AGREEMENT AND PLAN OF MERGERAgreement and Plan of Merger |
|
|
You are currently viewing: This Agreement and Plan of Merger involves
MUELLER WATER PRODUCTS, INC | WALTER INDUSTRIES, INC., | JW MERGERCO, INC. | DLJ MERCHANT BANKING II, INC.,. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
|
|
|
|
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
June 17, 2005
among
MUELLER WATER PRODUCTS, INC.,
WALTER INDUSTRIES, INC.,
JW MERGERCO, INC.
and
DLJ MERCHANT BANKING II, INC.,
as the Stockholders’ Representative
TABLE OF CONTENTS
ii
iii
iv
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of June 17, 2005 among Mueller Water Products, Inc., a Delaware corporation (the “ Company ”), Walter Industries, Inc., a Delaware corporation (“ Buyer ”), and JW MergerCo, Inc., a Delaware corporation (“ MergerCo ”), and, individually for purposes of Article 4 and otherwise, solely in its capacity as the Stockholders’ Representative (as defined below), DLJ Merchant Banking II, Inc., a Delaware corporation (“ DLJMB ”).
W I T N E S S E T H :
WHEREAS, this Agreement contemplates a transaction in which Buyer will acquire the Company pursuant to a transaction in which MergerCo, a wholly owned subsidiary of Buyer, will merge with and into the Company, with the Company surviving the merger, in accordance with the General Corporation Law of the State of Delaware, and the holders of the Company’s stock and warrants will receive cash in consideration for such merger; and
WHEREAS, Buyer, MergerCo, the Company and DLJMB desire to make certain representations, warranties, covenants and agreements in connection with the merger.
The parties hereto agree as follows:
Section 1.01 . Definitions . (a) The following terms, as used herein, have the following meanings:
“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided that neither the Company nor any Company Subsidiary shall be considered an Affiliate of any DLJ Entity.
“ Balance Sheet ” means the unaudited consolidated balance sheet of the Company and the Company Subsidiaries as of April 2, 2005.
“ Balance Sheet Date ” means April 2, 2005.
“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended on or prior to the date hereof, and any rules or regulations promulgated thereunder.
“ Closing Cash ” means the Company’s and the Company Subsidiaries’ consolidated cash and cash equivalents as at the close of business on the business day immediately preceding the date on which the Effective Time occurs. For the purposes hereof, Closing Cash shall be determined in accordance with generally accepted accounting principles and using accounting policies and practices (including methods for classifying cash and cash equivalents) that are consistent with those used in the preparation of the Balance Sheet.
“ Closing Working Capital ” means the amount of the Company’s and the Company Subsidiaries’ consolidated (i) sum of accounts receivables (net of allowance for doubtful accounts), inventories, prepaid expenses and other current assets, less (ii) sum of accounts payable (other than any accounts payable in respect of Transaction Expenses), accrued expenses and other current liabilities, in each case as at the close of business on the business day immediately preceding the date on which the Effective Time occurs. In calculating such figures, (v) all intracompany and intercompany accounts receivable and accounts payable between or among the Company and the Company Subsidiaries, (w) all debt owed to third parties, (x) Closing Cash, (y) income taxes receivable and (z) deferred income taxes shall be excluded. Closing Working Capital shall be determined in accordance with generally accepted accounting principles and using accounting policies and practices (including methods for classifying assets and liabilities, and methods for calculating line items in the Balance Sheet) that are consistent with those used in the preparation of the Balance Sheet.
“ Code ” means the United States Internal Revenue Code of 1986, as amended.
“ Company Subsidiary ” means a Subsidiary of the Company.
“ DLJ Entity ” means each of DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ Merchant Banking II, Inc., a Delaware corporation, as advisory general partner on behalf of DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified Partners-A, L.P., a Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation, DLJ Millennium Partners, L.P., a Delaware limited partnership, DLJ Millennium Partners-A, L.P., a Delaware limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, DLJ ESC II, L.P., a Delaware limited partnership, DLJ First ESC, L.P., a Delaware limited partnership, DLJ Investment Partners
2
L.P., a Delaware limited partnership, DLJ Investment Partners II, L.P., a Delaware limited partnership and DLJIP II Holdings, L.P., a Delaware limited partnership.
“ Delaware Law ” means the General Corporation Law of the State of Delaware.
“ Employee Plan ” means any employment, severance or similar contract, practice, plan or policy and each other arrangement providing for compensation, bonuses, profit-sharing, equity-related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits, change in control benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered or contributed to by the Company or any ERISA Affiliate and covers any current or former employee, director or consultant of the Company or a Company Subsidiary, including any “employee benefit plan”, as defined in Section 3(3) of ERISA; provided that the term Employee Plan shall not include any (i) plan or policy in Canada in respect of employment insurance, workers’ compensation or pensions in which participation is required by applicable law or (ii) contract, practice, plan, policy or other arrangement that provides incidental benefits that are not material in amount or coverage with respect to any particular employees or group of employees.
“ Environmental Laws ” means any and all statutes, laws, regulations, permits, common law, judgments, orders, decrees and rules, in each case as in effect on or prior to the date hereof, that have as their principal purpose the protection of the environment, natural resources or, to the extent relating to exposure to any hazardous or toxic substance, human health or safety.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code; provided that none of the DLJ Entities or any of their Affiliates (other than the Company and its Company Subsidiaries) shall be considered an ERISA Affiliate of the Company or any of its Company Subsidiaries.
“ Escrow Agent ” means the escrow agent appointed pursuant to the Escrow Agreement.
“ Escrow Agreement ” means the agreement to be dated as of the date of Closing among the Company, MergerCo, Buyer, DLJMB, as the Stockholders’ Representative and the Escrow Agent, substantially in the form attached hereto as Exhibit A .
3
“Escrow Amount” means $25,000,000.
“ Final Closing Cash ” means the Closing Cash (i) as shown in the Surviving Corporation’s calculation delivered pursuant to Section 2.12(a), if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.12(b) or (ii) if such a notice of disagreement is delivered, (A) as agreed by the Stockholders’ Representative and the Surviving Corporation pursuant to Section 2.12(c) or (B) in the absence of such agreement, as shown in the Neutral Arbitrator’s calculation delivered pursuant to Section 2.12(c); provided that in no event shall Final Closing Cash be less than the Surviving Corporation’s calculation of Closing Cash delivered pursuant to Section 2.12(a) or more than the Stockholders’ Representative’s calculation of Closing Cash delivered pursuant to Section 2.12(b).
“ Final Payment ” means: (i) in respect of any Share, the amount, if a positive number, equal to the Share Consideration as finally determined pursuant to Sections 2.11, 2.12 and 2.13, less the Initial Payment in respect thereof, and (ii) in respect of any Company Warrant, the amount, if a positive number, equal to the Warrant Consideration in respect thereof, as finally determined pursuant to Sections 2.11, 2.12 and 2.13, less the Initial Payment in respect thereof.
“ Final Working Capital ” means the Closing Working Capital (i) as shown in the Surviving Corporation’s calculation delivered pursuant to Section 2.12(a), if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.12(b), or (ii) if such a notice of disagreement is delivered, (A) as agreed by the Stockholders’ Representative and the Surviving Corporation pursuant to Section 2.12(c) or (B) in the absence of such agreement, as shown in the Neutral Arbitrator’s calculation delivered pursuant to Section 2.12(c); provided that in no event shall Final Working Capital be less than the Surviving Corporation’s calculation of Closing Working Capital delivered pursuant to Section 2.12(a) or more than the Stockholders’ Representative’s calculation of Closing Working Capital delivered pursuant to Section 2.12(b).
“ Full Dilution Number ” means (i) the total number of Shares outstanding as of the Effective Time plus (ii) the total number of Voting Common Shares issuable upon exercise of the Company Warrants outstanding as of the Effective Time.
4
“ Hazardous Substances ” means any pollutant, waste, contaminant or any toxic, radioactive or hazardous (or any other term of similar import) substance, as such terms are defined in, or identified pursuant to, any Environmental Law, including petroleum and petroleum products, asbestos and asbestos-containing materials and polychlorinated biphenyls.
“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“ Indebtedness ” means the sum of (i) the aggregate principal amount outstanding under the Senior Credit Agreement, (ii) the aggregate accreted value of the 14¾% Senior Discount Notes due 2014 of the Company, issued pursuant to an Indenture dated as of April 29, 2004 between the Company and the Trustee, (iii) the aggregate principal amount outstanding of the Second Priority Senior Secured Floating Rate Notes due 2011 of Mueller Group, issued pursuant to an Indenture dated as of April 23, 2004 among Mueller Group, the Trustee and the guarantors party thereto, and (iv) the aggregate principal amount outstanding of the 10% Senior Subordinated Notes due 2012 of Mueller Group, issued pursuant to an Indenture dated as of April 23, 2004 among Mueller Group, the Trustee and the guarantors party thereto, in each case immediately prior to the Effective Time.
“ Initial Payment ” means (i) in respect of any Share, the Share Consideration, as estimated pursuant to Section 2.11, less the Per Share Escrow Amount, and (ii) in respect of any Company Warrant, the Warrant Consideration in respect thereof, as estimated pursuant to Section 2.11, less the Per Share Escrow Amount in respect of the number of Voting Common Shares issuable upon exercise of such Company Warrant.
“ Intellectual Property Right ” means any trademark, service mark, trade name, Internet domain name, mask work, invention, patent, trade secret, copyright, know-how (including any registrations or applications for registration of any of the foregoing) or any other intellectual property right.
“ Knowledge of the Buyer ” means the actual knowledge of either Don DeFosset or Victor P. Patrick.
“ Knowledge of the Company ”, “ the Company’s knowledge ” or any other similar knowledge qualification in this Agreement means the actual knowledge of any of the officers of the Company identified on Schedule 1.01(a), after conducting a reasonable inquiry with individuals reporting to such officer.
“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance in respect of such property or asset.
5
“ Material Adverse Effect ” means (a) an effect that is materially adverse to the business, assets, liabilities, financial condition or results of operations of the Company and the Company Subsidiaries, taken as whole, except any such effect that is resulting from or arising out of or in connection with (i) the execution and delivery of the Transaction Agreements or the consummation of the Merger or any other transaction contemplated hereby or thereby or any announcement hereof or thereof, (ii) changes or conditions affecting any industry in which the Company or the Company Subsidiaries operate generally, (iii) changes in economic (including financial, banking and/or securities markets), regulatory or political conditions generally, or (iv) the announcement, commencement or continuation of any war or armed hostilities or the occurrence of any act or acts of terrorism, to the extent, in the case of each of clauses (ii), (iii) and (iv), that they do not have a disproportionate effect on the Company and the Company Subsidiaries taken as a whole, or (b) any effect on any of the Company and the Company Subsidiaries that prevents the consummation by the Company and the Company Subsidiaries of the Debt Offer, the Consent Solicitation, the Merger or the other transactions contemplated by the Transaction Agreements (for the avoidance of doubt, it being understood that any effect on Buyer or any of its Subsidiaries is not covered by the foregoing).
“ Mueller Group ” means Mueller Group, Inc., a Delaware corporation.
“ 1934 Act ” means the Securities Exchange Act of 1934, as amended.
“ Non-Voting Common Shares ” means shares of Non-Voting Common Stock.
“ Non-Voting Common Stock ” means the Class B Convertible Non-Voting Common Stock, par value $0.01 per share, of the Company.
“ Notes ” means (i) the 14¾% Senior Discount Notes due 2014 of the Company, issued pursuant to an Indenture dated as of April 29, 2004 between the Company and the Trustee, (ii) the Second Priority Senior Secured Floating Rate Notes due 2011 of Mueller Group, issued pursuant to an Indenture dated as of April 23, 2004 among Mueller Group, the Trustee and the guarantors party thereto, and (iii) the 10% Senior Subordinated Notes due 2012 of Mueller Group, issued pursuant to an Indenture dated as of April 23, 2004 among Mueller Group, the Trustee and the guarantors party thereto.
“ Per Share Escrow Amount ” means the amount obtained by dividing the Escrow Amount by the Full Dilution Number.
6
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“ Pre-Closing Tax Period ” means any Tax period ending at or before the Effective Time and, with respect to a Tax period that begins at or before the Effective Time and ends thereafter, the portion of such Tax period ending at the Effective Time.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, dumping, disposing or arranging for disposal.
“ Schedules ” means the Schedules to this Agreement dated as of the date hereof.
“ SEC ” means the U.S. Securities and Exchange Commission.
“ SEC Documents ” means all filings of the Company and any Company Subsidiary (including any exhibits or schedules to such filings, and any other documents and exhibits that are “filed” or “furnished” on Form 8-K) with the SEC under the 1934 Act.
“ Senior Credit Agreement ” means the Second Amended and Restated Credit Agreement dated as of April 23, 2004 among Mueller Group, as borrower, Credit Suisse First Boston, as lead arranger, sole book runner and administrative agent, JPMorgan Chase Bank and Deutsche Bank Securities Inc., as syndication agents, and the various financial institutions identified therein, as Lenders (as defined therein) and the related ancillary documents, in each case as amended.
“ Shares ” means the Voting Common Shares and the Non-Voting Common Shares.
“ Stockholders ” means the DLJ Entities and all other Persons who own any Shares at the Effective Time.
“ Subsidiary ” means, with respect to any Person, any other Person of which either (i) a majority of the common stock or other ownership interests are at the time, directly or indirectly, owned by such Person or (ii) securities or other ownership interests having the ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.
“ Tax ” means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, withholding on amounts paid to or by any Person), together with any interest, penalty, addition to
7
tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax (a “ Taxing Authority ”), and (ii) any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of the Company being a member of an affiliated, consolidated or combined group with any other corporation at any time at or prior to the Effective Time.
“ Transaction Agreements ” means this Agreement, the Escrow Agreement and the Voting Agreement.
“ Transaction Expenses ” means the aggregate amount of (i) all fees and expenses payable to Credit Suisse First Boston, Goldman, Sachs & Co., Davis Polk & Wardwell and any other banker, counsel, accountant, advisor, consultant, agent or representative retained by or on behalf of the Company or any Company Subsidiary, in each case relating to the Merger (but excluding any such banker, counsel, accountant, advisor, consultant, agent or representative retained by or on behalf of the Company’s senior management, in each case relating to the Merger), including the preparation, negotiation, execution and delivery of this Agreement and the other Transaction Agreements and the consummation of the transactions contemplated herein and therein, including any interest rate swap termination fees (including any “mark to market” payment) if Buyer complies with its obligations under Section 7.11 but excluding all fees and expenses payable to the Mueller Group’s lenders and counsel to Mueller Group’s lenders in connection with the repayment of its credit facility under the Senior Credit Agreement, and any fees or expenses incurred by Buyer or MergerCo in connection with the Financing and any interest rate swap termination fees (including any “mark to market” payment) if Buyer does not comply with its obligations under Section 7.11 and (ii) the net after-tax cost of the transaction bonuses described in Schedule 6.01 and any other change of control or other payments by or on behalf of the Company and any Company Subsidiary which are or become payable at or prior to the Effective Time as a result of the consummation of the transactions contemplated hereby. Notwithstanding anything to the contrary above, costs, expenses and payments expressly referred to in Section 6.06(d) or 6.06(e) and the proviso to the last sentence of Section 6.06(a) shall not be deemed Transaction Expenses.
“ Trustee ” means the Law Debenture Trust Company of New York, as trustee.
“ Voting Agreement ” means the agreement dated as of the date hereof among the DLJ Entities and Buyer.
“ Voting Common Shares ” means shares of Voting Common Stock.
8
“ Voting Common Stock ” means the Class A Common Stock, par value $0.01 per share, of the Company.
“ Warrant Agreement ” means the Warrant Agreement dated as of April 29, 2004 between the Company and Law Debenture Trust Company of New York, as warrant agent.
“ Warrant Consideration ” means, in respect of any Company Warrant, the amount in cash, without interest, determined by multiplying (i) the excess of the Share Consideration over the exercise price of such Company Warrant by (ii) the number of Voting Common Shares such holder could have purchased upon exercise of such Company Warrant in full immediately prior to the Effective Time.
(b) Each of the following terms is defined in the Section set forth opposite such term:
9
Section 1.02 . Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this
10
Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. Whenever the words “ordinary course of business” are used in this Agreement, they shall be deemed to be followed by the words “consistent with past practice,” whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.
Section 2.01 . The Merger. (a) Upon the terms and subject to the conditions hereof, at the Effective Time, MergerCo shall be merged (the “ Merger ”) with and into the Company in accordance with Delaware Law, whereupon the separate existence of MergerCo shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”).
(b) From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and MergerCo, all as provided under Delaware Law.
Section 2.02 . Closing; Effective Time. Subject to the provisions of Article 9, the closing of the Merger (the “ Closing ”) shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, 10017, as soon as practicable, but in no event later than 10:00 a.m., New York City time,
11
on the second business day after the date on which each of the conditions set forth in Article 9 has been satisfied or waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time or on such other date as MergerCo and the Company may mutually agree. At the Closing, MergerCo and the Company shall cause a certificate of merger (the “ Certificate of Merger ”) to be executed and filed with the Secretary of State of the State of Delaware in the form required by and executed in accordance with the applicable provisions of Delaware Law. The Merger shall become effective as of the date and time of such filing or such other time after such filing as MergerCo and the Company shall agree in the Certificate of Merger (the “ Effective Time ”).
Section 2.03 . Certificate of Incorporation; Bylaws; Directors and Officers. (a) At the Effective Time, and without any further action on the part of the Company or MergerCo, the certificate of incorporation of the Company shall be the certificate of incorporation of the Surviving Corporation and thereafter may be amended or repealed in accordance with applicable law.
(b) The bylaws of the Company shall become, from and after the Effective Time, the bylaws of the Surviving Corporation, until thereafter amended or repealed as provided therein or in the certificate of incorporation of the Surviving Corporation and in accordance with applicable law.
(c) The directors of MergerCo and the officers of the Company immediately prior to the Effective Time shall become, from and after the Effective Time, the directors and officers, respectively, of the Surviving Corporation, until their respective successors are duly elected or appointed or their earlier resignation or removal.
Section 2.04 . Conversion of Shares. At the Effective Time:
(i) except as otherwise provided in Section 2.04(ii), each Share shall be converted into the right to receive an amount, calculated as set forth in Schedule 2.04 and adjusted pursuant to the procedures set forth in Sections 2.11, 2.12 and 2.13 (such adjusted amount, the “ Share Consideration ”), in cash without interest, except as contemplated by Section 4 of the Escrow Agreement;
(ii) each Share held by the Company as treasury stock immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto; and
(iii) each share of common stock of MergerCo outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the
12
same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.
Section 2.05 . Surrender and Payment . (a) At Closing, in addition to making the payments set forth in Section 7.09, Buyer or MergerCo shall deposit, or shall cause to be deposited (x) with the Company, in a separate account established for the benefit of the holders of Shares and Company Warrants (the “ Payment Fund ”), by wire transfer of immediately available funds, an amount equal to the estimate of the aggregate Share Consideration furnished pursuant to Section 2.11 and the estimate of the aggregate Warrant Consideration furnished pursuant to Section 2.11, less the Escrow Amount, and (y) with the Escrow Agent, in a separate account established pursuant to the Escrow Agreement for the benefit of the holders of Shares and Company Warrants (the “ Escrow Fund ”), by wire transfer of immediately available funds, the Escrow Amount. Neither the Payment Fund nor the Escrow Fund shall be used for any purpose except as expressly provided in this Agreement and in the Escrow Agreement.
(b) Each holder of Shares that have been converted into the right to receive the applicable Share Consideration will be entitled to receive upon surrender to the Surviving Corporation of certificates representing Shares (the “ Share Certificates ”), together with a properly completed letter of transmittal, the Share Consideration for each Share represented by such Share Certificate, in the manner and at the times set forth in Sections 2.05(c) and 2.13. Until so surrendered, each such Share Certificate shall represent after the Effective Time for all purposes only the right to receive such Share Consideration.
(c) Payment of the applicable Share Consideration shall be effected in the following manner:
(i) If any holder of record of any Shares surrenders such holder’s Share Certificate(s), together with a properly completed letter of transmittal, to the Surviving Corporation at the Effective Time, or thereafter but prior to the determination of Final Working Capital, then such holder shall receive (A) payment of the applicable Initial Payment for such Shares, if surrendered at the Effective Time, at the Closing, or, if surrendered after the Effective Time, on the second business day after such surrender, and (B) the applicable Final Payment for such Shares in accordance with Section 2.13, in each case in immediately available funds by wire transfer to an account designated by such holder in the letter of transmittal.
(ii) If any holder of record of any Shares surrenders such holder’s Share Certificate(s), together with a properly completed letter of
13
transmittal, to the Surviving Corporation after the determination of Final Working Capital, then such holder shall be entitled to receive payment of the Share Consideration for each such Share on the second business day after such surrender in immediately available funds by wire transfer to an account designated by such holder in the letter of transmittal.
No later than two business days prior to the date on which the Closing is scheduled to occur, the Company shall send to each holder of Shares a letter of transmittal for use in exchanging such Shares for the applicable Share Consideration. The letter of transmittal shall be in form and substance reasonably acceptable to Buyer.
(d) If any portion of the applicable Share Consideration is to be paid to a Person other than the Person in whose name the surrendered Share Certificate is registered, it shall be a condition to such payment that the Share Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Surviving Corporation any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Share Certificate or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not payable.
(e) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, Share Certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for the applicable Share Consideration. For purposes of such exchange, the canceled Shares shall be deemed surrendered pursuant to Section 2.05(c) as of the date presented to the Surviving Corporation.
(f) Any amount in the Payment Fund and the Escrow Fund (and any interest or other income earned thereon) that remains unclaimed by the Stockholders and the holders of the Company Warrants after the later of (i) the determination of the Final Working Capital and Final Closing Cash and (ii) a period of 12 months immediately following the Effective Time shall be returned to the Surviving Corporation, and any holder who has not exchanged its Shares for the applicable Share Consideration and any holder who has not exercised its Company Warrants for the applicable Warrant Consideration prior to such time shall thereafter look only to the Surviving Corporation for payment thereof without any interest thereon. Any portion of the aggregate Share Consideration (and any interest or other income earned thereon) that remains unclaimed by the Stockholders on the second anniversary of the date on which the Effective Time occurs (or such earlier date immediately prior to such time when the amounts would otherwise escheat to or become property of any governmental authority) shall become, to the extent permitted by applicable law, the property of the
14
Surviving Corporation, free and clear of any claims or interest of any Person previously entitled thereto. Any portion of the aggregate Warrant Consideration that remains unclaimed by the holders of Company Warrants at 5:00 p.m., New York City time, on April 15, 2014 shall become, to the extent permitted by applicable law and the provisions of the Warrant Agreement, the property of the Surviving Corporation, free and clear of any claims or interest of any Person previously entitled thereto.
Section 2.06 . Dissenting Shares . Notwithstanding Sections 2.04 and 2.05, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Delaware Law shall not be converted into a right to receive the applicable Share Consideration, unless such holder fails to perfect, withdraws or otherwise loses its right to appraisal. If, after the Effective Time, such holder fails to perfect, withdraws or loses its right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the applicable Share Consideration, to be paid as provided in Section 2.05(c). The Company shall give Buyer prompt notice of any demands received by the Company for appraisal of Shares, and Buyer shall have the right to participate in all negotiations and proceedings with respect to such demands. Except with the prior written consent of Buyer, the Company shall not make any payment with respect to, or offer to settle or settle, any such demands.
Section 2.07 . Warrants. (a) At or after the Effective Time, upon the exercise of any Company Warrant by any holder thereof and upon such holder’s surrender of such holder’s certificates representing such Company Warrants (the “ Warrant Certificates ”) to the Surviving Corporation, in each case in accordance with the provisions of the Warrant Agreement, Buyer shall, or shall cause the Surviving Corporation to, deliver to such holder the applicable Warrant Consideration, in the manner and at the times set forth in Sections 2.07(b) and 2.13.
(b) Payment of the applicable Warrant Consideration shall be effected in the following manner:
(i) If any holder of any Company Warrants exercises such Company Warrants, and surrenders such holder’s Warrant Certificate(s) therefor to the Surviving Corporation at the Effective Time, or thereafter but prior to the determination of the Final Working Capital, then such holder shall receive (A) payment of the applicable Initial Payment for such Company Warrants, if surrendered at the Effective Time, at the Closing, or, if surrendered after the Effective Time, on the second business day after such surrender, and (B) the applicable Final Payment for such
15
Company Warrants in accordance with Section 2.13, in each case in immediately available funds by wire transfer to an account designated by such holder in writing at the time of surrendering such Warrant Certificate(s).
(ii) If any holder of Company Warrants exercises such Company Warrants, and surrenders such holder’s Warrant Certificate(s) therefor to the Surviving Corporation after the determination of the Final Working Capital, then such holder shall be entitled to receive payment of the applicable Warrant Consideration for such Company Warrants on the second business day after such surrender in immediately available funds by wire transfer to an account designated by such holder in writing at the time of surrendering such Warrant Certificate(s).
Section 2.08 . Adjustments . If during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur, including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of Shares, or stock dividend thereon with a record date during such period, the applicable Share Consideration and the applicable Warrant Consideration, and any other amounts payable pursuant to this Agreement, shall be appropriately adjusted.
Section 2.09 . Withholding Rights . The Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 2 such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the Surviving Corporation so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares or Company Warrants in respect of which the Surviving Corporation made such deduction and withholding.
Section 2.10 . Lost Share Certificates . If any Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Share Certificate to be lost, stolen or destroyed and such indemnification or other undertakings as may be reasonably requested by the Surviving Corporation, the Surviving Corporation will pay, in exchange for such lost, stolen or destroyed Share Certificate, the applicable Share Consideration to be paid in respect of the Shares represented by such Share Certificate, as contemplated by this Article 2.
Section 2.11 . Estimate of Share Consideration. No later than five (5) business days prior to the date on which the Closing is scheduled to occur, the Company shall furnish to Buyer a statement, prepared in reasonable detail,
16
reflecting the Company’s good faith estimate of Closing Working Capital (the “ Estimated Working Capital ”) and the Company’s good faith estimate of Closing Cash (the “ Estimated Closing Cash ”), in each case determined in accordance with the definitions thereof. The Company shall also deliver to Buyer its estimated calculation of the Share Consideration, the Warrant Consideration and the Per Share Escrow Amount. Such calculations shall be made by applying the Estimated Working Capital, the Estimated Closing Cash and the amounts reflected on the pay-off letter from the Administrative Agent under the Senior Credit Agreement delivered pursuant to Section 7.09 and the amounts of Transaction Expenses to the methodology set forth in Schedule 2.04. Buyer and the Company shall cooperate and negotiate in good faith to resolve any dispute regarding the Estimate Closing Cash prior to Closing; provided that if any such item of dispute is not resolved by agreement in writing between Buyer and the Company not less than two (2) business days prior to the Closing, then the Company’s estimate of such disputed items, together with the resolved items, shall be the final estimates.
Section 2.12 . Closing Working Capital . (a) As promptly as practicable, but no later than 60 days after the Closing, the Surviving Corporation will cause to be prepared and delivered to the Stockholders’ Representative (i) a statement setting forth the Surviving Corporation’s calculation of Closing Working Capital (the “ Closing Working Capital Statement ”), and (ii) a statement setting forth the Surviving Corporation’s calculation of Closing Cash (the “ Closing Cash Statement ” and together with the Closing Working Capital Statement, the “ Closing Statements ”), in each case determined in accordance with the definitions thereof. The Closing Statements shall (i) be signed by the Surviving Corporation’s chief financial officer, (ii) fairly present the Closing Working Capital and Closing Cash, each in accordance with the definitions thereof, and (iii) the Closing Working Capital Statement shall specifically identify the respective amounts of inventories, accounts receivable, prepaid expenses and other current assets (and, in each case, any allowances or reserves therefor) and accounts payable, accrued expenses and other current liabilities used for the Surviving Corporation’s calculation of Closing Working Capital.
(b) If the Stockholders’ Representative disagrees with the Surviving Corporation’s calculation of Closing Working Capital or Closing Cash delivered pursuant to Section 2.12(a), the Stockholders’ Representative may, within 30 days after receipt of the Closing Statements, deliver a written notice to the Surviving Corporation and Buyer disagreeing with such calculation and setting forth the Stockholders’ Representative’s calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which the Stockholders’ Representative disagrees, and the Stockholders’ Representative shall be deemed to have agreed with all other items and amounts contained in the relevant Closing Statement and the Surviving Corporation’s calculation of Closing Working
17
Capital or Closing Cash, as the case may be, and such agreed items and amounts shall be final and binding upon the parties. If the Stockholders’ Representative fails to deliver such a written notice within such 30 day period, the Surviving Corporation’s calculation of Closing Working Capital and Closing Cash, respectively, shall be final and binding upon the parties.
(c) If a notice of disagreement shall be duly delivered pursuant to Section 2.12(b), the Stockholders’ Representative, Buyer and the Surviving Corporation shall, during the 30 days following such delivery, use all reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Working Capital or Closing Cash, as the case may be. Any written agreement by Buyer, the Surviving Corporation and the Stockholders’ Representative resolving any disputed items or amounts during such period or any mutually agreed extension thereof shall be final and binding upon the parties. If, during such period or any mutually agreed extension thereof, the Stockholders’ Representative, Buyer and the Surviving Corporation are unable to reach such agreement, they shall promptly thereafter cause Ernst & Young LLP or such other nationally recognized accounting firm agreed to among the parties (the “ Neutral Arbitrator ”) promptly to review this Section 2.12 and the disputed items or amounts for the purpose of calculating Closing Working Capital or Closing Cash, as the case may be. In making such calculation, the Neutral Arbitrator shall act as an arbitrator and shall consider only those items or amounts in the Surviving Corporation’s calculation of Closing Working Capital or Closing Cash, as the case may be, as to which the Stockholders’ Representative has disagreed. The Neutral Arbitrator shall make its determination based solely on the presentations and supporting materials provided by the parties and not pursuant to any independent review. The Neutral Arbitrator shall deliver to the Stockholders’ Representative, Buyer and the Surviving Corporation, as promptly as practicable, a written report setting forth such calculation. Such report shall be final and binding upon the Stockholders’ Representative, Buyer and the Surviving Corporation, and judgment may be entered on the award. The fees and expenses of the Neutral Arbitrator shall be allocated to and paid by the Buyer and Stockholders’ Representative in the same proportion that the aggregate amount of the disputed items so submitted to the Neutral Arbitrator that is unsuccessfully disputed by such party (as finally determined by the Neutral Arbitrator) bears to the total amount of such disputed items so submitted; provided that such fees and expenses of the Neutral Arbitrator allocable to and payable by the Stockholders’ Representative may be paid by the Stockholders’ Representative from the Escrow Fund.
(d) Buyer and the Surviving Corporation agree that they will, and Buyer will cause its Subsidiaries to, and Buyer agrees to use reasonable efforts to cause its and the Surviving Corporation’s respective independent accountants to, cooperate and assist the Stockholders’ Representative in the review of the Closing
18
Statements, including without limitation, the making available of books, records, work papers and personnel; provided that any such access shall not unreasonably interfere with the conduct of the business of the Surviving Corporation or its Subsidiaries. If any party fails to submit a statement regarding any disputed item submitted to the Neutral Arbitrator within the time determined by the Neutral Arbitrator (which shall take into account the proviso in the immediately preceding sentence) or otherwise fails to give the Neutral Arbitrator access as reasonably requested, then the Neutral Arbitrator shall render a decision based solely on the evidence timely submitted and the access afforded to the Neutral Arbitrator by Buyer, the Surviving Corporation and the Stockholders’ Representative.
Section 2.13 . Adjustment of Share Consideration and Warrant Consideration. (a) If the sum of Estimated Working Capital and Estimated Closing Cash exceeds the sum of Final Working Capital and Final Closing Cash (the amount of such excess being referred to as the “ Shortfall Amount ”), then (i) the Share Consideration shall be reduced by an amount equal to the Shortfall Amount (not to exceed the Escrow Amount) divided by the Full Dilution Number (the “ Common Stock Reduction ”) and (ii) the Warrant Consideration for each Company Warrant shall be reduced by the product of the Common Stock Reduction and the number of Voting Common Shares issuable upon exercise of such Company Warrant. No Stockholder or holder of Company Warrants shall have any liability to the Surviving Corporation or to Buyer for any amount by which the Shortfall Amount may exceed the Escrow Amount.
(b) If the sum of Final Working Capital and Final Closing Cash exceeds the sum of Estimated Working Capital and Estimated Closing Cash (the amount of such excess being referred to as the “ Excess Amount ”), then (i) the Share Consideration shall be increased by an amount equal to the Excess Amount divided by the Full Dilution Number (the “ Common Stock Increase ”) and (ii) the Warrant Consideration shall be increased by the product of the Common Stock Increase and the number of Voting Common Shares issuable upon exercise of such Company Warrant.
(c) Promptly following determination of Final Working Capital and Final Closing Cash, each holder of any Shares that has previously surrendered Share Certificate(s) therefor pursuant to Section 2.05(c), and each holder of Company Warrants that has previously exercised such Company Warrants and surrendered the Warrant Certificate(s) pursuant to Section 2.07, shall be entitled to prompt payment of the applicable Final Payment, if any, in respect thereof from the Surviving Corporation. To the extent funds are available in the Escrow Fund, the Surviving Corporation may cause payment of the Final Payment to be made in accordance with Section 5 of the Escrow Agreement. If there is no Excess Amount, or if the Excess Amount is less than the amounts in the Escrow Fund, Buyer shall be entitled to receive the amounts remaining in the Escrow
19
Fund after the payment of the applicable Final Payment. If for any reason the Payment Fund and the Escrow Fund are inadequate to pay all amounts to which the holders of Shares and Company Warrants shall be entitled, pursuant to this Agreement, Buyer and the Surviving Corporation shall be jointly and severally liable for payment thereof. Buyer and the Stockholders’ Representative each agrees to instruct the Escrow Agent to make disbursements from the Escrow Fund consistent with the provisions of this Section 2.13.
ARTICLE 3
Except (i) as specifically set forth in the SEC Documents filed with or furnished to the SEC prior to the date hereof or (ii) as set forth in a section of the Schedules hereto that corresponds to a section of this Article 3, the Company represents and warrants to Buyer as of the date hereof (except for representations and warranties that are made as of a specific date) that:
Section 3.01 . Corporate Existence and Power . The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and authority and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has made available to Buyer a true and complete copy of its certificate of incorporation and bylaws as in effect on the date hereof. The Company has made available to Buyer complete and accurate copies of minutes of all meetings of the directors or stockholders of the Company held after August 16, 1999 and all resolutions passed or other actions taken by the board of directors and the stockholders of the Company after August 16, 1999.
Section 3.02 . Corporate Authorization . (a) The execution, delivery and performance by the Company of this Agreement and the Escrow Agreement and the consummation of the transactions contemplated to be consummated by it hereby and thereby are within its corporate powers and authority. The execution and delivery of this Agreement and the Escrow Agreement, the performance of the obligations under this Agreement and the Escrow Agreement required to be performed by the Company and the consummation of the transactions
20
contemplated to be consummated by it under this Agreement, other than the Merger, and by the Escrow Agreement have been, and, assuming receipt of the requisite approval of the Company’s stockholders, the Merger, will be at the Effective Time, duly authorized by all necessary corporate action on the part of the Company. This Agreement constitutes, and the Escrow Agreement when executed and delivered will constitute, a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).
(b) The Company’s Board of Directors has (i) unanimously determined that this Agreement and the transactions contemplated to be consummated by the Company hereby are fair to and in the best interests of the Company’s stockholders, (ii) unanimously approved this Agreement and the Escrow Agreement and the transactions contemplated to be consummated by it hereby and thereby, and (iii) unanimously resolved to recommend adoption of this Agreement by its stockholders. The affirmative vote of a majority of the Voting Common Shares is the only vote of the holders of any class or series of capital stock of the Company necessary to adopt this Agreement.
Section 3.03 . Governmental Authorization . The execution, delivery and performance by the Company of this Agreement and the Escrow Agreement and the consummation of the transactions contemplated to be consummated by the Company hereby and thereby require no approval of, action by or in respect of, notice to, or filing with, any governmental body, agency or official other than (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) compliance with any applicable requirements of the HSR Act, (iii) compliance with any applicable requirements of the 1934 Act or any other applicable securities laws, and (iv) any such approval, action, notice or filing as to which the failure to make or obtain would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.04 . Non-contravention . The execution, delivery and performance by the Company of this Agreement and the Escrow Agreement and the consummation of the transactions contemplated to be consummated by the Company hereby and thereby do not and will not (i) assuming receipt of requisite approval of the Company’s stockholders, violate the certificate of incorporation, bylaws or similar organizational documents of the Company or any Company Subsidiary, (ii) assuming compliance with the matters referred to in Section 3.03, violate any applicable law, rule, regulation, judgment, injunction, order or decree, except for any such violations which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (iii) except as
21
disclosed in Schedule 3.04 or as to matters which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, require any consent or other action by, or notice to, any Person under, constitute a breach or default under (with or without notice or lapse of time), or give rise to any right of termination, cancellation, modification or acceleration of any right or obligation of the Company or any Company Subsidiary or to a loss of any benefit to which the Company or any Company Subsidiary is entitled under any provision of any agreement or other instrument binding upon the Company or any Company Subsidiary or any of their assets, or (iv) result in the creation or imposition of any Lien on any asset of the Company or any Company Subsidiary, except for any Permitted Liens.
Section 3.05 . Capitalization . (a) The authorized capital stock of the Company consists of 400,000,000 Voting Common Shares, 150,000,000 Non-Voting Common Shares and 50,000,000 shares of preferred stock, par value $0.01 per share. As of the date hereof, there are outstanding 131,208,998 Voting Common Shares, 89,343,699 Non-Voting Common Shares, no shares of preferred stock of the Company and warrants to purchase 24,487,383 Voting Common Shares (the “ Company Warrants ”).
(b) All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable and free and clear of any preemptive rights. Except as described in Section 3.05(a) and on Schedule 3.05, and changes after the date hereof resulting from the exercise of any Company Warrants outstanding on the date hereof, there are no outstanding (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options, warrants or other rights to acquire from the Company, or other obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses 3.05(b)(i), 3.05(b)(ii) and 3.05(b)(iii) being referred to collectively as the “ Company Securities ”), (iv) obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire, or issue, sell or otherwise transfer, any Company Securities or (v) “phantom” stock or other commitments of the Company that provide any right to receive benefits similar to Company Securities.
Section 3.06 . Ownership of Shares . As of the date hereof, all of the outstanding Voting Common Shares and Non-Voting Common Shares are owned of record by the holders, and in the respective amounts, set forth in Schedule 3.06.
Section 3.07 . Company Subsidiaries . (a) Each Company Subsidiary is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization
22
and has all corporate or limited liability company powers and authority and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Company Subsidiary is duly qualified to do business as a foreign corporation where such qualification is necessary, and is in good standing in each such jurisdiction, except for those jurisdictions where the failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All Company Subsidiaries and their respective jurisdictions of incorporation are identified on Schedule 3.07.
(b) Except as disclosed in Schedule 3.07, all of the outstanding capital stock or other equity securities of each Company Subsidiary is owned by the Company, directly or indirectly, is duly authorized, validly issued, fully paid and nonassessable, free and clear of any Lien or preemptive rights. Except as disclosed in Schedule 3.07, there are no outstanding (i) securities of the Company or any Company Subsidiary convertible into or exchangeable for shares of capital stock or voting securities of any Company Subsidiary, (ii) options, warrants or other rights to acquire from the Company or any Company Subsidiary, or other obligation of the Company or any Company Subsidiary to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any Company Subsidiary (the items in clauses 3.07(b)(i) and 3.07(b)(ii) being referred to collectively as the “ Company Subsidiary Securities ”), (iii) obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any outstanding Company Subsidiary Securities or (iv) “phantom” stock or other commitments of such Company Subsidiary that provide any right to receive benefits similar to Company Subsidiary Securities.
(c) Except for the joint venture agreements set forth in Schedule 3.11, the Company and the Company Subsidiaries do not, directly or indirectly, own any equity or similar interest in, or any interest convertible into or exchangeable for, any equity or similar interest in, any corporation, partnership, limited liability company, joint venture or other Person.
Section 3.08 . SEC Documents; Financial Statements. (a) The Company and Mueller Group have each filed all SEC Documents required to be filed under the 1934 Act since August 11, 2004, when the Company and Mueller Group first became required to make such filings. As of their respective dates of filing with the SEC (or, if amended or superseded by a filing prior to the date hereof, as of the date of such filing), the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC
23
thereunder, and none of the reports included in the SEC Documents when filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company and Mueller Group included in the SEC Documents complied as to form, as of their respective dates of filing with the SEC, in all material respects with all applicable accounting policies and with the published rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by Form 10-Q).
(b) The audited consolidated balance sheet as of September 30, 2004 and the related audited consolidated statements of income and cash flows for the year ended September 30, 2004 and the Balance Sheet and the related unaudited interim consolidated statements of income and cash flows for the three months ended April 2, 2005 of the Company and the Company Subsidiaries fairly present in conformity with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto) the consolidated financial position of the Company and the Company Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements).
Section 3.09 . Absence of Certain Changes . Except as disclosed in Schedule 3.09 and as may have been affected by acts permitted by Section 6.01 hereof, or consented to by Buyer in writing hereunder, since March 31, 2005, the business of the Company and the Company Subsidiaries has been conducted in the ordinary course and there has not been:
(a) any event, change, circumstance, or effect which has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company or any Company Subsidiary of any outstanding shares of capital stock or other securities of the Company or any Company Subsidiary;
(c) any amendment of any material term of any outstanding security of the Company or any Company Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any Company Subsidiary of any indebtedness for borrowed money or any assumption or guarantee by the Company or any Company Subsidiary of
24
any debt, liability or other obligation of any Person (other than the Company or any Company Subsidiary), in either case other than in the ordinary course of business;
(e) any making of any loan, advance or capital contributions to or investment in any Person other than loans, advances or capital contributions to or investments made in the ordinary course of business;
(f) any investment in, or acquisition of any assets or properties from, any Person by the Company or any Company Subsidiary, in each case in excess of $5,000,000;
(g) any sale, lease, license or other disposition of any material assets or property of the Company and its Subsidiaries, in each case in excess of $5,000,000;
(h) any change in any method of accounting or accounting policy by the Company or any Company Subsidiary except for any such change required by reason of a concurrent change in generally accepted accounting principles;
(i) any (i) employment, deferred compensation, severance, retirement or other similar agreement entered into with any current or former director, consultant or employee of the Company or any Company Subsidiary (or any amendment to any such existing agreement), (ii) grant of any severance pay to any current or former director, consultant or employee of the Company or any Company Subsidiary, or (iii) increase in compensation or other benefits payable to any current or former director, consultant or employee of the Company or any Company Subsidiary pursuant to any severance or retirement plans or policies thereof, in the case of each of (i), (ii) and (iii) other than in the ordinary course of business or (iv) establishment, adoption, entrance into, amendment or termination of any Employee Plan or collective bargaining agreement (other than as may be required by the terms of an existing Employee Plan or collective bargaining agreement, or as may be required by applicable law or in order to qualify under Sections 401 and 501 of the Code);
(j) any material Tax election made or changed, any material method of Tax accounting changed, any material amended Returns or claims for material Tax refunds filed, any material closing agreement entered into, any extension of a statute of limitations agreed to, any material Tax claim, audit or assessment settled, or any right to claim a material Tax refund, offset or other reduction in Tax liability surrendered;
25
(k) any capital expenditure project approved by the Company in excess of $1,000,000;
(l) any disposal or lapse of any rights in, to or for the use of any material patent, trademark, trade name or copyright of the Company or any Company Subsidiary, except in each case not in the ordinary course of business;
(m) any revaluation by the Company or any Company Subsidiary of any of its assets, including writing down the value of goodwill or inventory or writing off notes or accounts receivable, in an amount in excess of $1,000,000 in the aggregate, other than in the ordinary course of business; or
(n) any cancellation of a material debt (including cancellation, compromise, release or assignment of material indebtedness owed to the Company or any Company Subsidiary) in each case in an amount in excess of $1,000,000.
Section 3.10 . No Undisclosed Material Liabilities. There are no liabilities of the Company or any Company Subsidiary of any kind (absolute, accrued, contingent or otherwise), other than:
(a) liabilities provided for in the Balance Sheet or disclosed in the notes thereto and for which an adequate reserve has been made;
(b) liabilities disclosed on Schedule 3.10;
(c) liabilities incurred in the ordinary course of business since the Balance Sheet Date and not in violation of this Agreement; or
(d) other undisclosed liabilities which have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.11. Material Contracts . (a) Except as disclosed in Schedule 3.11 or as made available in accordance with Section 3.20 or entered into after the date hereof in the ordinary course of business and in compliance with Section 6.01, neither the Company nor any Company Subsidiary is a party to or bound by:
(i) any lease (whether of real or personal property) providing for annual rental payments of $250,000 or more, or $2,500,000 or more in the aggregate, in either case, that cannot be terminated on not more than 30 days’ notice by the Company or any Company Subsidiary without payment or incurrence of any material penalty or cost;
26
(ii) any agreement (other than purchase orders, work orders and similar instruments) for the purchase by the Company or any Company Subsidiary of materials, supplies, goods, services, equipment or other assets requiring annual payments of $1,000,000 or more, or requiring future payments of $10,000,000 or more in the aggregate from the date hereof, that cannot be terminated on not more than 90 days’ notice by the Company or any Company Subsidiary without payment or incurrence of any material penalty or cost;
(iii) any sales, distribution or other similar agreement (other than purchase orders, work orders and similar instruments) for the sale by the Company or any Company Subsidiary of materials, supplies, goods, services, equipment or other assets requiring annual payments of $1,000,000 or more, or requiring future payments of $10,000,000 or more in the aggregate from the date hereof, that cannot be terminated on not more than 90 days’ notice;
(iv) any material partnership, joint venture or other similar agreement or arrangement;
(v) any agreement relating to the acquisition or disposition of any material business (whether by merger, sale of stock, sale of assets or otherwise) that has been consummated subsequent to August 16, 1999;
(vi) any agreement relating to indebtedness for borrowed money (other than intra-company borrowings) or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), except any such agreement (A) with an aggregate outstanding principal amount not exceeding $250,000 or (B) entered into subsequent to the date of this Agreement as permitted by Section 6.01;
(vii) any agreement that limits the freedom of the Company or any Company Subsidiary to compete in any line of business or with any Person or in any area in any material respect;
(viii) any agreement with any DLJ Entity or any officer of the Company;
(ix) any material agreement relating to Intellectual Property Rights; or
(x) any other agreement, commitment, arrangement or plan not made in the ordinary course of business that is material to the Company and the Company Subsidiaries, taken as a whole.
27
(b) Except as disclosed in Schedule 3.11, each agreement, contract, plan, lease, license, arrangement or commitment required to be disclosed pursuant to this Section 3.11 is a valid and binding agreement of the Company or a Company Subsidiary, as the case may be, and is in full force and effect, and none of the Company, any Company Subsidiary or, to the Knowledge of the Company, any other party thereto is, or is alleged by the Company or any other party to the agreement to be, in default or breach in any material respect under the terms of any such agreement, contract, plan, lease, license, arrangement or commitment, and, to the Knowledge of the Company, no event or circumstance has occurred that, with notice or lapse of time, would constitute any event of default thereunder, except for any such defaults or breaches which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has made available to Buyer true and complete copies of each such agreement, contract, plan, lease, license, arrangement or commitment, except for any such failures to provide any such copies that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.12 . Litigation . Except as disclosed in Schedule 3.12 and except for matters that are in the Knowledge of Buyer, there is no action, suit, investigation or proceeding (other than any action, suit, investigation or proceeding relating to environmental matters, the sole representation concerning which is contained in Section 3.21) pending against, or to the Knowledge of the Company, threatened against, the Company or any Company Subsidiary or any of their respective properties that would reasonably be expected to (i) have, individually or in the aggregate, a Material Adverse Effect or (ii) result in monetary damages in excess of $1,000,000 or (iii) result in the imposition of material injunctive relief against the Company or any Company Subsidiary or any of their respective properties. There are no orders, judgments, injunctions or decrees currently in force against the Company or any Company Subsidiary or any of their respective properties, except for such orders, judgments, injunctions or decrees that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.13 . Compliance with Laws and Court Orders . (a) Except as disclosed in Schedule 3.13 and except for matters that are in the Knowledge of Buyer, neither the Company nor any Company Subsidiary is in violation of or, has violated since June 17, 2002 or, to the Knowledge of the Company, is under investigation with respect to or threatened to be in violation of, any applicable law, rule, regulation, judgment, injunction, order or decree (other than Environmental Laws, the sole representation concerning which is contained in Section 3.21), except for such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
28
(b) Except as disclosed on Schedule 3.13 or as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) the Company and the Company Subsidiaries own, hold or possess all licenses, franchises, permits, approvals and other governmental authorizations (collectively, “ Licenses and Permits ”) necessary to entitle them to own or lease, operate and use their respective properties and to carry on and conduct in their respective businesses, (ii) the Company and the Company Subsidiaries are not in violation of or in default under any Licenses and Permits, (iii) all Licenses and Permits of the Company and the Company Subsidiaries are valid and in full force and effect, and (iv) no claim, demand, action, suit, proceeding or arbitration is pending, nor to the Knowledge of the Company is threatened, to suspend, revoke, revise, restrict, terminate or declare invalid any of the Licenses and Permits, in each case of (i)-(iv) other than Licenses and Permits related to or required under any Environmental Laws, the sole representation concerning which is contained in Section 3.21.
Section 3.14 . Properties . (a) The Company and the Company Subsidiaries have good title to, or in the case of leased property and assets have valid leasehold interests in, all property and assets (whether real, personal, tangible or intangible) that are necessary for the conduct of their businesses as currently conducted, including all such property and assets reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business or where the failure to have such good title or valid leasehold interests would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. None of such property or assets is subject to any Lien, except:
(i) Liens and other matters described in or by reference in Schedule 3.14;
(ii) Liens disclosed on the Balance Sheet or in the notes thereto or securing liabilities reflected on the Balance Sheet or in the notes thereto;
(iii) Liens for taxes, assessments and similar charges that are not |
AGREEMENTS / CONTRACTS
CLAUSES
| Get Email Updates |
