herein).
(d) In the
event that Holdco or any of its successors or assigns (i) consolidates with
or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any Person,
then, and in each such case, to the extent necessary proper provision shall be
made so that the successors and assigns of Holdco, as the case may be, assume
the obligations set forth in this Section 8.11.
|
Section
8.12
|
Access
to Employees; Cooperation Throughout the Pre-Closing
Process
|
(a) Subject
to Section 8.3(b), from the Effective Date to the Closing Date, Holdco shall
provide the Buyer the opportunity reasonably requested by it to contact and have
access to the employees of Holdco and its Subsidiaries for pre-Closing
introductions, discussions and training sessions.
(b) Prior to
the Closing, Holdco shall provide to the Buyer information and access reasonably
requested by it necessary to proceed with customary pre-Closing integration
processes.
|
Section
8.13
|
Tax
Matters
|
(a) For any
taxable period of Holdco or any of its Subsidiaries that includes (but does
not end on) the Closing Date (any such taxable period, a “Straddle Period”) or
that ends on or before the Closing Date for which any Tax Returns by Holdco and
its Subsidiaries are due after the Closing Date (any such taxable period, a
“Prior
Period”), the Buyer will timely prepare and file with the appropriate
Taxing Authority all tax returns required to be filed by Holdco and its
Subsidiaries (collectively, the “Tax Returns”) and
will pay all Taxes due with respect to such Tax Returns. The Buyer
will furnish such Tax Returns and related work papers and supporting information
to the Sellers’ Representative and its tax advisers for their review and comment
at least sixty (60) days prior to the due date (or extended due date that has
been approved by the Sellers’ Representative) for filing such Tax
Returns. Simultaneous with
45
(b) If at the
end of the applicable dispute resolution period no resolution is reached, either
the Buyer or the Sellers’ Representative may request that the disagreement be
resolved by the Accounting Firm. The calculation of the Taxes due and
the Party(ies) responsible for the payment thereof shall be made by such firm
within the range of the respective calculations of the Buyer and the Sellers’
Representative and when so made shall be conclusive, and shall be binding on,
and nonappealable by, the Parties. The fees and disbursements of such
firm shall be borne equally by the Parties.
(c) Subject
to the terms and conditions of this Section 8.13, Section 9.4, Section 9.5(d)
and Section 9.6(a), the Buyer Indemnitees shall be indemnified and held harmless
by the Sellers solely from the Escrow Fund from and against any loss, damage,
liability, or expense, including reasonable fees for attorneys and consultants,
incurred in contesting or otherwise in connection with (i) any breach of the
representations and warranties set forth in Section 7.23 of this Agreement and
(ii) the following Taxes, but only to the extent such Taxes have not been paid
prior to the Closing or adequately provided for by a liability accrued for Taxes
on the Latest Balance Sheet (subsections (i) and (ii) of this Section 8.13(c),
the “Tax
Losses”): (A) the non-payment prior to the Closing of Taxes owed by
Holdco or any of its Subsidiaries for any Prior Period and for the portion
through the Closing for any Straddle Period, and (B) the non-payment of Taxes of
any other Person imposed on, but not paid prior to the Closing by such other
Person, Holdco or any of its Subsidiaries as a transferee or successor, by
contract or pursuant to any Law, which Taxes relate to an event or transaction
occurring before the Closing.
(d) In the
case of any Straddle Period, the Taxes of Holdco or any of its Subsidiaries
allocable to pre-Closing taxable periods will be computed as if such taxable
period ended as of the Closing except in the case of Taxes that are imposed on a
periodic basis and measured by the level of any item, deemed to be the amount of
such Taxes for the entire period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period)
the portion allocable to the pre-Closing period shall be the product of such
Taxes multiplied by a fraction the numerator of which is the number of calendar
days in the period ending on the Closing Date and the denominator of which is
the number of calendar days in the entire period. The Buyer
acknowledges that
46
(e) If a
party is responsible for the payment of Taxes pursuant to this Section 8.13 (the
“Tax Indemnifying
Party”) and the other party to this Agreement (the “Tax Indemnified
Party”) receives notice of any deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim with respect to
such Taxes which, if determined adversely to the taxpayer, would be grounds for
indemnification under this Section 8.13 (a “Tax Claim”), the Tax
Indemnified Party will promptly notify the Tax Indemnifying Party in writing of
such Tax Claim, but the failure to so notify the Indemnifying Party will not
relieve the Indemnifying Party of any liability it may have to the Indemnified
Party, except (i) if notice is not promptly given, the Tax Indemnifying Party
shall not be liable for any legal or accounting costs incurred before such
notice is actually given, or any interest or similar charge accruing between the
time notice should have been given and the time notice is actually given, and
(ii) the Tax
Indemnifying Party shall not be liable to the extent that, but for such failure,
the Tax Indemnifying Party could have avoided all or a portion of the Taxes or
other costs indemnifiable hereunder in question. The notice shall be
accompanied by copies of the notice and other documentation received by the Tax
Indemnified Party.
(f) With
respect to any Tax Claim, the Tax Indemnifying Party will assume and control all
proceedings taken in connection with such Tax Claim and, without limiting the
foregoing, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any applicable governmental Persons with respect
thereto, and may either pay the Tax claimed and xxx for a refund where
applicable Law permits such refund suits or contest the Tax Claim in any
permissible manner; provided, however, that the Tax Indemnifying Party will
consult with the Tax Indemnified Party in the negotiation and settlement of any
Tax Claim and the Tax Indemnifying Party will not, without the written consent
of the Tax Indemnified Party, which consent shall not be unreasonably withheld,
delayed or conditioned, settle or compromise any Tax Claim in any manner if such
settlement or compromise would have the effect of increasing the Taxes of the
Indemnified Party (“Indemnified Party Tax
Increase”), provided, however, that the consent of the Tax Indemnified
Party will not be required if the Tax Indemnifying Party indemnifies the Tax
Indemnified Party for all Tax Losses attributable to such Indemnified Party Tax
Increase; provided, further, that, to the extent that a Tax Claim relates to a
Straddle Period, the Sellers’ Representative and the Buyer will jointly control
all proceedings taken in connection with any such Tax Claim.
(g) The Tax
Indemnified Party will cooperate with the Tax Indemnifying Party in contesting
any Tax Claim, which cooperation will include the retention and (upon the Tax
Indemnifying Party’s request) the provision to the Tax Indemnifying Party of
records and information which are reasonably relevant to such Tax Claim, and
making employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
(h) Neither
party will settle or compromise a Tax Claim relating solely to Taxes of Holdco
or any of its Subsidiaries for a Straddle Period without the other party’s
written consent which consent shall not be unreasonably withheld, delayed or
conditioned. The consent of the Sellers may be exercised by the
Sellers’ Representative.
(i) The
Sellers and the Buyer agree that any indemnification payments made pursuant to
this Section 8.13 will be treated by the parties on their Tax Returns as an
adjustment to the Final Purchase Price, unless a final determination by a
relevant taxing authority causes any such payment not to be treated as an
adjustment to the Final Purchase Price for Tax purposes.
47
(j) The Buyer
shall, within fifteen (15) days of receipt, pay or cause to be paid to the
Sellers’ Representative, for the account of the Sellers, pro rata in accordance
with each Seller’s Pro Rata Share, as an increase in the Purchase Price, all
refunds of Taxes and interest thereon received by the Buyer, any Affiliate of
the Buyer, Holdco or any Subsidiary of Holdco with respect to any net operating
loss deduction for the Prior Period or the portion of a Straddle Period ending
on the Closing Date that is carried back to a prior taxable year.
(k) To the
extent (A) the Return of Holdco for the taxable year that includes the Closing
Date reflects a net operating loss carryforward (the “Transaction Tax NOL”)
or (B) Tax deductions attributable to Transaction Expenses, the Accrued Bonus
Amount, any write-off of deferred financing expenses or any other expense
incurred by Holdco and/or its Subsidiaries in connection with the Business prior
to the Closing or the Transactions are not properly reflected on a Return for a
Prior Period but are reasonably expected to be reflected on a Return other than
a Return for a Prior Period (the “Post-Closing Transaction Tax
Deductions”), then Buyer shall pay to the Sellers’ Representative, for
distribution to the Sellers as an increase in the Purchase Price, within fifteen
(15) days of the filing of Holdco’s federal income tax Return for the taxable
year that includes the Closing Date, an amount equal to (x) the Assumed Tax Rate
multiplied by (y) the sum of the Transaction Tax NOL and the Post-Closing
Transaction Tax Deductions. For purposes of this Section 8.13(k) and
Section 9.6(a), the Assumed Tax Rate shall equal thirty-eight percent
(38%).
(l) The
representations, warranties and obligations contained in or made pursuant to
Section 7.23 and this Section 8.13 shall survive for the duration of the
Indemnification Period.
|
Section
8.14
|
Release
|
Effective
upon the Closing, each Seller hereby irrevocably waives, releases and discharges
forever Holdco and each of its Subsidiaries from any and all liabilities and
obligations to, and agreements with, such Seller of any kind or nature
whatsoever, whether in his, her or its capacity as a Seller hereunder, as a
stockholder, director, officer or employee of Holdco or any of its Subsidiaries
or otherwise, in each case whether absolute or contingent, liquidated or
unliquidated, and whether arising under any agreement or understanding or
otherwise at Law or equity, and each Seller hereby covenants and agrees that it,
he or she will not seek to recover any amounts in connection therewith or
thereunder from Holdco or any of its Subsidiaries. However, the
foregoing shall not apply to claims to payments and other rights and remedies of
any Seller (a) under, or as contemplated by, this Agreement, including, without
limitation, Article II, Section 8.11 and Article IX, (b) if such Seller is or
was an employee, officer or director of Holdco or any of its Subsidiaries, (i)
under any Employment Agreement (ii) under a policy of insurance providing
coverage or defense to any Seller, or (iii) under the Charter Documents of
Holdco or any of its Subsidiaries, (c) arising from any actions, omissions or
occurrences after the Closing, or (d) under any of the agreements set forth on
Schedule
8.14.
|
Section
8.15
|
Severance
Payment Obligations; Shareholder Approval of Payments; Non-Hire of Certain
Employees
|
(a) Not later
than ten (10) business days before the Closing Date, the Buyer shall deliver to
Holdco a schedule of those employees of Holdco and its Subsidiaries proposed by
the Buyer to be terminated as of the Closing (the “Terminated
Employees”). For the avoidance of doubt, the Severance Payment
Amount shall not include any severance amounts payable to any employee of Holdco
or its Subsidiaries who is not identified by the Buyer as a Terminated Employee
on the above-mentioned schedule. The Buyer shall, and following the
Closing shall cause Holdco and its Subsidiaries to, provide any Severance
Payments to which the Terminated Employees are entitled in accordance with the
terms of such Terminated Employee’s Employment Agreement or pursuant to any
other employee benefit or
48
(b) Prior to
Closing, each of Holdco and its Subsidiaries shall seek stockholder approval
with respect to any excess parachute payments (as defined under Code section
280G) payable to employees of Holdco and its Subsidiaries as a result of the
transaction contemplated by this Agreement in order to exempt such payments from
the excise taxes under Code section 280G, and reasonable evidence thereof shall
have been delivered to the Buyer prior to Closing; if stockholder approval is
not obtained, no such payments shall be made.
(c) Except as
set forth on Schedule
8.15, for a period of one year following the Closing (or, if shorter, the
number of months of severance to which a person is entitled pursuant to the
terms of his or her Employment Agreement or other severance arrangement with
Holdco and/or its Subsidiaries), the Buyer shall not, and shall cause its
Subsidiaries, including Holdco and its Subsidiaries, not to, hire or employ as
an employee or consultant any Terminated Employee.
|
Section
8.16
|
Maintenance
of Insurance
|
Holdco
shall use commercially reasonable efforts to maintain insurance coverage for
Holdco and its Subsidiaries through the Closing Date on terms no less favorable
than the insurance coverages for them in effect as of the Effective
Date.
|
Section
8.17
|
Financial
Statements
|
From the
Effective Date until the Closing Date, Holdco and its Subsidiaries shall provide
the Buyer with reasonable cooperation in the Buyer’s preparation of all
financial statements for Holdco and its Subsidiaries required to be included
under the rules and regulations of the SEC by the Buyer in its Form 8-K to be
filed following the consummation of the Transactions; provided, that Holdco
and its Subsidiaries shall not be required to incur any out-of-pocket expenses
in connection therewith that are not paid for by the Buyer.
|
Section
8.18
|
PediaCare
Recall Claims
|
The Buyer
acknowledges that Holdco and its Subsidiaries are pursuing certain claims
against XxXXXX-PPC, Inc. and/or its Affiliates under the XxXxxx Agreement
(including the agreements related to the transactions contemplated thereby) to
recover certain costs, expenses and other losses in connection with the recall
of the PediaCare Products as more fully described on Schedule 7.13(c) (the
“PediaCare Recall
Claims”). The Buyer further acknowledges that Holdco and its
Subsidiaries will continue to pursue the PediaCare Recall Claims between the
date hereof and the Closing, and may choose to settle such claims, or otherwise
resolve them, on such terms as determined in their sole
discretion. To the extent that any PediaCare Recall Claims are not
fully resolved prior to the Closing, the Buyer shall use commercially reasonable
efforts (for such purpose, assuming that the Buyer and its Affiliates (and not
the
49
|
Section
8.19
|
Waiver
of Rights
|
Holdco
and each Seller hereby waive all applicable restrictions or limitations
contained in Section 4.1 through Section 4.7 of the Stockholders Agreement,
dated as of October 29, 2009, among Holdco and the Holdco stockholders party
thereto, to the extent relating to the sale of the Purchased Shares pursuant to
this Agreement.
|
Section
8.20
|
Maintenance
of Certain Foreign Trademarks
|
Upon the
written instruction of the Buyer, from the Effective Date through the Closing
Date, Holdco or any of its Subsidiaries shall use commercially reasonable
efforts to maintain and renew (including, without limitation, obtaining the
assignments for applicable foreign trademarks purchased from XxXXXX-PPC, Inc.)
any foreign trademarks identified by the Buyer which are owned by Holdco or any
of its Subsidiaries and are scheduled to expire or otherwise lapse during such
period; provided, that the
Buyer shall be solely responsible for any costs or expenses incurred by Holdco
or any of its Subsidiaries under this Section 8.20 and shall promptly reimburse
Holdco and/or its Subsidiaries for any such amounts upon receipt of
documentation thereof in a form reasonably satisfactory to Buyer or, at Holdco’s
option, pay any such amounts directly.
ARTICLE
IX
SURVIVAL
AND INDEMNIFICATION
|
Section
9.1
|
Survival
of Representations, Warranties and Covenants; Escrow
Period
|
(a) Except as
provided in Section 9.1(b), the representations, warranties, covenants and
agreements set forth in this Agreement and in any certificate or instrument
delivered in connection herewith shall survive the Closing through the
Indemnification Period but shall thereafter terminate and be of no further force
or effect, except as to claims pending against the Indemnification
Fund. Notwithstanding the preceding sentence, survival shall be for
applicable statute of limitations, but in any event not to exceed six (6) years,
with respect to the assertion of claims or liabilities constituting or alleging
a breach of a Fundamental Representation that is subject to an indemnity claim
pursuant to Section 9.2(b).
(b) The
covenants and agreements contained herein to be performed or complied with after
the Closing shall survive in accordance with their respective terms or, absent a
specific term, until expiration of the applicable statute of
limitations. This Article IX shall survive the Closing and shall
remain in effect indefinitely.
50
|
Section
9.2
|
Indemnification
Obligations of Holdco and the
Sellers
|
(a) From and
after the Closing and subject to the limitations contained in this Article IX,
the Buyer, its Affiliates, and the respective equity holders, officers,
managers, directors, employees and agents of each (collectively, the “Buyer Indemnitees”)
shall be indemnified and held harmless solely and exclusively from the
Indemnification Fund for any Damages that the Buyer incurs by reason of the
following:
(i) the
incorrectness, falsity or breach of any warranty or representation, made by
Holdco in this Agreement (other than Section 7.23, indemnity for which is
provided in Section 8.13(c) hereof);
(ii) the
failure by Holdco to perform, or the breach by it of, any covenant or agreement
under this Agreement or any related agreement to be performed by Holdco prior to
the Closing;
(iii) any claim
to ownership rights in Holdco or the Target brought by a Person claiming to be a
shareholder of either Holdco or the Target (other than any claims related to the
incorrectness, falsity or breach of the warranties and representations made by
the Sellers in Article VI, indemnity for which is provided in Section
9.2(b)(i)); and
(iv) any claim
made by any Terminated Employee related to his or her employment by Holdco or
any of its Subsidiaries or the termination thereof, who has not executed and
delivered the Employee Release as of the Closing, until such time as such
Terminated Employee executes and delivers the Employee Release to
Holdco.
(b) From and
after the Closing and subject to the limitations contained in this Article IX,
the Buyer Indemnitees shall be indemnified and held harmless by each Seller for
any Damages that the Buyer incurs by reason of the following:
(i) the
incorrectness, falsity or breach of the warranties and representations made by
such Seller in Article VI; provided, that each
Seller’s obligation to provide indemnity under this Section 9.2(b)(i) shall be
several and not joint;
(ii) the
failure by such Seller to perform, or the breach by such Seller of, any covenant
or agreement under this Agreement or any related agreement to be performed by
such Seller; provided, that each
Seller’s obligation to provide indemnity under this Section 9.2(b)(ii) shall be
several and not joint; and
(iii) the
incorrectness, falsity or breach of the warranties and representations made by
Holdco in Section 7.2 with respect to the capitalization of Holdco and the
Target; provided, that each
Seller’s obligation to provide indemnity under this Section 9.2(b)(iii) shall be
solely and exclusively limited to the extent of such Seller’s Pro Rata Share of
any such Damages.
|
Section
9.3
|
Indemnification
Obligations of the Buyer
|
From and
after the Closing and subject to the limitations contained in this Article IX,
the Sellers, their respective Affiliates, and the respective equity holders,
officers, managers, directors, partners, members, employees and agents of each
(collectively, the “Seller Indemnitees”)
shall be indemnified and held harmless by the Buyer for any Damages that the
Seller Indemnitees incur by reason of the following:
51
(a) the
incorrectness, falsity or breach of the warranties and representations made by
the Buyer in Article V; and
(b) the
failure by the Buyer to perform, or the breach by the Buyer of, any covenant or
agreement under this Agreement or any related agreement.
|
Section
9.4
|
Conditions
of Indemnification
|
No Party
shall be entitled to assert any claim for indemnification pursuant to Section
9.2 or Section 9.3 unless such claim is asserted by an Indemnification Claim
Notice given prior to the expiration of the Indemnification
Period. In the case of the Buyer Indemnitees, no claim for
indemnification may be asserted under Section 9.2 unless and only until the
aggregate amount of the Damages attributable to the Buyer Indemnitees for
indemnification under Section 9.2 exceeds the Deductible, in which case the
Buyer Indemnitees may claim for the amount of Damages in excess of the
Deductible; provided, however, that any
claim for indemnification relating to any Fundamental Representation shall not
be subject to the Deductible; and, provided, further, that no
claim for indemnification shall be required to be paid under Section 9.2(b)(iii)
unless and only until the Buyer Indemnitees have first pursued such claim
against the Indemnification Fund and there are no further assets
therein. In the case of the Seller Indemnitees, no claim for
indemnification may be asserted under Section 9.3 unless and only until the
aggregate amount of the Damages attributable to the Seller Indemnitees for
indemnification under Section 9.3 exceeds the Deductible, in which case the
Seller Indemnitees may claim for the amount of Damages in excess of the
Deductible; provided, however, that any
claim for indemnification relating to any Fundamental Representation shall not
be subject to the Deductible. Notwithstanding the foregoing, a Party
may not make any claim for indemnification under Sections 9.2 or 9.3, as
applicable, for any claim that, individually, does not exceed the Indemnity
Claim Threshold; provided, however, that the
foregoing shall not apply to any claims for Damages arising from any breach of
any Fundamental Representation. Notwithstanding anything to the
contrary contained herein, the maximum aggregate liability of each Seller under
Section 9.2(b) shall not exceed the Cap of such Seller.
|
Section
9.5
|
Indemnification
Procedures
|
(a) Notice of
Claim. Any Person making a claim for indemnification pursuant
to Section 9.2 or 9.3 above (an “Indemnified Party”)
must give the party from whom indemnification is sought (an “Indemnifying Party”),
written notice of such claim (an “Indemnification Claim
Notice”) (and, if the Buyer, with a copy to the Escrow Agent and the
Sellers’ Representative stating the aggregate amount of Damages claimed to have
been incurred by the Buyer) promptly after the Indemnified Party receives any
written notice of any action, lawsuit, proceeding, investigation or other claim
(a “Proceeding”) against
or involving the Indemnified Party by a Governmental Authority or other third
Person (a “Third Party
Claim”) or otherwise discovers the liability, obligation or facts giving
rise to such claim for indemnification (it being understood that any claim for
indemnity pursuant to Section 9.2 or 9.3 above must be made by written notice
given within the applicable survival period specified in Section 9.1
above). Such notice must contain a description of the claim and the
nature and amount of Damages (to the extent that the nature and amount of
Damages are known at such time). Such notice shall be accompanied by
copies of all relevant documentation with respect to such Third Party Claim,
including any summons, complaint or other pleading which may have been served,
any written demand or any other document or instrument. Failure to
give or delay in giving notice shall not excuse the Indemnifying Party from
liability for indemnification except to any extent to which the Indemnifying
Party is actually prejudiced by such failure or delay or if the Indemnification
Claim Notice is delivered after the time specified in Section 9.1.
52
(b) Response to Claim from Buyer Against
Indemnification Fund. Indemnification Claim Notices relating
to a matter for which reimbursement will be sought from the Indemnification Fund
shall be governed by the following additional terms and
conditions: The Sellers’ Representative shall have thirty (30) days
from its receipt of the Indemnification Claim Notice to dispute the claim or
claims or to consent to the payment of such claim or claims by delivering a
notice to the Escrow Agent and the Buyer. In the event the Sellers’
Representative gives its consent to the payment of any such claim, the Escrow
Agent shall, subject to the limitations set forth in this Article IX, pay to the
Buyer the amount of Damages set forth in the Indemnification Claim
Notice. In the event the Sellers’ Representative disputes the payment
of any claim, such claim shall become a disputed claim (“Disputed Claim”) to
be resolved in accordance with Section 9.5(c) as if the claim were a Third Party
Claim. If the Escrow Agent does not receive any notice from the
Sellers’ Representative within the thirty-day period after the receipt of an
Indemnification Claim Notice by the Sellers’ Representative, the Escrow Agent
shall confirm from the Sellers’ Representative that (i) the Sellers’
Representative received the Indemnification Claim Notice, and (ii) thirty (30)
days have elapsed since the receipt of the Indemnification Claim Notice by the
Sellers’ Representative. Upon such confirmation by the Escrow Agent,
the Escrow Agent shall, subject to the limitations set forth in this Article IX,
pay to the Buyer the amount of Damages set forth in the Indemnification Claim
Notice.
(c) Control of Defense;
Conditions. The obligations of an Indemnifying Party under
this Article IX with respect to Damages arising from any Third Party Claims that
are subject to the indemnification provided in Section 9.2 or 9.3 above shall be
governed by the following additional terms and conditions:
(i) At its
option, an Indemnifying Party shall be entitled to assume control of the defense
of any claim and may appoint as lead counsel of such defense any legal counsel
selected by the Indemnifying Party and reasonably acceptable to the Indemnified
Party (except that the Indemnifying Party may not so elect without the
Indemnified Party’s consent unless (i) the Indemnifying Party provides
reasonable evidence to the Indemnified Party of its financial ability to satisfy
its indemnification obligations, and (ii) the Indemnifying Party notifies the
Indemnified Party in writing that the Indemnified Party will be indemnified
against any Damages arising out of such Third Party Claim (subject to the
limitations set forth in Section 9.4).
(ii) Notwithstanding
Section 9.5(c)(i) above, the Indemnified Party shall be entitled to participate
in the defense of such claim and to employ counsel of its choice for such
purpose; provided, however, that such employment shall be at the Indemnified
Party’s own expense unless (A) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, (B) the Indemnifying Party has
failed to assume the defense and employ reasonably satisfactory counsel
(following written notice from the Indemnified Party), in which case the
reasonable fees and expenses of the Indemnified Party’s counsel shall be paid by
the Indemnifying Party, or (C) a conflict of interest exists between the
Indemnifying Party and the Indemnified Party that makes separate counsel
advisable.
(iii) The
Indemnified Party shall not consent to the entry of any judgment or enter into
any settlement with respect to any Third Party Claim without the prior written
consent of the Indemnifying Party (not to be unreasonably withheld, delayed, or
conditioned). The Indemnifying Party shall not consent to the entry
of any judgment or enter into any settlement with respect to any Third Party
Claim without the prior written consent of the Indemnified Party (such consent
not to be unreasonably withheld, delayed, or conditioned) unless such judgment
or settlement contains an unconditional release of the Indemnified Party and
does not impose any obligations on it other than monetary obligations that are
being fully discharged simultaneously by the Indemnifying Party.
53
(iv) The
Sellers’ Representative shall be authorized on behalf of the Sellers, to the
extent the Sellers are Indemnifying Parties, to provide the notice contemplated
by Section 9.5(a), to assume and control the defense, to authorize settlements
and to take other actions necessary or appropriate in connection with Third
Party Claims. Any indemnification from the Indemnification Fund shall
be deemed to have the Sellers as the Indemnifying Parties.
(d) Manner of
Payment.
(i) Any
indemnification obligations pursuant to Section 9.2(a) or Section 8.13 shall be
paid solely out of the portion of the Indemnification Fund then held in escrow
and not previously distributed pursuant to the terms of the Escrow
Agreement.
(ii) Any
indemnification obligations of the Buyer pursuant to Section 9.3 shall be paid
promptly by wire transfer of immediately available funds, to an account
designated in writing by the applicable Seller Indemnitees, within fifteen (15)
days after the final determination thereof.
|
Section
9.6
|
Miscellaneous
Indemnification Provisions
|
(a) The
amount of any claim for indemnification against the Indemnifying Parties under
this Agreement shall be net of (i) any amounts actually recovered by the
Indemnified Party pursuant to any indemnification by or agreement with any third
party (“Third Party
Indemnity”), and (ii) any insurance proceeds actually received as an
offset against the amount of Damages arising out of such claim or event for
which indemnification is sought hereunder. Prior to enforcing any
claim for indemnification against the Indemnifying Parties under this Agreement,
the Indemnified Parties shall administratively file in good faith claims with
any insurers under applicable policies of insurance, if any, for the proceeds of
such insurance coverage, if any, applicable to the claim or event from which
such indemnification right arose. In the event that any Third Party
Indemnity or insurance proceeds are paid to the Indemnified Parties respecting
an event to which an indemnification right applies hereunder, such
indemnification right shall apply only to the extent that the amount of Damages
indemnified against exceeds the amount of such Third Party Indemnity or
insurance proceeds, as applicable, actually paid to the Indemnified Parties, net
of the costs and expenses of the Indemnified Parties in obtaining such Third
Party Indemnity or insurance proceeds, as applicable. If any Third
Party Indemnity or insurance proceeds are actually realized by an Indemnified
Party subsequent to the receipt by such Indemnified Party of an indemnification
payment hereunder in respect of the claims to which such insurance proceeds
relate, appropriate refunds shall be made promptly to the Indemnifying Party
regarding the amount of such indemnification payment. In addition,
the amount of any Damages and the amount of any Tax Losses under Section 8.13(c)
shall be reduced by the amount of any Tax Benefit realized by the Buyer, any
Affiliate of the Buyer, Holdco or any Subsidiary of Holdco in any taxable period
after the Closing Date. For purposes of this Section 9.6(a), “Tax Benefit” shall
mean the Assumed Tax Rate multiplied by any deduction, exclusion from income or
other Tax allowance which would not, but for the event giving rise to
indemnification under Section 9.2 or Section 8.13(c), be
allowable. If any Tax Benefit is in the form of a credit against Tax,
solely for purposes of this Section 9.6(a), the Assumed Tax Rate shall be deemed
to equal one.
(b) The
Indemnified Parties agree that: (i) the Indemnified Party shall act reasonably
and in good faith in an effort to mitigate any Damages to which it is entitled
to indemnification; and (ii) the Indemnifying Parties shall be entitled to
reasonably participate, at their sole cost and expense, but not control in such
mitigation by the Indemnified Party.
(c) In no
event shall any Indemnified Party be entitled to recover or make a claim for any
amounts in respect of consequential, incidental, indirect damages, lost profits,
or punitive damages of
54
(d) No
Indemnifying Party shall be liable for any claim for indemnification under this
Article IX for any Damages arising out of changes after the Closing Date in any
Legal Requirement or changes in GAAP.
(e) Indemnification
payments from the Sellers to a Buyer Indemnitee shall be deemed a reduction in
the Final Purchase Price.
|
Section
9.7
|
Certain
Other Indemnity Matters
|
From and
after the Closing, the Parties sole and exclusive remedy with respect to any and
all claims relating to the subject matter of this Agreement, other than claims
of fraud or claims for equitable injunctive relief with respect to any violation
of the covenants in this Agreement, shall be pursuant to the provisions set
forth in this Article IX and Section 8.13.
|
Section
9.8
|
Jurisdiction
and Venue
|
Each
Indemnifying Party (i) consents to the exclusive jurisdiction of any state or
federal court sitting in the State of New York for purposes of the assertion by
such Indemnified Party of any claim such Indemnified Party may have against such
Indemnifying Party with respect to such third party claim or the matters alleged
therein, and (ii) agrees that process may be served on such Indemnifying Party
with respect to such a claim by the Indemnified Party anywhere in the world,
provided that such process shall not be valid unless and until a copy of it is
provided to the Indemnifying Party to be served with such process as if such
process were a notice being given to such Indemnifying Party under Section
12.5.
ARTICLE
X
CONDITIONS
TO THE CLOSING
|
Section
10.1
|
Closing
Conditions – The Buyer
|
The
obligation of the Buyer to consummate the Closing is subject to the satisfaction
as of the time of the Closing of the following conditions
precedent:
(a) Representations and Warranties;
Covenants. (i) Each representation and warranty set forth in
Articles VI and VII above shall be true and correct in all material respects at
and as of the Closing as though then made except to the extent such
representations and warranties by their terms speak as of an earlier date in
which case they shall be true and correct in all material respects as of such
earlier date (except for any representations or warranties that are qualified by
the concept of materiality, which shall be true and correct in all respects),
and (ii) Holdco, the Target and the Sellers shall have performed and observed in
all material respects each covenant or other obligation required to be performed
or observed by each of them at or prior to Closing pursuant to the Transaction
Documents prior to the Closing; except, in each case, breaches of such
representations and warranties or covenants that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) Proceedings. No
judgment, order, decree, stipulation, injunction or charge of a Governmental
Authority shall be in effect which prohibits, and no action, suit or proceeding
shall have been initiated by a Governmental Authority and be pending seeking to
prohibit the consummation of the transactions contemplated by the Transaction
Documents or that, if successful, could cause such transactions to be rescinded
following their consummation.
55
(c) Absence of
Changes. Since the date of the Latest Balance Sheet, no
Material Adverse Effect shall have occurred.
(d) Closing
Documents. The Sellers shall have delivered to the Buyer the
deliveries required by Sections 4.2(i) and 4.3(a).
(e) Consents and
Approvals. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been
terminated.
(f) Resignations. The
Buyer shall have received the resignations, effective as of the Closing, or
evidence of removal as of the Closing, of all members of the board of directors
of Holdco and each of its Subsidiaries.
(g) Escrow
Agreement. Each of the Sellers’ Representative and the Escrow
Agent shall have executed and delivered the Escrow Agreement.
|
Section
10.2
|
Closing
Conditions – The Sellers
|
The
obligation of the Sellers to consummate the Closing is subject to the
satisfaction as of the time of the Closing of the following conditions
precedent:
(a) Representations and Warranties;
Covenants. (i) Each representation and warranty set forth in
Article V above shall be true and correct in all material respects at and as of
the Closing as though then made except to the extent such representations and
warranties by their terms speak as of an earlier date in which case they shall
be true and correct in all material respects as of such earlier date (except for
any representations or warranties that are qualified by the concept of
materiality, which shall be true and correct in all respects), and (ii) the
Buyer shall have performed and observed in all material respects each covenant
or other obligation required to be performed or observed by it at or prior to
Closing pursuant to the Transaction Documents prior to the Closing; except for
breaches of such representations and warranties that would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the Buyer’s ability to consummate the transactions contemplated by this
Agreement and perform its obligations hereunder.
(b) Proceedings. No
judgment, order, decree, stipulation, injunction or charge of a Governmental
Authority shall be in effect which prohibits, and no action, suit or proceeding
shall have been initiated by a Governmental Authority and be pending seeking to
prohibit the consummation of the transactions contemplated by the Transaction
Documents or that, if successful, could cause such transactions to be rescinded
following their consummation.
(c) Closing
Documents. The Buyer shall have delivered to the Sellers the
deliveries required by Sections 4.2(ii) and 4.3(b).
(d) Consents and
Approvals. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been
terminated.
|
Section
10.3
|
Frustration
of Closing Conditions
|
Neither
the Sellers nor the Buyer may rely on the failure of any condition set forth in
this Article X to be satisfied if such failure was caused by such Party’s
failure to act in good faith or to use its commercially reasonable efforts to
cause the Closing to occur, as required by Section 8.1.
56
|
Section
10.4
|
Specific
Performance
|
The
Parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed by them in accordance with the
terms hereof or were otherwise breached and that each Party shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the provisions of this Agreement (without
any requirement to post any bond or other security in connection with seeking
such relief), in addition to any other remedy at Law or equity, exclusively in
any state or federal court within the State of New York. The parties
hereto agree not to raise any objections to the availability of the equitable
remedy of specific performance to prevent or restrain breaches of this Agreement
by Holdco or the Sellers, on the one hand, and to prevent or restrain breaches
of this Agreement by the Buyer, on the other hand, and to specifically enforce
the terms and provisions of this Agreement to prevent breaches or threatened
breaches of, or to enforce compliance with, the covenants and obligations of the
Parties under this Agreement. Each of the Parties hereby irrevocably
submits with regard to any such action or proceeding relating to this Section
10.4, for itself and in respect of its property, generally and unconditionally,
to the personal jurisdiction of the aforesaid courts and agrees that it will not
bring any action relating to this Section 10.4 in any court other than the
aforesaid courts. For purposes of this Section 10.4, each of the
parties hereto hereby consents to service of process in accordance with the
terms of Section 9.8 of this Agreement. For the avoidance of doubt,
if the Closing shall not have occurred because of a breach by the Buyer of any
material covenant under this Agreement (including as a result of a breach of its
representation set forth in Section 5.4) and all of the conditions set forth in
Section 10.1 to the Buyer’s obligations have either been satisfied or previously
waived (or would have been satisfied or are capable of being satisfied but for
such breach of the Buyer’s obligations under this Agreement), then either the
Sellers’ Representative or Holdco shall have the right to a court order
specifically enforcing the provisions of this Agreement to which such breach
applies and, in any event, to specifically force the Closing to
occur.
ARTICLE
XI
TERMINATION
|
Section
11.1
|
Termination
of Agreement
|
This
Agreement may be terminated as provided below:
(a) The
Parties may terminate this Agreement by mutual written consent of the Sellers’
Representative and the Buyer at any time prior to the Closing;
(b) The Buyer
may terminate this Agreement by giving written notice to the Sellers’
Representative at any time prior to the Closing (i) if the Buyer is not then in
breach of any material representation, warranty or covenant contained in this
Agreement (including the representation set forth in Section 5.4), in the event
the Sellers or Holdco have breached any material representation, warranty or
covenant contained in this Agreement, the Buyer has notified the Sellers’
Representative of the breach, and, if of a type which can be cured, the breach
has continued without cure for a period of thirty (30) days after the notice of
breach, and further, such breach is such that the conditions set forth in
Section 10.1(a) are incapable of being satisfied as a result thereof, or (ii) if
the Closing shall not have occurred on or before December 31, 2010, as such date
shall be extended for up to three (3) months in the event the conditions set
forth in Section 10.1(e) and Section 10.2(d) has not been satisfied (“Termination Date”),
by reason of the failure of any condition precedent under Section 10.1 (unless
the failure results primarily from the Buyer breaching any material covenant
contained in this Agreement (including as a result of a breach of the
representation set forth in Section 5.4)).
57
(c) The
Sellers’ Representative may terminate this Agreement by giving written notice to
the Buyer at any time prior to the Closing (i) if the Sellers or Holdco are not
then in breach of any material representation, warranty or covenant contained in
this Agreement, in the event the Buyer has breached any material representation,
warranty or covenant contained in this Agreement, the Sellers’ Representative
has notified the Buyer of the breach, and, if of a type which can be cured, the
breach has continued without cure for a period of thirty (30) days after the
notice of breach, and further, such breach is such that the conditions set forth
in Section 10.2(a) are incapable of being satisfied as a result thereof or (ii)
if the Closing shall not have occurred on or before the Termination Date, by
reason of the failure of any condition precedent under Section 10.2 (unless the
failure results primarily from Holdco or the Sellers breaching any material
covenant contained in this Agreement).
|
Section
11.2
|
Effect
of Termination
|
(a) Notwithstanding
any other provision in this Article XI, (i) in the event the Sellers’
Representative terminates this Agreement pursuant to Section 11.1(c)(ii)
rather than pursuing or continuing to pursue its right to specific performance
pursuant to Section 10.4 or if it is not awarded such specific performance at a
time when (A) all of the conditions precedent set forth in Section 10.1 of
this Agreement have been satisfied or previously waived (or would have been
satisfied or are capable of being satisfied but for such breach of the Buyer’s
obligations under this Agreement), and (B) the Buyer had no right to
terminate this Agreement at such time, then the Buyer shall pay to the Target
the Termination Fee within two (2) business days of such termination, and the
Sellers’ sole and exclusive remedy in the event of such termination shall be the
receipt by the Target of the Termination Fee from the Buyer.
(b) Except as
otherwise provided in this Section 11.2, if either Party terminates this
Agreement pursuant to Section 11.1, this Agreement shall forthwith become null
and void and all rights and obligations of the Parties hereunder shall terminate
without any liability, except for the agreements set forth in Section 8.4, this
Section 11.2 and Article XII; provided, that no such termination shall relieve
any party liability for any breach of any covenant set forth in this Agreement
prior to such termination (provided that an action by the non-breaching party
must be commenced with respect to such breach no later than the first
anniversary of such termination).
(c) All
costs, fees and expenses (including reasonable attorneys’ fees and expenses)
incurred by a non-breaching Party in connection with enforcing its rights
hereunder with respect to a breach of any covenant hereunder by another Party
prior to the Closing shall be paid by the breaching Party.
ARTICLE
XII
MISCELLANEOUS
|
Section
12.1
|
Treatment
of Confidential Information
|
(a) The
Sellers and Holdco acknowledge that they have had in the past, currently have
and in the future may have access to Confidential Information with respect to
the Business of Holdco and its Subsidiaries. The Sellers, from and
after the Closing until the third anniversary of the Closing Date, agree that
they will keep confidential all such Confidential Information furnished to them
and, except with the specific prior written consent of the Buyer, will not use
any such Confidential Information and will not disclose any such Confidential
Information to any Person except (i) Representatives of the Buyer and its
Affiliates and (ii) their own Representatives, provided that these
Representatives agree to the confidentiality provisions of this Section 12.1;
provided, however, that, for
purposes of this Section 12.1(a), Confidential Information does not include such
information as (i) becomes known to the public generally through no fault of the
Sellers or their Representatives or (ii) is required to be disclosed by law or
the order of any Governmental Authority under color of law or in order to
enforce their obligations
58
(b) Because
of (i) the difficulty of measuring economic losses as a result of the breach of
the foregoing covenants in Section 12.1(a) and (ii) the immediate and
irreparable damage that would be caused to the Buyer for which it would have no
other adequate remedy, the Sellers agree that, in the event of a breach or
threatened breach by the Sellers of the provisions of this Section 12.1 with
respect to any Confidential Information, the Buyer and its successors and
assigns shall be entitled to seek an injunction restraining the Sellers from
disclosing, in whole or in part, that Confidential Information (without the
necessity of posting any bond or proving any actual damages, all of which are
waived by the Sellers). Nothing herein shall be construed as
prohibiting the Buyer from pursuing any other available remedy for that breach
or threatened breach, including the recovery of damages.
|
Section
12.2
|
Assignment;
No Third Party Beneficiaries
|
This
Agreement and the rights of the Parties hereunder may not be assigned without
the prior written consent of (i) the Buyer, in the case of any attempted
assignment by Holdco or the Sellers, or (ii) the Sellers’ Representative, in the
case of any attempted assignment by the Buyer and will be binding on
and inure to the benefit of the Parties hereto and their respective successors
and permitted assigns. Any attempted assignment in violation of this
Section 12.2 shall be void; provided that, the Buyer may make the following
assignments in its sole discretion: (x) the Buyer may (at any time prior to the
Closing) assign, in whole or in part, its rights and obligations pursuant to
this Agreement to one or more of its Affiliates (including Affiliates which may
be organized subsequent to the Effective Date) so long as such assignment would
not delay or prevent the Closing; (y) the Buyer may assign its rights under this
Agreement for collateral security purposes to any lenders providing financing to
the Buyer or any of its Affiliates; and (z) the Buyer may assign its
rights under this Agreement, in whole or in part, to any subsequent purchaser of
the Purchased Shares or the assets of Holdco and its Subsidiaries; provided, however, that no such
assignment in (x), (y) or (z) above shall release the Buyer of any of its
obligations hereunder. Neither this Agreement nor any other
Transaction Document is intended, or shall be construed, deemed or interpreted,
to confer on any Person not a party hereto (or a permitted assignee thereof) or
thereto any rights or remedies hereunder or thereunder, except as Article IX or
Section 8.13 provides or as otherwise provided expressly herein.
|
Section
12.3
|
Entire
Agreement; Amendment; Waivers
|
This
Agreement, which includes the Exhibits and the Schedules hereto, and the
documents delivered hereunder, together with that certain Confidentiality
Agreement, dated June 11, 2010, between the Buyer and Holdco, constitute the
entire agreement and understanding between the Parties and supersede all prior
agreements and understandings, both written and oral, relating to the subject
matter of this Agreement, including the Letter of Intent. This
Agreement may be amended, and any right hereunder may be waived, if, but only
if, that amendment or waiver is in writing and signed by the Buyer and the
Sellers’ Representative, except for any amendment that treats any Seller
differently from any other Seller in any material adverse respect, in which case
the consent of any such adversely affected Seller shall also be
required. The waiver of any of the terms and conditions hereof shall
not be construed or interpreted as, or deemed to be, a waiver of any other term
or condition hereof.
59
|
Section
12.4
|
Expenses
|
(a) Except as
set forth in Section 12.4(b) below, (i) the Buyer will pay its fees, expenses
and disbursements in connection with the subject matter of this Agreement, and
(ii) Holdco and the Sellers will pay their fees, expenses and disbursements in
connection with the subject matter of this Agreement. The Sellers
further acknowledge that they, and not the Buyer, will pay all Taxes due by them
under applicable Legal Requirements with respect to any consideration payable to
the Sellers under the Transaction Documents.
(b) The
Sellers, on the one hand, and the Buyer, on the other hand, will each pay
one-half of the filing fees required by the HSR Act in connection with the
filings to be made by them thereunder.
|
Section
12.5
|
Notices
|
All
notices required or permitted hereunder must be in writing and will be deemed to
be delivered and received (i) if personally delivered or if delivered by
facsimile or courier service, when actually received by the Party to whom notice
is sent or (ii) if
deposited with the United States Postal Service (whether actually received or
not), at the close of business on the third business day next following the day
when return receipt is received if placed in the mail, postage prepaid,
certified or registered with return receipt requested, addressed to the
appropriate Party or Parties, at the address of such Party or Parties set forth
below (or at such other address as such Party may designate by written notice to
all other Parties in accordance herewith):
| (i) | If to the Buyer: | |||||
| Prestige Brands Holdings, Inc. | ||||||
| 00 Xxxxx Xxxxxxxx | ||||||
| Xxxxxxxxx, XX 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attn: | Xxxx X. Xxxx, Esq. | |||||
| General Counsel and Secretary | ||||||
| with copies, which shall not constitute notice to the Buyer, to: | ||||||
| Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C. | ||||||
| Xxxxx Xxxxxxxx Center | ||||||
| Suite 800, 000 Xxxxxxxx Xxxxxx | ||||||
| Xxxxxxxxx, XX 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attn: | Xxxx X. Xxxxx, Esq. | |||||
| (ii) | If to Holdco: | |||||
| Blacksmith Brands Holdings, Inc. | ||||||
| 000 Xxxxx Xxxxxx Xxxx | ||||||
| Xxxxx 000 | ||||||
| Xxxxxxxxx, XX 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attn: | Xxxxx X. Xxxx | |||||
| with copies to: | ||||||
60
| Charlesbank Capital Partners, LLC | ||||||
| 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx | ||||||
| Xxxxxx, XX 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attn: | Xxxxxx X. Xxxxxxx | |||||
| Xxxx X. Xxxxx | ||||||
| with copies, which shall not constitute notice to any Seller, to: | ||||||
| Xxxxxxxxx & Xxxxxxx LLP | ||||||
| The New York Times Building | ||||||
| 000 Xxxxxx Xxxxxx | ||||||
| Xxx Xxxx, XX 00000 | ||||||
| Attn: | Xxxxxxx X. Xxxxxxx | |||||
| Facsimile: (000) 000-0000 | ||||||
| Xxxxx X. Xxxxxxxx | ||||||
| Facsimile: (000) 000-0000 | ||||||
| (iii) | If to any Seller: | |||||
| Charlesbank Capital Partners, LLC | ||||||
| 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx | ||||||
| Xxxxxx, XX 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attn: | Xxxxxx X. Xxxxxxx | |||||
| Xxxx X. Xxxxx | ||||||
| with copies, which shall not constitute notice to any Seller, to: | ||||||
| Xxxxxxxxx & Xxxxxxx LLP | ||||||
| The New York Times Building | ||||||
| 000 Xxxxxx Xxxxxx | ||||||
| Xxx Xxxx, XX 00000 | ||||||
| Attn: | Xxxxxxx X. Xxxxxxx | |||||
| Facsimile: (000) 000-0000 | ||||||
| Xxxxx X. Xxxxxxxx | ||||||
| Facsimile: (000) 000-0000 | ||||||
The
address to which notices are to be given may be changed by written notice given
in accordance with this Section 12.5.
|
Section
12.6
|
Governing
Law
|
This
Agreement and the rights and obligations of the Parties hereto shall be governed
by and construed and enforced in accordance with the substantive laws of the
State of New York without regard to any
conflicts of law provisions thereof that would result in the application of the
laws of any other jurisdiction.
61
|
Section
12.7
|
Exercise
of Rights and Remedies
|
Except as
this Agreement otherwise provides, no delay or omission in the exercise of any
right, power or remedy accruing to any Party hereto as a result of any breach or
default hereunder by any other Party hereto will impair any such right, power or
remedy, nor will it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor will any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver. Subject to the
provisions of Article IX and Section 8.13, no right, remedy or election under
any term of this Agreement will be deemed exclusive, but each will be cumulative
with all other rights, remedies and elections available under the terms of this
Agreement.
|
Section
12.8
|
Conflicts
and Privilege
|
It is
acknowledged by each of the Parties that the Sellers’ Representative has
retained Xxxxxxxxx & Xxxxxxx LLP (“Xxxxxxxxx”) to act as
its counsel in connection with the Transactions. The Buyer hereby
agrees that, in the event that a dispute arises after the Closing between the
Buyer, Holdco and its Subsidiaries on the one hand, and the Sellers’
Representative and the Sellers on the other hand, Xxxxxxxxx may represent the
Sellers’ Representative and the Sellers in such dispute even though the
interests of the Sellers’ Representative and the Sellers may be directly adverse
to Holdco and its Subsidiaries, and even though Xxxxxxxxx may have represented
Holdco or its Subsidiaries in a matter substantially related to such dispute, or
may be handling ongoing matters for Holdco or its Subsidiaries. The
Buyer further agrees that, as to all communications among Xxxxxxxxx, Holdco, its
Subsidiaries, the Sellers’ Representative and/or any Seller that relate in any
way to the Transactions, the attorney-client privilege and the expectation of
client confidence belongs to the Sellers’ Representative and the Sellers and may
be controlled by the Sellers’ Representative and the Sellers and shall not pass
to or be claimed by the Buyer, Holdco or any of its
Subsidiaries. Notwithstanding the foregoing, in the event that a
dispute arises between the Buyer, Holdco and its Subsidiaries on the one hand
and a third party other than the Sellers’ Representative or a Seller on the
other hand, the Buyer, Holdco and its Subsidiaries may assert the
attorney-client privilege to prevent disclosure of confidential communications
to such third party; provided, however, that neither
the Buyer, Holdco or its Subsidiaries may waive such privilege without the prior
written consent of the Sellers’ Representative.
|
Section
12.9
|
Non-Recourse
|
This
Agreement may only be enforced against the Parties. No past, present
or future officer, director, shareholder, employee, incorporator, member,
partner, agent, attorney, Representative or Affiliate of any Party (including
any Person negotiating or executing this Agreement on behalf of a Party) (any
such Person, a “Non-Obligated
Person”) has any liability or obligation with respect to this Agreement
or with respect to any claim or cause of action (whether in contract, tort or
otherwise) arising out of or relating to this Agreement (including the
negotiation, execution or performance of this Agreement and any representation
or warranty made in or in connection with this Agreement or as an inducement to
enter into this Agreement).
|
Section
12.10
|
Reformation
and Severability
|
If any
provision of this Agreement is invalid, illegal or unenforceable, that provision
will, to the extent possible, be modified in such manner as to be valid, legal
and enforceable but so as to most nearly retain the intent of the Parties hereto
as expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
62
|
Section
12.11
|
Counterparts
|
This
Agreement may be executed in multiple counterparts, each of which will be an
original, but all of which together will constitute one and the same
agreement. Any counterpart of this agreement which has attached to it
one or more separate signature pages, which together contain the signatures of
all of the Parties hereto, shall for all purposes be deemed a fully-executed
original of this Agreement. A signature of any Party to this
Agreement transmitted by facsimile or other electronic means shall be deemed to
be such Party’s original signature for all purposes.
|
Section
12.12
|
Construction
|
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring either Party by virtue of the authorship of any of the provisions of
this Agreement.
|
Section
12.13
|
Payments
to the Sellers’ Representative
|
The Buyer
will have no liability or obligation for the amount paid or to be paid by the
Sellers’ Representative to each Seller and the Buyer’s sole obligation under
this Agreement shall be to pay to or as instructed by the Sellers’
Representative payments to be paid by it to the Sellers’ Representative in
accordance with the terms of this Agreement. Each Seller expressly
authorizes the Buyer and the Escrow Agent to make all payments to which such
Seller is entitled under this Agreement to the Sellers’ Representative and
agrees and confirms that payment thereof by the Buyer shall constitute payment
by the Buyer to such Seller. The Sellers’ Representative shall cause
all amounts of the Final Purchase Price received from the Buyer to be
distributed to the Sellers in accordance with each Seller’s Pro Rata
Share.
ARTICLE
XIII
SELLERS’
REPRESENTATIVE; POWER OF ATTORNEY
|
Section
13.1
|
Appointment
|
Each of
the Sellers irrevocably hereby constitutes and appoints Charlesbank Equity Fund
VII, Limited Partnership as its, his or her true and lawful attorney-in-fact,
agent and representative (the “Sellers’
Representative”), with full power of substitution and
resubstitution. The Sellers’ Representative shall have full power and
authority to take all actions under this Agreement and the Escrow Agreement that
are to be taken by the Sellers’ Representative. The Sellers’
Representative shall take any and all actions which it believes are necessary or
appropriate under this Agreement and the Escrow Agreement, including, without
limitation, executing the Escrow Agreement as the Sellers’ Representative,
giving and receiving any notice or instruction permitted or required under this
Agreement or the Escrow Agreement by the Sellers’ Representative, interpreting
all of the terms and provisions of this Agreement and the Escrow Agreement,
authorizing payments to be made with respect hereto or thereto, obtaining
reimbursement as provided for herein for all out-of-pocket fees and expenses and
other obligations of or incurred by the Sellers’ Representative in connection
with this Agreement and the Escrow Agreement, defending all indemnity claims
against the Escrow Fund pursuant to Section 8.13 and Section 9.2 of this
Agreement (an “Indemnity Claim”) and
all disputes pursuant to Section 3.1 hereof, consenting to, compromising or
settling all Indemnity Claims or disputes pursuant to Section 3.1, conducting
negotiations with the Buyer and its Representatives regarding such claims or
disputes, dealing with the Buyer and the Escrow Agent under this Agreement,
taking any all other actions specified in or contemplated by this Agreement and
the Escrow Agreement, and engaging counsel, accountants or other representatives
in connection with the foregoing matters. Without limiting the
generality of the
63
|
Section
13.2
|
Authorization
|
(a) The
Sellers’ Representative shall have the authority to:
(i) Receive
all notices or documents given or to be given to Sellers’ Representative
pursuant hereto or to the Escrow Agreement or in connection herewith or
therewith and to receive and accept services of legal process in connection with
any suit or proceeding arising under this Agreement or the Escrow
Agreement;
(ii) Engage
counsel, and such accountants and other advisors and incur such other expenses
in connection with this Agreement or the Escrow Agreement and the transactions
contemplated hereby or thereby as the Sellers’ Representative may in its sole
discretion deem appropriate; and
(iii) After the
Effective Date, take such action as the Sellers’ Representative may in its sole
discretion deem appropriate in respect of: (i) waiving any inaccuracies in
the representations or warranties of the Buyer contained in this Agreement or in
any document delivered by the Buyer pursuant hereto; (ii) taking such other
action as the Sellers’ Representative is authorized to take under this Agreement
or the Escrow Agreement; (iii) receiving all documents or certificates and
making all determinations, in its capacity as the Sellers’ Representative,
required under this Agreement or the Escrow Agreement; and (iv) all such
actions as may be necessary to carry out any of the transactions contemplated by
this Agreement and the Escrow Agreement, including, without limitation, the
defense and/or settlement of any claims for which indemnification is sought
pursuant to Section 8.13, Section 9.2 and this Article XIII and any waiver
of any obligation of the Buyer.
(b) Notwithstanding
any provision herein to the contrary, the Sellers’ Representative is not an
agent of the Sellers, and shall have no duties to the Sellers or liability to
the Sellers with respect to any action taken, decision made or instruction given
by the Sellers’ Representative in connection with the Escrow Agreement or this
Agreement.
|
Section
13.3
|
Indemnification
of Sellers’ Representative
|
The
Sellers’ Representative shall be indemnified for and shall be held harmless by
the Sellers against any loss, liability or expense incurred by the Sellers’
Representative or any of its Affiliates and any of their respective partners,
managers, members, directors, officers, employees, agents, stockholders,
consultants, attorneys, accountants, advisors, brokers, representatives or
controlling persons, in each case relating to the Sellers’ Representative’s
conduct as the Sellers’ Representative, other than losses, liabilities or
expenses resulting from the Sellers’ Representative’s gross negligence or
willful misconduct in connection with its performance under this Agreement and
the Escrow Agreement. This indemnification shall survive the
termination of this Agreement. The costs of such indemnification
(including the costs and expenses of enforcing this right of indemnification)
shall be first deducted from the Sellers’ Expense Amount and shall thereafter be
individual obligations of the Sellers based on their Pro Rata Share of such
costs, which obligations may be satisfied as contemplated by
Section 13.8. The Sellers’ Representative may, in all questions
arising under this Agreement, rely on the advice of counsel and for anything
done, omitted or suffered in good faith by the Sellers’ Representative in
accordance with such advice, the Sellers’ Representative shall not be liable to
the Sellers or the Escrow Agent or any other Person. In no event
shall the Sellers’ Representative be liable hereunder or in connection herewith
for
64
|
Section
13.4
|
Access
to Information
|
The
Sellers’ Representative shall have reasonable access to information of and
concerning any Indemnity Claim and which is in the possession, custody or
control of the Buyer and the reasonable assistance of the Buyer’s officers and
employees for purposes of performing the Sellers’ Representative duties under
this Agreement or the Escrow Agreement and exercising its rights under this
Agreement and the Escrow Agreement, including for the purpose of evaluating any
Indemnity Claim against the Escrow Fund by the Buyer; provided, that the
Sellers’ Representative shall treat confidentially and not, except in connection
with enforcing its rights under this Agreement and the Escrow Agreement,
disclose any nonpublic information from or concerning any Indemnity Claim to
anyone (except to the Sellers’ Representative’s attorneys, accountants or other
advisers, to Sellers and on a need-to-know basis to other individuals who agree
to keep such information confidential).
|
Section
13.5
|
Reasonable
Reliance
|
In the
performance of its duties hereunder, the Sellers’ Representative shall be
entitled to (a) rely upon any document or instrument reasonably believed to
be genuine, accurate as to content and signed by any Seller or any party
hereunder and (b) assume that any Person purporting to give any notice in
accordance with the provisions hereof has been duly authorized to do
so.
|
Section
13.6
|
Orders
|
The
Sellers’ Representative is authorized, in its sole discretion, to comply with
final, nonappealable orders or decisions issued or process entered by any court
of competent jurisdiction or arbitrator with respect to the Escrow
Fund. If any portion of the Escrow Fund is disbursed to the Sellers’
Representative and is at any time attached, garnished or levied upon under any
court order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court order, or
in case any order, judgment or decree shall be made or entered by any court
affecting such property or any part thereof, then and in any such event, the
Sellers’ Representative is authorized, in its sole discretion, but in good
faith, to rely upon and comply with any such order, writ, judgment or decree
which it is advised by legal counsel selected by it is binding upon it without
the need for appeal or other action; and if the Sellers’ Representative complies
with any such order, writ, judgment or decree, it shall not be liable to any
holder of Holdco Common Shares or Holdco Preferred Shares or to any other Person
by reason of such compliance even though such order, writ, judgment or decree
may be subsequently reversed, modified, annulled set aside or
vacated.
|
Section
13.7
|
Removal
of Sellers’ Representative; Authority of Sellers’
Representative
|
A
majority in interest of the Sellers’ shall have the right at any time during the
term of the Escrow Agreement to remove the then-acting Sellers’ Representative
to appoint a successor Sellers’ Representative; provided, however, that neither
such removal of the then acting Sellers’ Representative nor such appointment of
a successor Sellers’ Representative shall be effective until the delivery to the
Escrow Agent of executed counterparts of a writing signed by each such Seller
with respect to such removal and appointment, together with an acknowledgement
signed by the successor Sellers’ Representative appointed in such writing that
he, she or it accepts the responsibility of successor Sellers’ Representative
and agrees to perform and be bound by all of the provisions of this Agreement
applicable to the Sellers’ Representative. For all purposes
hereunder, a majority in interest of the Sellers shall be determined on the
basis of each Seller’s Pro Rata Share. Each successor Sellers’
Representative shall
65
|
Section
13.8
|
Expenses
of the Sellers’ Representative
|
The
Sellers’ Representative shall be entitled to withdraw cash amounts held in the
account containing the Sellers’ Expense Amount in reimbursement for out of
pocket fees and expenses (including legal, accounting and other advisors’ fees
and expenses, if applicable) incurred by the Sellers’ Representative in
performing under this Agreement and the Escrow Agreement. In the
event that the Sellers’ Expense Amount is insufficient to cover the fees and
expenses incurred by the Sellers’ Representative in performing under this
Agreement, first, the Sellers’ Representative shall be entitled to be paid out
of the Escrow Fund prior to any payments made out of such fund for the benefit
of the Sellers, and second, each of the Sellers shall be obligated to pay their
share of any such deficiency, which share shall be determined by multiplying the
amount of such deficiency by each Seller’s Pro Rata Share.
|
Section
13.9
|
Irrevocable
Appointment
|
Subject
to Section 13.7, the appointment of the Sellers’ Representative hereunder
is irrevocable and any action taken by the Sellers’ Representative pursuant to
the authority granted in this Article XIII shall be effective and
absolutely binding as the action of the Sellers’ Representative under this
Agreement or the Escrow Agreement.
[Signatures
appear on following pages]
66
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
BUYER:
By: /s/ Xxxxxxx X.
Xxxxxxxx
Name: Xxxxxxx X.
Xxxxxxxx
Title: Chief Executive
Officer
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
HOLDCO:
BLACKSMITH
BRANDS HOLDINGS, INC.
By: /s/ Xxxxx X.
Xxxx
Name: Xxxxx X.
Xxxx
Title: Chief Executive
Officer
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
HOLDCO
STOCKHOLDERS / SELLERS:
CHARLESBANK
EQUITY FUND VII,
LIMITED
PARTNERSHIP
By: Charlesbank
Equity Fund VII GP, Limited
Partnership, its General
Partner
By: Charlesbank
Capital Partners, LLC, its
General
Partner
By: /s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
By: /s/ Xxx X.
Xxxxx
Name: Xxx X. Xxxxx
Title: Managing Director
CB
OFFSHORE EQUITY FUND VII, L.P.
By: CB
Offshore Equity Fund VII GP, LLC
By: Charlesbank
Equity Fund VII GP,
Limited Partnership, its sole
member
By: Charlesbank
Capital Partners, LLC,
its General Partner
By: /s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
By: /s/ Xxx X.
Xxxxx
Name: Xxx X. Xxxxx
Title: Managing Director
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
CB
PARALLEL FUND VII, LIMITED PARTNERSHIP
By: Charlesbank
Equity Fund VII GP, Limited
Partnership, its General
Partner
By: Charlesbank
Capital Partners, LLC, its
General
Partner
By: /s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
By: /s/ Xxx X.
Xxxxx
Name: Xxx X. Xxxxx
Title: Managing Director
CHARLESBANK
EQUITY COINVESTMENT FUND VII, LIMITED PARTNERSHIP
By: Charlesbank
Equity Fund VII GP, Limited
Partnership, its General
Partner
By: Charlesbank
Capital Partners, LLC, its
General
Partner
By: /s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
By: /s/ Xxx X.
Xxxxx
Name: Xxx X. Xxxxx
Title: Managing Director
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
CHARLESBANK
COINVESTMENT PARTNERS, LIMITED PARTNERSHIP
By:
Charlesbank Capital Partners, LLC, its
General
Partner
By: /s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s Xxxxx X. Xxxx | ||
| XXXXX X. XXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxx X. Xxxxxxxx | ||
| XXXX X. XXXXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxxx X. Xxxxxx | ||
| XXXXXX X. XXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxxxx Xxxx | ||
| XXXXXXX XXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxx X. Xxxxxx | ||
| XXXX X. XXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxxxx Xxxxxxx | ||
| XXXXXXX XXXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxx X. Xxxxxx | ||
| XXXXX X. XXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxxxxx X. Xxxx | ||
| XXXXXXXX X. XXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxxx Xxxxxxxx | ||
| XXXXXX XXXXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxx-Xxxx Xxxx | ||
| XXX-XXXX XXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
IN
WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of
the Effective Date.
| /s/ Xxxxx Xxxxxxx | ||
| XXXXX XXXXXXX |
[Counterpart
Signature Page to Stock Purchase Agreement]
Disclosure Schedules
to
Stock
purchase Agreement
[Disclosure
Schedules intentionally omitted from filing pursuant to Item 601(b)(2) of
Regulation S-K.]
Exhibit
A to
Stock
Purchase Agreement
Holdco
Stockholders
[Exhibit
A intentionally omitted from filing due to immateriality.]
A-1
Exhibit
B to
Stock
Purchase Agreement
| Escrow Agreement (this “Agreement”), dated as of [ ], 2010 (the “Closing Date”), by and among Prestige Brands Holdings, Inc., a Delaware corporation (the “Buyer”), Charlesbank Equity Fund VII, Limited Partnership, a Massachusetts limited partnership, solely in its capacity as the Sellers’ Representative (the “Sellers’ Representative”), and U.S. Bank, National Association, a [ ] banking corporation, as escrow agent (the “Escrow Agent”). |
Introduction
Pursuant
to the Stock Purchase Agreement (the “Purchase Agreement”),
dated as of [ ], 2010, by and among the Buyer, Blacksmith Brands
Holdings, Inc., a Delaware corporation (“Holdco”), and the
stockholders of Holdco as set forth on Exhibit A attached
thereto (the “Holdco
Stockholders”), the Holdco Stockholders have agreed to sell, and the
Buyer has agreed to purchase, 100% of the issued and outstanding shares of the
capital stock of Holdco, on the terms and conditions set forth
therein. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the respective meanings given to them in the Purchase
Agreement.
The
parties hereto, intending to be legally bound, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby agree as follows:
1.
Appointment of Escrow Agent;
Establishment of Escrow.1
(a) On the
Closing Date, the Buyer has deposited, or caused to be deposited, with the
Escrow Agent (in an account designated by the Escrow Agent) an aggregate amount
of $8,700,000 (the “Escrow Amount”),
which consists of a $1,200,000 portion (the “Working Capital Deficiency
Adjustment Fund”) and a $7,500,000 portion (the “Indemnification
Fund”), and the Escrow Agent acknowledges receipt of the Escrow
Amount. The Escrow Amount plus any Escrow
Consideration (as defined below) allocable to it minus any amounts
released or disbursed therefrom from time to time in accordance with the terms
hereof shall be referred to herein as the “Escrow
Fund.”
(b) The Buyer
and the Sellers’ Representative hereby jointly appoint the Escrow Agent as the
escrow agent under this Agreement and the Escrow Agent hereby agrees to act as
escrow agent and to hold, safeguard, and disburse the Escrow Fund pursuant to
the terms and conditions hereof.
2.
Investment of
Funds.
(a) Except as
the Buyer and the Sellers’ Representative may from time to time jointly instruct
the Escrow Agent in writing, the Escrow Fund shall be invested from time to time
in a [money market fund] listed on Exhibit A attached
hereto. Such joint written instructions referred to in the foregoing
sentence shall specify the type and identity of the investments to be purchased
and/or sold and shall also include the name of the broker-dealer, if any, which
the Buyer and the Sellers’ Representative direct the Escrow Agent to use in
respect of such investment, any particular settlement procedures required (which
settlement procedures shall be consistent with industry standards and
practices), and such other information as the Escrow Agent may reasonably
require. The Escrow Agent shall liquidate any investments held in
order to provide funds necessary to make required payments under this
Agreement.
1
Section 1 and Section 3(c) to be revised in the event that any amounts are paid
into the Escrow Account in respect of Severance Payments pursuant to Section
8.15(a) of the Purchase Agreement.
B-1
(b) The
Escrow Fund shall be held by the Escrow Agent as an escrow fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any party thereto.
3.
Distribution of Funds;
Indemnity Escrow Fund. The Escrow Fund shall be released from
the account in which such fund is held as follows:
(a) Purchase Price
Adjustment. Promptly after the Final Determination Date (as
defined below), if a payment is to be made to the Buyer in accordance with
Section 3.1(e) of the Purchase Agreement, then the Buyer and the Sellers’
Representative shall jointly instruct the Escrow Agent in writing to pay to the
Buyer, from the Escrow Fund, the amount payable to the
Buyer pursuant to Section 3.1(e) of the Purchase Agreement, and the Escrow Agent
shall promptly (and in any event within five business days following the Escrow
Agent’s receipt of such joint written instruction) pay such amount to the Buyer
or the Buyer’s designee. If the amount paid to the Buyer or the
Buyer’s designee pursuant to the preceding sentence (which shall equal zero if
no amount is paid to the Buyer or the Buyer’s designee) is less than the amount
of the Working Capital Deficiency Adjustment Fund, then the Buyer and the
Sellers’ Representative shall jointly instruct the Escrow Agent in writing to
pay to or as instructed by the Sellers’ Representative, from the Escrow Fund, an
amount equal to the difference thereof, and the Escrow Agent shall promptly (and
in any event within five business days following the Escrow Agent’s receipt of
such joint written instruction) pay such amount to or as instructed by the
Sellers’ Representative. For purposes of this Section
3(a), the term “Final Determination
Date” means the earliest to occur of: (A) the thirty-first (31st)
day following the receipt of the Proposed Closing Statement by the Sellers’
Representative if a Notice of Disagreement has not been delivered to the Buyer
by the Sellers’ Representative, (B) the date that a written resolution is
executed pursuant to Section 3.1(d)(v) or Section 3.1(d)(vi) of the Purchase
Agreement, if all outstanding matters are resolved through such resolution, and
(C) the date that the Accounting Firm delivers its final, binding resolution
pursuant to Section 3.1(d)(vi) of the Purchase Agreement. The Escrow
Agent shall have no duty to establish the Final Determination Date or to
determine whether any Notice of Disagreement has been delivered, but shall rely
conclusively and without further inquiry on joint written instructions furnished
by the Buyer and the Sellers’ Representative with respect to distributions
pursuant to this Section
3(a).
(b) Indemnification
Fund.
(i) Any Buyer
Indemnitee making a claim for indemnification pursuant to Section 9.2(a) or
Section 8.13(c) of the Purchase Agreement must give the Sellers’ Representative
written notice of such claim (an “Indemnification Claim
Notice”), with a copy to the Escrow Agent, stating the aggregate amount
the Buyer Indemnitee claims to be entitled to be paid from the Escrow Fund,
promptly after the Buyer Indemnitee receives any written notice of any action,
lawsuit, proceeding, investigation or other claim against or involving the Buyer
Indemnitee by a Governmental Authority or other third person (a “Third Party Claim”)
or otherwise discovers the liability, obligation or facts giving rise to such
claim for indemnification. Such notice shall be accompanied by copies
of all relevant documentation with respect to such claim for indemnification,
including any summons, complaint or other pleading which may have been served,
any written demand or any other document or instrument. Failure to
give or delay in giving notice shall not excuse the party from whom
indemnification is sought from liability for
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indemnification
except to any extent to which the Buyer Indemnitee is actually prejudiced by
such failure or delay.
(ii) The
Sellers’ Representative shall have thirty (30) days from its receipt of the
Indemnification Claim Notice to dispute the claim or claims, the amount
requested to be paid from the Escrow Fund or any other matter set forth in the
Indemnification Claim Notice or other documents delivered by the Buyer hereunder
or to consent to the payment of such claim or claims by delivering a notice to
the Escrow Agent and the Buyer. In the event the Sellers’
Representative gives its consent to the payment of any such claim, the Escrow
Agent shall pay to the Buyer the amount requested to be paid in the
Indemnification Claim Notice. If the Escrow Agent does not receive
any notice from the Sellers’ Representative within the thirty-day period after
the receipt of an Indemnification Claim Notice by the Sellers’ Representative,
the Escrow Agent shall seek to obtain written confirmation from the Sellers’
Representative that (i) the Sellers’ Representative received the Indemnification
Claim Notice, and (ii) thirty (30) days have elapsed since the receipt of the
Indemnification Claim Notice by the Sellers’ Representative. Upon (A)
receipt of such written confirmation by the Escrow Agent, or (B) the Sellers’
Representative having failed to respond to the Escrow Agent’s request for such
written confirmation for a period of five (5) business days, the Escrow Agent
shall pay to the Buyer the amount requested to be paid in the Indemnification
Claim Notice, from the Escrow Fund, by wire transfer of immediately available
funds to an account designated in the Indemnification Claim Notice or otherwise
by the Buyer.
(iii) Subject
to Section
3(b)(ii), if it is determined, in accordance with the
terms of the Purchase Agreement, that a Buyer Indemnitee is entitled to any
payment from the Escrow Fund in respect of an Indemnification Claim Notice,
then, in each such case, the Buyer and the Sellers’ Representative shall
promptly deliver to the Escrow Agent a joint written notice specifying the
portion of the Escrow Fund that is equal to the amount to which the Buyer
Indemnitee is entitled and the Escrow Agent shall promptly pay to the applicable
Buyer Indemnitee, from the Escrow Fund, by wire transfer of immediately
available funds to an account designated in such joint written notice, the
amount requested to be paid in such joint written notice.
(c) Payment Upon Expiration of
the Survival Period. If any portion of the Escrow Fund remains
upon the expiration of the Indemnification Period, then the Buyer and the
Sellers’ Representative shall promptly (and in any event within one business day
after the expiration of the Indemnification Period) deliver to the Escrow Agent
a joint written notice specifying the amount (the “Payment Amount”)
equal to the excess of (A) the then-remaining Escrow Fund over (B) the
aggregate amount of all claims for indemnification of Buyer Indemnitees which
were properly asserted and pending as of the expiration of the Indemnification
Period, and the Escrow Agent shall promptly (and in any event within one
business day following the Escrow Agent’s receipt of such joint written notice)
pay to the Sellers’ Representative, from the Escrow Fund, by wire transfer of
immediately available funds to an account designated by the Sellers’
Representative, the Payment Amount, together with any Escrow
Consideration.
(d) Treatment of Remaining
Funds. In the event that any amount (the “Remaining Amount”)
remains in the Escrow Fund after Section
3(c) has been complied with, then, promptly upon (and in
any event within one business day after) the resolution of any claim of
indemnification that was pending as of the expiration of the Indemnification
Period, the Buyer and the Sellers’ Representative shall deliver to the Escrow
Agent a joint written notice specifying (A) the portion, if any, of the
Remaining Amount to be released to any Buyer Indemnitee, (B) the portion,
if any, of the Remaining Amount to be
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(e) Releases to Sellers’
Representative. Notwithstanding anything to the contrary
contained herein, whenever this Agreement contemplates a payment to the Sellers’
Representative, the Sellers’ Representative shall have the right to instruct the
Escrow Agent in writing that, in lieu of making such payment to the Sellers’
Representative, the Escrow Agent make direct payments to the Sellers, in each
case subject to the Sellers’ Representative providing the Escrow Agent with (i)
a list setting forth the respective amounts to be paid to each such Seller, (ii)
the respective wire transfer information and (iii) completed, original Form W-9s
for each such Seller. The Sellers’ Representative shall be entitled
to retain any payment, or portion thereof, made to the Sellers’ Representative
in the event that the Sellers’ Expense Amount is insufficient to cover the fees
or expenses incurred by the Sellers’ Representative in performing its duties
under this Agreement or the Purchase Agreement.
(f) Maximum Amount of Escrow
Payments to Buyer Indemnitees. Notwithstanding anything to the
contrary contained herein, in no event shall the aggregate amount of any
payments to the Buyer or any Buyer Indemnitee pursuant to Section
3(a) and Section
3(b) exceed the Escrow Fund plus any Escrow
Consideration.
4. Termination of Escrow and
Final Release of Escrow Fund. This Agreement shall terminate
upon the final distribution of all of the Escrow Fund in accordance with the
terms of this Agreement and the Purchase Agreement; provided, however, that in the
event that any fees, expenses, costs or other amounts required to be paid to the
Escrow Agent hereunder are not fully and finally paid prior to termination, the
provisions of Section
5(h) hereof shall survive the termination of this
Agreement until such time as all fees, expenses, costs and other amounts have
been paid in full.
5. Duties of Escrow
Agent.
(a) Except as
provided in Section 2, the Escrow Agent shall not be required to invest any
funds held hereunder except as directed in this Agreement. Uninvested
funds held hereunder shall not earn or accrue interest. The Escrow
Agent shall have no implied duties or obligations and shall be required to
perform only such duties as are expressly set forth in this
Agreement. The Escrow Agent shall not be required to take notice of
the Purchase Agreement and shall have no duty or responsibility to take any
action pursuant to the terms thereof. The Escrow Agent shall not be
obligated to take any legal action or to commence any proceedings in connection
with the Escrow Fund or this Agreement, or to appear in, prosecute or defend in
any such legal action or proceedings.
(b) The
Escrow Agent shall not be liable, except for its own gross negligence,
recklessness or willful misconduct and, except with respect to claims based upon
such gross negligence, recklessness or willful misconduct that are asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor to the Escrow
Agent) and each of the Escrow Agent’s officers, directors, agents and employees
from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable legal
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(c) The
Escrow Agent shall be entitled to rely upon any order, judgment, certification,
demand, notice, instrument or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of the service thereof, unless the
Escrow Agent has actual knowledge of any such lack of authenticity, correctness,
propriety or validity. The Escrow Agent may act in reliance upon any
instrument or signature reasonably believed by it to be genuine and may assume
that the person purporting to make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so unless
the Escrow Agent has actual knowledge of the lack of authority. The
Escrow Agent may conclusively presume that the undersigned representative of any
party hereto which is an entity has full power and authority to instruct the
Escrow Agent on behalf of that party unless written notice to the contrary is
delivered to the Escrow Agent or unless the Escrow Agent has actual knowledge of
the lack of power or authority.
(d) The
Escrow Agent may act pursuant to the advice of legal counsel with respect to any
matter relating to this Agreement and shall not be liable for any action taken
or omitted by it in good faith in accordance with such advice. The
Escrow Agent shall not have any interest in the Escrow Fund deposited hereunder
and is serving as escrow holder only and having only possession
thereof. The Escrow Agent shall prepare and provide to the Sellers’
Representative and the Buyer a monthly information statement of the Escrow
Consideration no later than the last calendar day of any given month in respect
of the immediately preceding full calendar month (the “Monthly Earnings
Statement”). This Section
5(d), Section
5(b) and Section
5(h) shall survive notwithstanding any termination of
this Agreement or the resignation or removal of the Escrow Agent.
(e) The
Escrow Agent makes no representation as to the validity, value, genuineness or
the collectability of any security or other document or instrument held by or
delivered to it.
(f) The
Escrow Agent (and any successor to the Escrow Agent) may resign at any time upon
thirty (30) days’ prior written notice to the Sellers’ Representative and the
Buyer, and may be removed by the mutual consent of the Sellers’ Representative
and the Buyer upon thirty (30) days’ prior written notice to the Escrow
Agent. Prior to the effective date of the resignation or removal of
the Escrow Agent, the Sellers’ Representative and the Buyer shall jointly
appoint a successor escrow agent, to hold the Escrow Fund, and any such
successor escrow agent shall execute and deliver to the predecessor escrow agent
an instrument accepting such appointment, upon which such successor agent shall,
without further act, become vested with all of the rights, powers and duties of
the predecessor escrow agent as if
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originally
named herein. If no successor escrow agent is appointed prior to the
effective date of the termination or resignation of the Escrow Agent, the Escrow
Agent shall first, place all of the Escrow Fund at the disposal of a court and
petition the court to act as the successor escrow agent or to appoint another
entity to act as the successor escrow agent and second, if the court does not
agree to act as successor agent or fails to appoint another entity to act as a
successor escrow agent, deposit all of the Escrow Fund into the registry of any
court of competent jurisdiction and notify the Sellers’ Representative and the
Buyer in writing of such deposit. In the event that the Escrow Agent
makes a deposit of the Escrow Fund into the registry of a court in the manner
specified in the preceding sentence, the Escrow Agent shall thereupon be
discharged from all further duties as the escrow agent hereunder.
(g) In the
event of any disagreement between the Buyer and the Sellers’ Representative
resulting in conflicting claims or demands being made in connection with the
Escrow Fund or in the event that the Escrow Agent is in reasonable doubt as to
what action it should take hereunder, the Escrow Agent shall be entitled to
retain the Escrow Fund until the Escrow Agent shall have received (i) a final
and non-appealable judgment resolving the applicable claim or directing delivery
of the Escrow Fund or (ii) joint written instructions executed by the Buyer and
the Sellers’ Representative directing delivery of the Escrow Fund, in which
event the Escrow Agent shall disburse the Escrow Fund in accordance with such
final and non-appealable judgment, decision, award or written
instructions. The Escrow Agent shall act on such final and
non-appealable judgment, decision, award or written instructions without further
questions.
(h) The
Escrow Agent shall be paid compensation (as payment in full) for the services to
be rendered by the Escrow Agent hereunder in accordance with the terms of Exhibit B attached
hereto, the terms of which are incorporated herein by reference, and shall be
reimbursed promptly upon receipt of a written invoice from the Escrow Agent for
all reasonable out-of-pocket expenses, disbursements and advances incurred or
made by the Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of one outside counsel, but not any
fees or expenses allocated to its internal counsel). Any such
compensation and reimbursement to which the Escrow Agent is entitled shall be
paid by the Buyer; provided, that,
solely as between the Sellers’ Representative and the Buyer, the Sellers’
Representative will reimburse the Buyer, within ten (10) business days after
payment, for fifty percent (50%) of such payments.
(i) In
connection with any funds transfer, the Escrow Agent may rely solely upon any
account numbers or similar identifying number provided in accordance herewith to
identify (A) the beneficiary, (B) the beneficiary’s bank, or (C) an order
executed by such party using any such identifying number, even where its use may
result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary’s bank, or an intermediary bank
designated. The Escrow Agent shall have no liability with respect to
the transfer or distribution of any funds effected by the Escrow Agent pursuant
to wiring or transfer instructions provided to the Escrow Agent by any party to
this Agreement.
6. Responsibility. The
Sellers’ Representative represents and warrants to the Escrow Agent that it is
duly appointed to act as the Sellers’ Representative, in the manner contemplated
by the terms of this Agreement. The Escrow Agent shall be entitled to
deal exclusively with the Sellers’ Representative (on behalf of the Sellers)
with respect to all matters arising under this Agreement, including the receipt
of notices and the exercise of any rights with respect to the Escrow Agent’s
obligations under this Agreement, the modification or amendment of the terms of
such agreements, the waiver of conditions,
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7. Tax
Matters.
(a) The
Sellers’ Representative and the Buyer agree to treat the Escrow Fund
consistently with the provisions of Proposed Treasury Regulation §1.468B-8, and
to file all Tax Returns on a basis consistent with such
treatment. This Section 7(a) shall survive notwithstanding any
termination of this Agreement.
(b) For all
Tax purposes, all payments from the Escrow Fund to the Sellers’ Representative
shall be treated by the parties as adjustments to the Final Purchase Price to
the extent permitted by applicable Law, including, without limitation, Section
483 of the Code. This Section 7(b) shall survive notwithstanding any
termination of this Agreement.
(c) On or
before the execution of this Agreement, the Buyer and the Sellers’
Representative shall each provide to the Escrow Agent a completed Form W‑9. Promptly
following the end of each calendar year, the Sellers’ Representative shall
furnish to the Escrow Agent written instructions setting forth the amounts and
recipients of earnings and other amounts which should properly be reported on
Form 1099s. Except with respect to Form 1099s, the Escrow Agent shall
have no authority or responsibility to prepare or file any state or federal tax
return or report with respect to the Escrow Fund or any earnings
thereon. This Section 7(c) shall survive notwithstanding any
termination of this Agreement.
8. Notices. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
faxed (which is confirmed) or sent by commercial overnight courier to the
parties at the following addresses (or to such other address as the person to
whom notice is given may have previously furnished to the others in writing in
the manner set forth above; provided that notice
of any change of address shall be effective only upon receipt
thereof):
| (i) | If to the Buyer: | ||||
| Prestige Brands Holdings, Inc. | |||||
| 00 Xxxxx Xxxxxxxx | |||||
| Xxxxxxxxx, Xxx Xxxx 00000 | |||||
| Facsimile: | (000) 000-0000 | ||||
| Attention: | Xxxx X. Xxxx, Esq. | ||||
| General Counsel and Secretary | |||||
| with a copy (which shall not constitute notice to the Buyer) to; | |||||
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| Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C. | ||||||
| Xxxxx Xxxxxxxx Center | ||||||
| Suite 800, 000 Xxxxxxxx Xxxxxx | ||||||
| Xxxxxxxxx, Xxxxxxxxx 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attention: | Xxxx X. Xxxxx, Esq. | |||||
| (ii) | If to the Sellers’ Representative: | |||||
| Charlesbank Capital Partners, LLC | ||||||
| 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx | ||||||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||||
| Facsimile: | (000) 000-0000 | |||||
| Attention: | Xxxxxx X. Xxxxxxx | |||||
| Xxxx X. Xxxxx, Esq. | ||||||
| with a copy (which shall not constitute notice to the Sellers’ Representative) to: | ||||||
| Xxxxxxxxx & Xxxxxxx LLP | ||||||
| The New York Times Building | ||||||
| 000 Xxxxxx Xxxxxx | ||||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||||
| Attention: | Xxxxxxx X. Xxxxxxx, Esq. | |||||
| Facsimile: (000) 000-0000 | ||||||
| Xxxxx X. Xxxxxxxx, Esq. | ||||||
| Facsimile: (000) 000-0000 | ||||||
| (iii) | If to the Escrow Agent: | |||||
| U.S. Bank, National Association | ||||||
| [ | ] | |||||
| [ | ] | |||||
| [ | ] | |||||
| [ | ] | |||||
9.
Governing Law; Jurisdiction;
Waiver of Jury Trial.
(a) This
Agreement shall be governed by the laws of the State of New York, without giving
effect to its principles or rules of conflict of laws to the extent such
principles or rules are not mandatorily applicable by statute and would require
or permit the application of the laws of another jurisdiction.
(b) Each
party irrevocably submits to the exclusive jurisdiction of (x) the Supreme Court
of the State of New York, New York County, and (y) the United States
District Court for the Southern District Court of New York, for the purposes of
any claim, action or proceeding (“Proceedings”) arising
out of this Agreement or any transaction contemplated hereby. Each
party agrees to commence
B-8
(c) EACH
PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A)
CERTIFIES THAT NO AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
9(C).
10. Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same
agreement. Delivery of a signed counterpart by facsimile or other
electronic transmission will constitute a party’s due execution and delivery of
this Agreement.
11. Section
Headings. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation.
12. Waiver. The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party hereto in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable Law, (A) no claim or right arising
out of this Agreement or the transactions contemplated hereby can be discharged
by any party hereto, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other parties hereto; (B) no
waiver that may be given by a party hereto will be applicable except in the
specific instance for which it is given; and (C) no notice to or demand on any
party hereto will be deemed to be a waiver of any obligation of such party or of
the right of the party hereto giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
B-9
13. Entire Agreement and
Modification. This Agreement supersedes all prior agreements
(written or oral) between the parties hereto with respect to its subject matter
and constitutes (along with the documents referred to in this Agreement, as to
parties other than the Escrow Agent) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written
agreement executed by each party hereto.
14. Severability and Further
Assurances. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by applicable Law, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement. Each of the
parties hereto shall, at the request of any other party hereto, deliver to the
requesting party all further documents or other assurances as may reasonably be
necessary or desirable to carry out the purposes of this Agreement.
15. Specific
Enforcement. The parties acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they may be entitled at Law or equity.
16. Benefits;
Assignment. This Agreement and all of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns, but neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned by any of the parties hereto without the prior
written consent of the other parties hereto; provided, however, that any
person into which the Escrow Agent may be merged or converted or with which it
may be consolidated or any person resulting from any merger, conversion or
consolidation to which it shall be a party or any person to which the Escrow
Agent may sell or transfer all or substantially all of its escrow/custody
business, provided such person shall be eligible to serve as escrow agent
hereunder, shall be the successor hereunder to the Escrow Agent without the
execution or filing of any document or agreement or any further act; and provided, further, that the
Buyer may assign all of its rights and obligations under this Agreement to any
of its respective affiliates without the prior written consent of any other
party hereto (but only if the Buyer agrees in writing to remain primarily liable
hereunder for any obligations so assigned), and that such affiliate of the Buyer
shall promptly notify the other parties hereto in writing of any such
assignment. Any attempted assignment in violation of the immediately
preceding sentence shall be void.
17. Amendment; No Third Party
Beneficiaries. This Agreement may not be amended except by an
instrument in writing signed by of each of the parties hereto. This
Agreement is not intended to confer upon any person (other than the parties
hereto) any rights or remedies.
18. Interpretation. Solely
as among the parties hereto other than the Escrow Agent, the Purchase Agreement,
as it may from time to time be amended, shall control in the event of any
inconsistency with this Agreement.
19. Business
Day. As used in this Agreement, the term “business day” means
any day that is not a Saturday, Sunday, legal holiday or other day on which
commercial banks in New York City, New York are authorized or required by law to
close. If any day specified in this Agreement for the taking of
B-10
action by
the Escrow Agent shall not be a business day, then such action shall be taken on
the next succeeding day that is a business day.
20. Representations and
Warranties. Except as otherwise provided herein, each of the
Escrow Agent, the Buyer and the Sellers’ Representative hereby represents and
warrants to each of the other parties hereto (A) that this Agreement has been
duly authorized and executed and delivered on its behalf, constitutes its legal,
valid and binding obligation and is enforceable in accordance with its terms
except insofar as enforceability may be limited by applicable bankruptcy
insolvency, reorganization, liquidation or similar laws affecting creditor’s
rights generally or by principles governing the availability of equitable
remedies and (B) that the execution and performance of this Agreement and the
consummation of the transactions contemplated hereby by such person do not and
will not result in a material breach of or constitute a material default under
or a material violation of any trust (constructive or other), agreement,
judgment, decree, order or other instrument to which it is a party or it or its
properties or assets may be bound.
[Remainder of Page Intentionally Left
Blank—Signature Page Follows]
B-11
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
BUYER
By: __________________________
Name:
Title:
SELLERS’
REPRESENTATIVE
CHARLESBANK EQUITY FUND
VII,
LIMITED PARTNERSHIP, solely as the
Sellers’
Representative
under the Purchase Agreement
By:________________________________
its general partner
By:
Name:
Title:
ESCROW
AGENT
U.S.
BANK, NATIONAL ASSOCIATION, as the
Escrow
Agent
By:
Name:
Title:
[Signature
Page to Escrow Agreement]
EXHIBIT A
TO
ESCROW
AGREEMENT
Permitted
Money Market Investments
[To be
inserted]
EXHIBIT B
TO
ESCROW
AGREEMENT
Fee
Schedule
[To be
inserted]
Exhibit
C to
Stock
Purchase Agreement
Release
Reference is hereby made to the
[Employment[, Consulting]1 and Restrictive
Covenant Agreement, dated as of [October 29, 2009]2, [as amended,]2
between Blacksmith Brands, Inc., a Delaware corporation (“Blacksmith”), and the
undersigned, [Name] (the “Employment Agreement”)][offer
letter, dated as of May 5, 2010, from Blacksmith Brands, Inc., a Delaware
corporation (“Blacksmith”), to the
undersigned, [Name] (the “Offer Letter”)] and the Stock
Purchase Agreement, dated as of [date], by and among Prestige Brands Holdings,
Inc., a Delaware corporation (“Prestige”), Blacksmith Brands
Holdings, Inc., a Delaware corporation (“Holdings”), [the undersigned]
and the [other] stockholders of Holdings (the “SPA”).3
I,
[Name], do hereby release and forever discharge on behalf of myself and my
agents, assignees, attorneys, successors, assigns, heirs, administrators,
executors, beneficiaries, representatives and all others connected to me,
Blacksmith and Holdings and their divisions, subsidiaries and affiliates and
their current and future directors, officers, agents, employees, trustees,
stockholders, joint ventures, representatives, each of their predecessors,
successors and assigns, and all others connected with any of them, including
without limitation Charlesbank Capital Partners, LLC and its affiliates, and any
of their directors, officers, partners, members, agents and employees, both
individually and in their official capacities (collectively, the “Released Parties”) to the
extent provided below.
|
1.
|
I
understand and agree that (i) the following payments and benefits
represent, in part, consideration for signing this Release and are not
salary, wages, benefits or rights to which I was already entitled and (ii)
I will not receive the following payments and benefits unless I execute
this Release and do not breach this
Release:
|
|
a.
|
the
severance payments and benefits described in [Section 3(c) of the
Employment Agreement payable upon a termination without Cause (as defined
in the Employment Agreement)][Section 8 of the Offer Letter payable upon a
termination without Cause (as defined in the Blacksmith Brands Holdings,
Inc. 2009 Equity Incentive Plan)] and subject to the conditions therein,
including the execution of this Release;4
|
|
b.
|
a
partial year bonus under the Blacksmith Brands, Inc. Bonus Plan for the
portion of the year beginning on April 1, 2010 and ending on the date of
my termination of employment, as determined by the Board of Directors of
Blacksmith in its sole discretion;
and
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1
Include for Xxxxx Xxxx and Xxxx Xxxxxxxx only.
C-1
|
c.
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the
accelerated vesting of 100% of the restricted stock issued to me under the
Restricted Stock Agreement - Performance Vesting, dated as of [October 29,
2009]5,
between me and Holdings[ and the Restricted Stock Agreement - Additional
Performance Vesting, dated as of October 29, 2006, between me and
Holdings]6,
that would not otherwise have vested as a result of the consummation of
the SPA.7
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2.
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Except
as provided in Sections 5 and 7 below, I knowingly and voluntarily release
and discharge (on behalf of myself and my agents, assignees, attorneys,
successors, assigns, heirs, administrators, executors, beneficiaries,
representatives and all others connected to me) the Released Parties from
any and all claims and causes of action arising out of or related to any
act or omission prior to the date of this Release, including without
limitation claims related to my employment, and the termination of my
employment, and specifically including without limitation any and all
claims arising out of the Employment Agreement[, the Corporate Development
and Administrative Services Agreement, among Blacksmith, Holdings, the
undersigned and the other parties thereto]8 or any other
agreement or amendment thereto entered into by Blacksmith and/or Holdings
and me. This release includes, but is not limited to, any
allegation, claim or violation:
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a.
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for
wages, salary, bonuses, incentive compensation, stock, restricted stock,
stock options, severance pay, vacation pay or any other fees, compensation
or benefits (except for vested rights and benefits as of the date of
termination under any Blacksmith compensation or benefit plan, including
without limitation accrued salary and vacation pay through the termination
date, right to reimbursement of business expenses incurred through the
termination date in accordance with Blacksmith’s policy, and rights to
continued health coverage under
COBRA);
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b.
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arising
under the Civil Rights Act of 1866, Title VII of the Civil Rights Acts of
1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967 (including the Older Workers Benefit Protection Act), the
Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, the
Family Medical Leave Act of 1993, the Fair Labor Standards Act, the
Rehabilitation Act of 1973, the Employee Retirement Income Security Act of
1974, the Genetic Information Nondiscrimination Act of 2008, or their
state or local counterparts for sexual harassment, or retaliation or
discrimination based on race, gender, color, national origin, ancestry,
religion, marital status, sex, sexual orientation, citizenship status,
pregnancy, leave of absence, medical condition, disability (as defined by
the Americans with Disabilities Act of 1990, or any other state or local
law), age (under the Age Discrimination in Employment Act, or
any other federal, state, or local laws prohibiting age discrimination),
or genetic information (as defined in the Genetic
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5
Adjust for employees who were not part of the original equity
issuances.
C-2
| Information Nondiscrimination Act of 2008, or any other state or local law) or any other unlawful discrimination; and |
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c.
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claims
under the Worker Adjustment and Retraining Notification Act or
National Labor Relations Act, whistleblower claims, and claims for breach
of implied or express contract, breach of promise, breach of fiduciary
duty, misrepresentation, negligence, fraud, estoppel, defamation, slander,
infliction of emotional distress, violation of public policy or wrongful
or constructive discharge, and claims under any other federal, state, or
local statute, rule or regulation or principle of common, tort or contract
law and claims for damages or other remedies of any sort, including,
without limitation, compensatory damages, punitive damages, injunctive
relief and attorneys’ fees, that I or my agents, assignees, attorneys,
successors, assigns, heirs, administrators, executors, beneficiaries,
representatives and all others connected to me now have, ever had or may
hereafter have, whether known or unknown, suspected or unsuspected, up to
and including the date of this Release, but excluding any claims which I
may make under state workers’ compensation or unemployment compensation
laws (except for retaliation) and/or any claims which by law I cannot
waive and/or claims related to a breach of this
Release.
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3.
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I
acknowledge and represent that I have received all payments and benefits
that were due to be paid or received as of the date hereof, not including
severance payments and continuing benefits to be received
post-termination, by virtue of my employment with
Blacksmith.
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4.
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I
further agree, promise and covenant that, to the maximum extent permitted
by law, neither I, nor any person, organization, or other entity acting on
my behalf have or will file, charge, claim, xxx, or cause or permit to be
filed, charged or claimed, any action for damages or other relief
(including without limitation injunctive, declaratory, monetary relief or
other) against the Released Parties involving any matter occurring in the
past up to the date of this Release, or involving or based upon any
claims, demands, causes of action, obligations, damages or liabilities
which are the subject of this
Release.
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5.
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I
acknowledge that I am not waiving and am not being required to waive any
right that cannot be waived under law, including the right to file an
administrative charge or participate in an administrative investigation or
proceeding; provided, however, that I disclaim and waive any right to
share or participate in any monetary award resulting from the prosecution
of such charge or investigation or
proceeding.
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6.
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I
represent that I have made no assignment or transfer of any right, claim,
demand, cause of action or other matter covered by Section 2
above.
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7.
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I
agree that this Release does not waive or release: (a) any rights or
claims that I may have which first arise after the date I execute this
Release; (b) any rights or claims for severance payments [under Section 8
of the Offer Letter]9 or benefits
[under Section 3(c) of the Employment Agreement, or benefits]10 specifically
set forth in this Release; (c) my rights as
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9
Include only for employees who are party to an offer letter.
C-3
| a shareholder of Holdings; (d) my rights, if any, under any insurance policies issued to Blacksmith, Holdings, or Prestige, as a parent or successor in interest to Blacksmith or Holdings; and (e) any rights or any claims to enforce my rights to receive any indemnification or contribution from Blacksmith or Holdings under the Employment Agreement or Blacksmith’s or Holdings’ by-laws, by other contract or by law. |
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8.
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I
agree that unless required by law, I will not disclose the facts and
circumstances underlying this Release or its terms and conditions to
anyone other than my immediate family, tax advisor, legal counsel and any
future potential employer without the written consent of Blacksmith, and
that I will immediately instruct my immediate family, tax advisor, legal
counsel and any such future potential employer not to disclose such
information to anyone.
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9.
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I
agree that on or before 3 days following the date of the termination of my
employment with Blacksmith, I will return to Blacksmith any and all
records, files (both electronic and hard copy), notes, memoranda, reports,
work product and similar items, any manuals, drawings, sketches, plans,
tape recordings, computer programs, disks, cassettes and other physical
representations of any information, relating to Blacksmith, or to the
business of Blacksmith, including without limitation any and all copies of
any of the foregoing, whether or not constituting confidential
information, and I will return to Blacksmith any other property belonging
to Blacksmith.
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10.
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I
agree and acknowledge that the [confidentiality, nondisclosure, assignment
of inventions, non-competition[, and] nonsolicitation [, and first
offer]11
provisions of Sections 4 and 5 of the Employment Agreement]
[non-competition and intellectual property and ownership provisions of
Section 9 and 10 of the Offer Letter] remain in full force and
effect. I further agree that I will not disparage Blacksmith or
Holdings, or make or solicit any comments, statements, or the like to any
clients, competitors, suppliers, employees or former employees of
Blacksmith or Holdings, the press, other media, or others that may be
considered derogatory or detrimental to the good name or business
reputation of Blacksmith or Holdings.12
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11.
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I
understand that for providing this Release, Blacksmith and Holdings have
agreed not to disparage, criticize or defame me or make critical comments
regarding me in any writing, statement or other written or oral
communication, and to serve as a positive reference with respect to all
potential employers.
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12.
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I
agree that neither this Release, nor the furnishing of the consideration
for this Release, shall be deemed or construed at any time to be an
admission by any Released Party or myself of any improper or unlawful
conduct.
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13.
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During
the period beginning on the date of termination of my employment and
ending on the 3 month anniversary thereof, I further agree that I will
cooperate fully with Blacksmith and
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11
Include for Xxxxx Xxxx and Xxxx Xxxxxxxx only.
C-4
| its counsel with respect to any matter (including without limitation litigation, investigations, or governmental proceedings) in which I was in any way involved during my employment with Blacksmith. I will render such cooperation in a timely manner on reasonable notice from Blacksmith on the condition that Blacksmith will reasonably compensate me for my time expended and will reimburse my reasonable expenses. |
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14.
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I
agree and acknowledge that, in the event that it is judicially determined
that I have breached an obligation under this Release, each of Blacksmith,
Holdings and Charlesbank Equity Fund VII, as the Sellers’ Representative
under the SPA retains the right to seek all available remedies and
specifically retains the right to retain any outstanding payments due to
me under this Release and to seek repayment of any payments already
made. Notwithstanding any such relief, all of the other terms
of this Release, including without limitation my release of claims, shall
remain in full force and effect. The remedies provided for in
this provision shall not be construed to be exclusive and do not bar any
other claims for relief.
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|
15.
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This
Release shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed
entirely within that State. I hereby submit to the jurisdiction
of all state courts of the State of New York and all federal courts
located in the State of New York for the purposes of the enforcement of
this Release. Whenever possible, each release provision of this
Release shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Release is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or its validity and
enforceability in any other jurisdiction, but this Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision that had ever been contained
herein.
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|
16.
|
I
acknowledge that I have carefully read this Release and understand all of
its terms including without limitation the full and final release of
claims set forth above. I further acknowledge that I have had
adequate time to consider the terms of this Release and knowingly and
voluntarily entered into it; that I have not relied upon any
representation or statement, written or oral, not set forth in this
Release; and that this document gives me the opportunity and advises me to
have this Release reviewed by my attorney and tax advisor prior to signing
it.
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17.
|
By
signing this Release, I represent and agree that I have been advised to
consult with an attorney before signing this Release and I have done so
or, after careful reading and consideration, I have chosen not to do so of
my own volition.
|
Intending to be legally bound, I have
signed this Release knowingly and voluntarily as of the date written
below.
______________________________
[Name]
______________________________
Date
C-5